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23rd LEGCO REPORT TO HKSA COUNCIL By Hon. Eric K.C. Li


I. Highlights
To present orally.
II. Committees and Panels
@ 1. Public Accounts Committee (PAC):
@ @ The Committee held a total 11 meetings and 7 days of public hearings before I tabled the PAC Report No. 36 at LegCo on 4 July 2001. During the public hearings, the Committee heard evidence from a total of 39 witnesses, including 7 Bureau Secretaries and 12 Heads of Department.

Examination of two subjects (i.e. PAC Report 36, Chapter 1 "Follow-up Review on Control of Utility Openings" and Chapter 6 "Review of the Hong Kong Sports Development Board") has continuing. We have held hearings to receive evidence on these two subjects on 3 October 2001. To allow ourselves more time to consider the various issues involved and the additional information, we have decided to defer a full report on these two subjects and will resume proceeding and public hearings on 3 October 2001.

@ 2. Financial Affairs Panel:
@ @ The Panel held 2 meetings to date and the relevant agenda are attached as Appendix I.

On 3 July 2001, the Panel invited academics and experts to give their views on the subject "Proper use of the fiscal reserves". Professor Y C Jao, Richard Y C Wong, Tang Shu-hung, Stephen Y L Cheung etc. attended and expressed their views on this issue.

A special meeting will be held on 26 September 2001 to consider the item on "Reviving the economy" as well as the consultation document "A Broader-based Tax System for Hong Kong?"

@ 3. Economic Services Panel:
@ @ The Panel held only 1 meeting since the last report.

The Panel focused on the development of the helicopter industry in Hong Kong as well as the operation of the airport during and after typhoon Utor.

@ 4. Information Technology and Broadcasting Panel:
@ @ The Panel held 2 meetings to date.

The Panel studied the progress of the Cyberport project and the issues relating to digital divide - Administration's response to reviews expressed by members and deputations at the meeting on 14 May 2001.

There was also a special meeting to discuss the licensing of Third Generation (3G) mobile services.

@ 5. Education Panel:
@ @ The Panel held 2 meetings to date.

The Panel mainly focused on the relief measures for the 1999-2001 Secondary School Places Allocation.

A special meeting was also held to study Consultation Document on Arrangements for Implementing the "Through-train" Mode, library grant for kindergartens and child care centres and the review of Kindergarten Subsidy Scheme.

@ 6. Finance Committee and House Committee:
@ @ There were 4 (including a special meeting to discuss the insurance crisis that threatens to ground airlines) meetings of Finance Committee and 4 meetings of House Committee. TD of HKSA were kept informed of progress on all Bills on a weekly basis.
III. Bill Committees Joined
@ 1. Inland Revenue (Amendment) Bill 2000
@ @ The Bills Committee is now waiting on the Administration's request and subject to the availability of a Bills Committee slot at the time.
@ 2. Drug Trafficking and Organized Crimes (Amendment) Bill 2000
@ @ There was only 1 meeting held since the last report on the 4 July 2001.

Some Government's Committee Stage Amendments were presented to the Bills Committee in that meeting which the Committee had rejected in principle. We understand that the Administration will hold further consultation with the affected parties.

@ 3. Bills Committee on Securities and Futures Bill and Banking (Amendment) Bill 2000
@ @ There were 14 meetings held to date.

The Committee is now entering clause-by-clause examination of the Securities and Futures Bill and the Banking (Amendment) Bill 2000. The Committee will have to take some time to reach conclusion. I am liaising with the Secretariat to co-ordinate the profession's response to this complex Bill with wide-ranging implications.

@ 4. Bills Committee on Dutiable Commodities (Amendment) Bill 2001
@ @ The Bills Committee held only 1 meeting with the Administration since the last report. The objective of the Bill is to amend the Dutiable Commodities Ordinance (Cap. 109) (the Ordinance) so as to provide a legal basis for the use of a specified electronic service to process applications for dutiable commodities permits.

The Bills Committee is in support of the intent to promote the greater use of EDI service in processing trade-related documents to enhance Hong Kong's competitiveness. The Bills Committee therefore supports, in principle, the present Bill which seeks to introduce a legal framework for the use of EDI in processing DCP applications via the service of Tradelink. Implementation details of EDI for DCP are not part of the Bill. Even upon the passage of the Bill, trades will not be forced to use EDI for DCP immediately, and they will have a choice to use the paper mode until a certain date to be determined by the Administration and approved by the Legislative Council by means of subsidiary legislation.

