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Eric’s Bits and Bytes   Issue 34 (July 2004) (Translation)

Dear Friends,

Ever since I announced my withdrawal from the forthcoming LegCo elections, I have received calls and letters from quite a number of friends who are curious as to my reasons. Already I have given a detailed explanation in my “Letter to Hong Kong”, so I am not going to labour the point here.

Reading Hong Kong is not an easy undertaking, for the city bears some characteristics not shared by other places. To give an example, the conception of ione country, two systemsi is an unprecedented feat; the implementation of the Basic Law is also something never witnessed before in the modern history of China. And this is to say nothing of the melange of Chinese and Western cultures unique to the metropolis. Hong Kong, therefore, does call for in-depth readings. Careless commentary or superficial observations do not help.

Hong Kong is lovable also for its ability to generalize concepts as they are put into practice, a characteristic not seen in other places either. This is only allowed from a stable overall environ which allow changes in specific respects. Thus one should neither stick to the beaten path of dogmatic theories nor stand still under the pressure from the authorities.

Such a politically lively, lovely Hong Kong is the Hong Kong that I long for!

Eric Li


At a dinner of the Past Presidents Club, Hong Kong Branch, The Association of International Accountants.

As officiating guest and speaker at the sixteenth anniversary dinner of The Hong Kong Association of Accounting Technicians.

As officiating guest of the Law Enforcement Torch Run for Special Olympics 2004.

Officiating at the award presentation ceremony of ACCAis SME Accounting Management Excellence Award.

Officiating and presenting awards at the Statistical Project Competition for Secondary School Students.

A group photo taken after a meeting of the Children Programming Consultative Committee, Television Broadcasts Limited.

A photo taken with students from the Chinese University Society of Accountancy.

A photo with the Financial Secretary and others at the ninetieth anniversary dinner of The Society of Chinese Accountants and Auditors.
   

FORESIGHT

Amendment to Professional Accountants Ordinance passed

“Professional Accountants (Amendment) Bill 2004,” a private bill proposed by Dr. Hon. Eric Li, was given its first and second readings on 24 March and, after deliberations of the relevant LegCo Bills Committee, was passed on its third reading at the LegCo meeting on 9 July.

Eric Li considers himself a member of the opposition camp after voting against Inland Revenue Bill

Yesterday the government scored a critical victory in LegCo with the passing of the Inland Revenue Bill. The key to its success lies in the fervent lobbying in the past month or so by the officials in charge, successfully securing the support of the democratic camp. It comes as little wonder that after the bill was passed, Martin Lee n former chairman of the Democratic Party - joked in good humour “today we have become pro-government” upon entering the “antechamber” (a room for legislators to rest in). In contrast, Eric Li - the convenor of the Breakfast Group - who is normally on closer terms with the government, remarked, “We (the Breakfast Group) became the opposing party.”

Amendment introduced for duty collection unfair to large enterprises

Accountancy representative Eric Li pointed out that the whole amendment bill was unfair. Now that anti-avoidance provisions are already in place, if the amendment was introduced simply to ease the way for the Inland Revenue Department to collect back duties, it would not be fair to large enterprises. ( Ming Pao, 17 June 2004)

Bond market affected

Eric Li, legislator for the accounting sector, observed that when a company issues debentures and then subscribe to them through their subsidiary companies, it is probably only trying to maintain its level of stock ownership, rather than to avoid taxes. Li was worried that the implementation of the new rules would severely affect the budding bond market. ( Sing Pao, 17 June 2004)


Reply of Ministry of Finance to proposal of Eric Li and other members of CPPCC National Committee

Below is the reply of Ministry of Finance to the proposal iRegarding public practice of and mutual recognition of accreditation for certified public accountants on the Mainland and in Hong Kongi submitted by five members of the CPPCC National Committee, including Eric Li, in the Second Meeting of the Tenth National Committee:

Eric Li and the other four committee members:

This is a reply to your proposal regarding the public practice of, and mutual recognition of accreditation for, Certified Public Accountants on the Mainland and in Hong Kong.

Hong Kong and the Mainland have a long history of interchange and collaboration in the Accounting Profession, and this has played a vital role in enhancing the development of accounting and the overall economy in both places. In as early as the mid 1990s Hong Kong accounting professionals were allowed to enter for the certified public accountant examination of the Mainland and an examination centre was consequently established in Hong Kong. For years, Hong Kong accountancy firms have been establishing offices and going into temporary practice in Mainland China. Up until April 2004, the Ministry of Finance has approved the establishment of 12 agents for Hong Kong accountancy firms on the Mainland, and has handled and approved over 500 applications for temporary practice.

