This quarter starts with a narrowly focussed Policy Address
delivered on the 6 October 1999. The response from the Public
was luke warm but soon, news about the launch of the successful
TraHK Fund, the Disneyland Theme Park, China's possible entry
to the World Trade Organisation and the hard data providing
evidence that Hong Kong's gradual economic recovery was indeed
abound had actually begun to bring back the 'feel good' factor.
There is also some life, breathe into the otherwise extremely
conservative and modest beginning of the Growth Enterprise
There were also much excitement on the political front. The
District Board Election and the historical abolishment of
the municipal Councils gave political analysts a field day
in offering their various commentaries. The two lower tiers
of our political structure have at last captured the media
limelight for a short while.
As usual, Director of Audit Reports continued to drop bombshells
onto Government quarters. The reports on the untimely departure
of Messrs. Rafel Hui and K S Kwong had further fueled discussions
on the difficulties faced by senior civil servants in the
present political environment. There were also much concerns
expressed from the angle of 'conflict of interests' for senior
officials moving directly into highly-paid jobs created by
the Administration in Semi-Governmental bodies.
The admission by the FS on the existing narrow tax base had
also triggered off speculation on of what new tax he will
bring to life in the forth-coming Budget. It has also been
a busy quarter as far as bills scrutiny is concerned with
HKSA working flat-out with your LegCo representative.
II. Committees and Panels
||Public Accounts Committee (PAC):
||On 13 October 1999 and 17 November 1999, the
Director of Audit tabled two of his headline catching Reports
No. 33A and No. 33 in the Council. The Committee, after holding
public hearings to receive evidence from Controlling Officers,
will meet several times a week throughout the holiday season,
in the hope of finalizing our own independent report on time.
I intend to present the main bilingual PAC Report No. 33 to
LegCo on 26January 2000.
The shorter PAC Report No. 33A was tabled in LegCo on 8 December
1999. In this Report, the Committee has studied the Director
of Audit's follow-up review of the year 2000 (Y2K) problem.
The Committee has also concluded the outstanding Report on
Chapter 5 of the PAC Report No. 32, i.e. "The Government's
Monitoring of Electricity Supply Companies". Despite
of its highly controversial contents, all concerned parties
seemed to have accepted its conclusions and recommendation
||Financial Affairs Panel:
||I was re-elected Deputy Chairman of this Committee
on 7 October 1999.
The Panel held 4 meetings since the last report and the relevant
agenda are attached as Appendix I. On 6 December 1999, the
Financial Secretary (FS) has provided the Panel with a report
on the current economic situation in the third quarter of
1999 and updated forecasts for 1999. The meeting was widely
reported and in particular, the admission by the FS that our
tax base is unacceptably narrow and that he may have to consider
widening it in order to redress the sustained Budget Deficit.
A proposed list of future agenda items is also attached as
Appendix II for reference. The Chief Executive of HKMA will
brief the Panel on his annual performance on 3 January 2000.
||Welfare Services Panel:
||The Panel held 6 meetings since the last report.
The Panel studied the Year 2000 compliance in social welfare
organisations, survey report on street sleepers and the social
welfare subvention system as well as the issues arising from
the review of CSSA.
A special meeting was held to discuss the review of the social
welfare subvention system and the proposed amendments to the
Mental Health Ordinance. Moreover, two Joint meetings with
Panel on Manpower were held to study the Working Group on
research study on Unemployment Benefit Systems.
||Economic Services Panel:
||The Panel held 7 special meetings since the last
report. The Panel discussed the progress of Y2K compliance work
in Government and non-government organisations under the purview
of the Economic Services Bureau. It also studied the measures
to boost competitiveness of Hong Kong International Airport
as well as the study of interconnection and competition in the
Hong Kong electricity supply sector.
Two Special meetings were held to receive academics deputations
and to continue discussion with the Administration on the
Disney Theme Park.
||Information Technology and Broadcasting
||The Panel held 5 special meetings since the last
report. The Panel mainly focused on the progress of the Year
2000 compliance exercise and contingency planning in Government
and Non-Government organisations founded or regulated by Government,
the Entertainment Special Effects Bill as well as the development
of broadband and Internet services in Hong Kong.
It also studied the news reporting, network access charges,
and the Capital Works Reserve Fund Head 710 Computerisation.
||Finance Committee and House Committee:
||There were 5 meetings of Finance Committee and
10 meetings of House Committee (including 2 special House Committee
meetings to receive a briefing on the Disney Theme Park by the
Administration as well as one special Finance Committee meeting
to discuss the financial arrangements regarding capital works
projects of the two municipal councils after the Provision of
Municipal Services (Reorganization) is passed.)