The Bill was finally passed by the LegCo on 11 July 2001.

@ 5. Chief Executive Election Bill
@ @ The Bills Committee held a total of 15 meetings with the Administration.

It has received written submission from 80 organisations and individuals, and met representatives from 6 of the organisations. A total of 59 individuals and organizations also appeared before the Bills Committee to present their views. The Bills Committee had also invited views on clause 4 of the Bill from the Hong Kong Bar Association, the Law Society of Hong Kong, the Faculty of Law of the University of Hong Kong and the School of Law of the City University of Hong Kong.

The Bill will have to be rushed through in July 2001 so as to enable the preparatory works of the Chief Executive Election in the first quarter of 2002. The Bill was finally passed in a stormy marathon session of 11 July 2001.

@ 6. Banking (Amendment) Bill 2001
@ @ There was only 1 meeting held since the last report. The objective of the Bill is to improve the operation of the Banking Ordinance (Cap. 155) (BO) by providing for: -
  1. the control over Authorized Institutions' places of business;

  2. the regulation of Internet advertisements for deposits;

  3. the maintenance by Authorized Institutions (AIs) of adequate systems of control to ensure the fitness and properness of their "managers";

  4. the establishment of local representative office by non-deposit-taking banks;

  5. the rationalization of the availability of the general defence under section 126 of BO;

  6. the notification by Monetary Authority (MA) of his decision on an application to use the name "bank" and the appeal from MA's decision to the Chief Executive in Council;

  7. the requirement that the relevant shares of a controller, to whom MA has served a notice of objection, shall be transferred to a nominee of MA; and

  8. the enactment of a redrafted section 71 of BO relating to the approval of chief executives and directors by MA.

@ 7. Mandatory Provident Fund Schemes (Amendment) Bill 2001
@ @

There was 2 meetings held since the last report. The Bill seeks to:

  1. to introduce a number of technical amendments to the Mandatory Provident Fund Schemes Ordinance (Cap. 485) to better protect the interests of members of mandatory provident fund (MPF) schemes and enhance the effective operation of the MPF System; and

  2. to confer on the Mandatory Provident Fund Schemes Authority (MPFA) certain functions and powers to facilitate its regulation of MPF schemes.

The Bill also proposes consequential and other technical amendments to the Mandatory Provident Fund Schemes (General) Regulation (Cap. 485 sub. leg.). These technical amendments include those relating to strengthening the mechanism of charging contribution surcharge when employers fail to pay contributions and providing flexibility to employers in making contributions in respect of casual employees.

@ 8. Companies (Corporate Rescue) Bill
@ @ The Bills Committee has held only 1 meeting. It seeks to give effect to most of the recommendations contained in the Report on Corporate Rescue and Insolvent Trading issued by the Law Reform Commission (LRC) of Hong Kong.

The Bill proposes to inaugurate the new regime of provisional supervision and voluntary arrangements. The central idea is to stay all proceedings (with some specified exceptions) against at insolvent company so as to enable an independent professional appointed as a provisional supervisor to prepare a proposal which could salvage the company or part of its undertaking, or achieve the more advantageous realization of its assets or satisfaction of its debts and liabilities. The period of stay ("moratorium") would initially be 30 days which could be extended by the court up to six months upon application by the provisional supervisor.

Complementary to the new regime of moratorium is the introduction of the concept of "insolvent trade" (Clause 8 of Schedule 8). When a company is unable to pay its debts when they become due and the directors or manager of that company knowing that the company cannot avoid insolvency continue to incur debts, each of them could, upon the application of the liquidator in the subsequent liquidation of the company, be declared by the court to be liable for insolvent trading, and be ordered to pay such compensation to the company as the court may think proper in all the circumstances of the case. The Administration believes that this provision could encourage directors and senior management of a corporation to act on insolvency earlier rather than later.

V. Motion Debate

List attached as Appendix II. In addition, I have written a 'Letters to Hong Kong' on the 'Time to Rebuild' on 16 September 2001 for the RTHK. Speeches on my Web Page and highlights will be published in my circulars to members.

VI. Questions

I have asked 3 questions - (questions for the improvement of the curriculum of secondary schools with a view to improving young people's ability to cope with daily lives, appointment of young people to advisory boards and committees as well as statistics on flats produced and put up for sale by various organizations.) since the last report which are attached as Appendix III. The relevant HKSA Committees may wish to be advised and to consider the replies further.

VII. General Political Background

To present orally.

 

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