In the “Closer Economic Partnership Arrangement” (hereinafter called CEPA), Mainland has made two pledges with regard to accounting, auditing and book-keeping services. First, the “Temporary Permit for Auditing Practice” for the temporary auditing practice of Hong Kong accounting firms on the Mainland would be valid for one year. Secondly, the annual duration of practice on the Mainland required of Hong Kong accountants (including partners) - who possess Mainland professional qualifications for Certified Public Accountants and who are conducting accounting practices on the Mainland - is implemented in accordance with that of their Mainland counterparts. Both pledges have been fulfilled.

The Ministry attaches great importance to the mutual recognition of accreditation for Certified Public Accountants. After the signing of the CEPA, the Ministry and the Hong Kong Society of Accountants have had a series of discussions, and on 16 February 2004 established a Joint Working Committee, which has held two working conferences exploring the details. At present, the Committee is deliberating on the mutual exemption of certain subjects in the Certified Public Accountant examinations. The study report on technical issues is scheduled for completion in June 2004. On the basis of the study report by the Committee, the Ministry will conduct negotiations on the subject exemption in examinations and sign an agreement with the relevant parties.

As to the joint management of accounting firms, the Ministry has held a few meetings with the Hong Kong Society of Accountants exploring issues such as the related legal provisions, details of forms of organization and the cope of practice. We believe that through our joint efforts, Certified Public Accountants from both sides will be able to collaborate across a broader stratum, and with greater efficiency.

Thank you for your concern and support for the interchange and collaboration between Mainland and Hong Kong in the Accounting Profession. Your opinions are always welcomed.

General Office of the Ministry of Finance
11 May 2004


Commitments at The Legislative Council

Joined as member of the following newly formed Bills Committees:

• Bills Committee on Airport Authority (Amendment) Bill 2004

• Bills Committee on Professional Accountants (Amendment) Bill 2004


Questions raised and Debates

* Speech during Budget Debate
(Speech delivered on the Appropriation Bill 2004 at the Legislative Council debate on 22 April 2004)

* Chairman Report from the Bills Committee on Inland Revenue (Amendment) Bill 2000
(Report delivered as Chairman of the Committee on the Inland Revenue [Amendment] Bill 2000 at the Legislative Council meeting on 16 June 2004)

* Speech on Professional Accountants (Amendment) Bill 2004 (First and Second Readings of Members’ Bills)
(First and second readings of Dr. Hon. Eric Li’s private bill at the Legislative Council meeting on 24 March 2004)

* Speech on Professional Accountants (Amendment) Bill 2004 (Resumed Second Reading, Committee Stage and Third Reading of Members’ Bills)
(Speech delivered at the resumed second reading, committee stage and third reading of Dr. Hon. Eric Liis private bill at the Legislative Council meeting on 9 July 2004)

* Speech on Report No. 42 of the Public Accounts Committee
(Speech delivered as Chairman of the Committee at the Legislative Council meeting on 23 June 2004)

* Speech on Report of the Independent Police Complaints Council 2003
(Speech delivered on the Report at the Legislative Council meeting on 30 June 2004)

* Questions raised in the Chief Executive’s Question and Answer Session
(Questions raised in the Chief Executive’s Question and Answer Session at the Legislative Council on 13 July 2004)

* Speech on Valedictory Motion
(Speech delivered on the Valedictory Motion at the Legislative Council meeting on 10 July 2004)


ADIVCE FOR ACTION

Enlist support for governance from middle classes

Dr. Hon. Eric Li: I wonder whether you remember making an unfulfilled promise the last time we met with you. When a colleague asked you about the outcomes of soliciting more opinions from the middle classes and including their opinions in your policy, you said that you were not fully satisfied with the progress of both the research work and the implementation, and that you would like more work done in this respect. I understand it is quite difficult to satisfy the middle classes. For example, legislators representing the commercial sector tend to lobby for policies that are partial to certain trades, while legislators from the grassroots would ask you to address employment difficulties and social security issues. On the contrary, the middle classes have given much but gained little. They enjoy few welfare benefits; they are not used to asking you for favours. Given the results of the research, Mr. Tung, have you come up with any good ways to secure their support for your governance?

Chief Executive: In our attempt to strive for the support of the middle classes, the most important thing is to keep improving our governance. The second thing is to make every effort to draw the middle classes into our consultative mechanism so that they will  actually have the opportunity to participate in political processes and discussions of public affairs. ...The progress of the whole task has been slow. In the next few months, this will be our most important job. And we will hasten the progress. Most importantly, we must give the middle classes in general an impression that in the restructuring economy of the present day, they have the same opportunity as others to open up a new space for themselves. There is a lot to be done.

Dr. Hon. Eric Li: According to my understanding of the middle classes, they have widely divergent views. But whatever their views and drifts are, more and more people think that most middle-class professionals share some so-called core values. I believe that the government will explore what these values are. In many consultative bodies you hear many opinions given by the middle classes, but do their opinions reflect these core values? And can these values find expression in your governance?

Chief Executive: Recently I met and discussed with a group led by Anthony Cheung Bing-leung which concerns itself with core values. It has brought forward some of the core values of todayis Hong Kong which we all identify ourselves with. I also said these core values are our lifeline, so we will and we must safeguard them with determination. It is natural that people who come from different backgrounds or who gained different experiences at different places will view certain core values in different lights. So these are issues that should be more widely discussed within the community, and this I think will contribute to social solidarity. To me, the core values are the lifeline for Hong Kong and we must safeguard them. (Dialogue from the full record of the Chief Executiveis Question and Answer Session at the Legislative Council on 13 July 2004) Enlist support for governance from middle classes


Public Accounts Committee: on Harbour Fest

PAC urges disciplinary action against Mike Rowse

The PAC urges the Administration to consider taking disciplinary action against the Director-General of Investment Promotion, having regard to the gravity of his failure in discharging his duties. (From the speech delivered by Dr. Hon. Eric Li, Chairman of the PAC, at the submission of Report No.42 of the PAC at the Legislative Council meeting on 23 June 2004)

General funding procedure violated

Eric Li, Chairman of LegCois Public Accounts Committee and legislator for the accounting sector, also commented that while many local community organizations have to go through complicated formalities each time they apply for government funding, this general principle had been violated in the funding of the Harbour Fest. (Hong Kong Economic Times, 15 June 2004)

Urging Chief Executive to order thorough check on East Asiais accounts by invoking Audit Ordinance

Yesterday Eric Li, invoking Section 15 of the Audit Ordinance, urged Chief Executive Tung Chee-hwa to order the Director of Audit to conduct a value for money audit on the accounts of the Harbour Fest, then handing over to the LegCo for follow-up action. If prima facie evidence of base motives was found, the case would be handed over to the Independent Commission Against Corruption for investigation.

Li emphasized, “If the audit report revealed some shady entries, we canit just follow the usual ways of handling public affairs. We must take the initiative to investigate how such suspicious entries have come about. That was taxpayersi money. We must check whether it was good value for money!” (Sing Pao, 19 May 2004)

Audit suggested owing to suspicion of “book-cooking”

Eric Li, legislator for the accounting sector, remarked after the meeting that the enormous expenses incurred by the Harbour Fest might invite suspicion that isomebody has cooked the books to blow the whole of the 100 million dollars.i He suggested that the Chief Executive, by invoking the Audit Ordinance, order the Audit Commission to audit the accounts of the related organizations. (Apple Daily, 19 May 2004)

The whole Economic Relaunch Working Group is to blame too

Eric Li agreed, too, that the blame should be laid on the whole Economic Relaunch Working Group. In its meetings, the members have not raised any queries, and even the Secretary for Financial Services and the Treasury Frederick Ma, the senior official in charge of financial affairs, did not bring up any questions. According to Liis analysis, under the accountability system officials are often more or less obsessed with grandiose schemes. He therefore opined that all group members shared responsibility in this issue. As officials with sound moral integrity, they should have come forward to shoulder the responsibility even without being named for censure. (Sing Tao Daily, 27 June 2004)


Observation tour of northeastern China

First time to the northeast: new experience for the elite

Members of business, industry and professional sectors in Hong Kong have travelled widely around the world, and in recent years have become accustomed to investment and interchange involving the mainland. The trip to the three north-eastern provinces, however, was a new experience for many delegation members. Members such as Vincent Cheng, of Hang Seng Bank, and Eric Li, legislator for the accounting constituency, frankly admitted that this was the first time they had set foot in the northeast. This showed that this delegation, organized by the central authorities, was opportune and essential. (Ta Kung Pao, 8 June 2004)

Hong Kong could make up for what the mainland lacks in service industry

Eric Li, legislator for the accounting sector, believed that Hong Kong can supplement what the mainland is lacking in finance and service industries, and that accounting professionals have in Hong Kong have the ability to handle bad debts. (Sing Pao, 7 June 2004)

$5.97 million to be collected from mainland women giving birth in Hong Kong

The HA would take legal action to recover outstanding fees and was exploring ways to improve the mechanism for fee-collection. Yeoh Eng-kiong, Secretary for Health, Welfare and Food, said that in the past three years a total of 24,790 non-resident mainland women have given birth in public hospitals, and among these 739 defaulted on their payments, involving as much as 5.97 million HKD. (Wen Wei Po, 13 May 2004)

Dr. Hon. Eric Li, at the Legislative Council meeting on 24 April 2002, asked a supplementary question: It would seem that children without the right of abode in Hong Kong are not entitled to free education in Hong Kong even though their parents are Hong Kong residents. However, the non-resident wives of Hong Kong residents, who do not have the right of abode in Hong Kong, are entitled to medical services at next to no cost. May I ask whether the Chief Executive of the HA, in exercising the so-called power of approval, has adopted criteria which are entirely different from those of other government departments and which are overly lax?

Dr. Hon. Eric Li: My point is made in the context of comparing with the policy on education. It can be seen clearly from the policy on education that non-Hong Kong residents are not entitled to subsidized education in the SAR. According to my understanding, to a certain extent the financial policies of Hong Kong do not allow for extraterritorial use of Hong Kong’s resources - meaning that the resources cannot be used on non-Hong Kong residents. The criteria adopted in this policy seem to differ from those adopted in the policies of the HA. Is this the case?

Secretary for Health and Welfare: I believe it would be difficult to draw comparisons between different policies, because the objectives of medical services are somewhat different. However, I agree that we should carry out a review in the future.


NEWS DIGEST

Goodbye, LegCo

Eric Li: Bearing away with me not a cloudling

Eric Li, who has announced his decision of giving up re-election, quoted from a poem to express his feelings at parting, “In quietude I depart, bearing away with me not a cloudling.”

Accountancy representative Eric Li, veteran legislator with thirteen years of experience, received a chorus of praises yesterday. Miriam Lau hailed him as the “King of Accounts” in LegCo, and wished to see the iReturn of the Kingi in future LegCo elections. Lui Ming-wah described him as “virtuous and irreplaceable. ” Chairperson Rita Fan expressed her worries that she would not be able to found someone of his calibre in next yearis LegCo to be the Chairperson of the PAC. (Ta Kung Pao, 11 July 2004)

The presence of the “King of Accounts” “strikes fear” into the hearts of officials

A “King” commands in LegCo? Yes, in a sense. He is Eric Li, renowned for his razor-sharp sense in accounting and is therefore crowned by House Committee Chairperson Miriam Lau with the title of “King of Accounts.”

Hon. Miriam Lau said that she learned from the newspapers that two of her colleagues had decided not to run in the forthcoming LegCo elections, namely Eric Li and Law Chi-kwong. People from different camps, however, were still changing their candidacy combinations, so it remained unknown how many of her colleagues would finally part with LegCo and how many would enter the contest. According to Lau, with the Eric Li - AKA “King of Accounts” - chairing the Public Accounts Committee, government officials all trembled with fear upon the mere mention of the three letters: P.A.C. Losing the “King”, she believes, is a terrible loss for LegCo. The LegCo, therefore, should make a note of the contributions of the “King” to LegCo and to the citizens of Hong Kong. Of course the possibility of the “King” finally running in the election could not be ruled out. If so, LegCo would welcome the “Return of the King.” (Wen Wei Po, 11 July 2004)

Li has not lost his way

Eric Li, bidding farewell to LegCo after 13 years of service, likened life in LegCo to a drama. He said with a hint of nostalgia, “After such a long journey, I congratulate myself for not losing my true self. I havenit lost my way.” (Sing Pao, 11 July 2004)

Breakfast Group will continue to function

A new term of LegCo is just around the corner. Some academics expected the independent, middle-of-the-road legislators to assume a more delicate role in the new politically polarized LegCo. But Eric Li, convenor of the Breakfast Group, had announced that he would not seek re-election. He however emphasized that the Breakfast Group would continue to function and would be even more united. It might even evolve into a political party. (ATV News On-line, 27 June 2004)

Which directly elected legislator, instead of Eric Li, can answer questions about goods and services tax?

The Democratic Party suggested that in the 07/08 LegCo elections, 30 out of the 60 directly-elected seats were to be returned by the proportional representation system, ensuring that candidates from the business, industry or professional sectors would have the chance to be elected. But Ann Chiang Lai-wan argued that representatives of functional constituencies could not be replaced by directly-elected legislators. She said, “For example, if I want to ask about goods and services tax, I can seek out Eric Li (accounting sector). But among those directly elected legislators, who can I turn to aside from Eric?” (Ming Pao, 22 April 2004)

Audit Commission Reports should be judged on their professional level

Legislator Eric Li, who had openly opposed Benjamin Tang Kwok-bun taking over as Director of Audit, considered that it was not important whether reports of the Audit Commission contain severe criticisms, but that its reports should be judged on their professional competence and sufficiency of information. Li said that criticism was a political process, and that LegCo is also obliged to criticize the Government for the inadequate deployment of resources by government departments. (The Sun, 22 April 2004)

Eric Li: I am glad to see the truth revealed

Member of the Breakfast Group Eric Li said that when he was working with Cheng Shousan in the Preparatory Committee, Cheng, being a steady and chatty person, often struck up conversations with him and his wife. He was delighted to see Cheng clarify the matter, for biased as some people were, the controversy over the resignation of certain famous talk-show hosts would only be blackened.   Now the truth has made itself known. In Liis opinion, the freedom of speech in Hong Kong had not been curtailed, because more people are actually making public their opinions after the issue broke out. Who said the freedom of speech had been reduced? (Ta Kung Pao, 1 June 2004)

Swaps between officials commonplace

Breakfast Group legislator Eric Li said yesterday that swaps between officials were commonplace in the accountability systems of foreign countries. Swaps would familiarize Arthur Li with more posts, paving his way to become the Chief Secretary or even Chief Executive. Martin Lee, former chairman of the Democratic Party, remarked, “He (Arthur Li) is so bold he may as well take charge of that section (Health, Welfare and Food Bureau).” (Hong Kong Economic Times, 9 July 2004)

Eric Li encourages young people to seize opportunities

(In the experience sharing seminar “Elites on Self-Improvement” co-organized by Ming Pao and the Commerce, Industry and Technology Bureau) Legislator Eric Li said jokingly that he himself is a “negative example,” for he hadnit done muchplanning in his younger days. He went to study in the UK unprepared, but the nonrestrictive studying environment there had a great influence on him. He read many books which he had not intended to read previously, and this has enriched his knowledge and rendered considerable assistance for his future development. That is why, despite his lack of plans, he still managed to build a successful career. “Opportunities are often right under your nose. It depends on whether you can seize them.” He also joked that he sought out the most difficult tasks, for he might not have another opportunity to try them out. He had to grasp every opportunity.

Legislator Eric Li said, “Keep trying, and I will make it.” (Ming Pao, 2 July 2004)

Have one’s eye on the enormous potential on the Mainland

Eric Li, who had studied in the UK in his early years and received his accountant license there, opined that young graduates in Hong Kong must be far-sighted in their job hunting. They should not confine themselves to Hong Kong, which is but a mere speck on the world map, but should rather have their eye on the enormous potential on the Mainland. He remarked that after the signing of the CEPA, the commercial relationship between Mainland and Hong Kong would definitely grow closer. Professionals in the fields of finance and management are relatively scarce in Mainland China, yet these are precisely the two aspects in which Hong Kong enjoys a critical edge. He therefore believed that Hong Kong graduates would be able to achieve a lot on the mainland. (Ta Kung Pao, 27 June 2004)


 

Legislators are not politicians; they should make concrete contributions for Hong Kong

LegCo Accountancy representative Eric Li, who had announced his decision of not running in the LegCo elections in September, commented that Legislative Councillors are politicians but not legislators. He said, for a politician the most important skill is to “target the heart.” Under fierce political rivalry, many legislative councillors are good at keeping their odds of survival within the political circle. With power on their hands but not the corresponding responsibility, they have not, however, been unrealistic in affairs concerning the governance of Hong Kong. (Wen Wei Po, 16 July 2004)

 

 

 

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