I wrote an article on "Behind Mickey's Mask" in
the December 1999 issue of the Hong Kong Accountant to recap
the difficulties in the scrutiny of this project and state
the position I have taken on the matter.
TD of HKSA was kept informed of progress on all bills on
a weekly basis. The hefty 1998/99 legislative programme dated
6 October is attached as Appendix III.
III. Bill Committees Joined
||Protection of Wages on Insolvency (Amendment)
||I was elected Chairman of this Bills Committee
as a recognised 'neutral' lawmaker on labour issues. The Committee
has held 3 meetings with the Administration to discuss the Bill.
In view of the Bills Committee's suggestion, the Administration
has subsequently accepted member's views and agreed to use
the highest wage level specified in any of the undertaking
given by the employer during the preceding 12 months for calculation
of ex-gratia severance payments from the Fund.
The Administration has also decided to move a Committee stage
amendment to remove the requirement for employer's written
undertaking, i.e. both verbal and written undertakings by
employers will be recognised by the Fund Board.
The Bill was finally passed on 1 December 1999.
||Telecommunication (Amendment) Bill 1999
||There were 4 meetings held since the last report.
This Bill proves to be very controversial but represent a
significant step of the Government in liberalising the telecommunications
market. HKSA had made a submission which is being followed
up. It looks like that the Bill will not get through LegCo
unless there are significant amendments to provide better
check and balance on the 'draconian' powers given to the Administration.
||Electronic Transaction Bill
||The Bills Committee held 10 meetings with the
This Bill seeks to provide a statutory framework for the
conduct of electronic transactions to: (a) give legal recognition
to electronic records and digital signatures used in electronic
transactions; and (b) provide for the establishment of certification
authorities ("CAs") to ensure trust and security
in electronic transactions through the issue of digital certificates
by Cas and the use of public/private key technology.
The Bill is an important measure to promote the development
of electronic commerce in Hong Kong. It can also enable voting
by electronic means and our launch of the high-profiled 'webtrust'
project. HKSA had made a significant submission and after
much hard work and close liaison and co-operation on all sides,
the Bill is now heavily amended in our favor. Other legislators
have remarked that the amended Bill is almost beyond recognition
from its original. To me, this is a classic example of excellent
collaboration of HKSA, your LegCo representative and the Administration
which in the end produced the best desired results.
The Bill will receive its second and third Reading on 5 January
||Arbitration (Amendment) Bill 1999
||There were 3 meetings since the last report.
The purposes of the Bill are to amend the Arbitration Ordinance
(Cap. 341) (the Ordinance) - (a) to give effect to what Hong
Kong has agreed in the "Arrangement Concerning Mutual Enforcement
of Arbitral Awards Between the Mainland and the Hong Kong Special
Administrative Region" (the Arrangement); and (b) to adapt
the Ordinance to bring it into conformity with the Basic Law
and with the status of Hong Kong as a Special Administrative
Region of the People's Republic of China.
Since the refusal of enforcement of Mainland arbitral awards
in Hong Kong and vice versa after 1 July 1997, business and
arbitration communities have expressed grave concerns. Given
the great impact on the commercial world, this Bill warrants
detailed scrutiny urgently.
||Mass Transit Railway Bill
||The Bills Committee held 5 meetings with the
Administration since the last report.
The objective of the Bill provides for - (a) the grant of
a franchise to the MTR Corporation Limited ("the Corporation")
to operate the Mass Transit Railway; (b) the regulation of
the operation of the railway under the franchise; and (c)
the vesting in the Corporation of the whole of the property,
rights and liabilities of the Mass Transit Railway Corporation
Some Members expressed support for the privatisation while
some expressed concern over various matters such as the duration
of the franchise, the fare control mechanism, the granting
MTRCL properly development rights as well as the granting
of property rights for the purpose of calculating the ultimate
value of the MTRC. (since the Bill will grant to the Corporation
an exclusive franchise for a period of 50 years to operate
the MTR and to construct any extension to the railway and
grant to the Corporation to determine its own fares.)
The Committee will still take some time to reach conclusion.
||Subcommittee on Resolution under Section 3
of the Dogs and Cats Ordinance (Cap. 167) and Dogs and Cats
(Amendment) Ordinance 1997 (97 of 1997) Commencement) Notice
||There were another 2 meetings since the last
report. The purpose of the Subcommittee is to seek the Legislative
Council's approval of the Dangerous Dogs Regulation ("the
Regulation") which provides for the control and regulation
of fighting dogs, large dogs and known dangerous dogs. I received
a number of representations from dog-owners within the Accountancy
Functional Constituent. I think the Administration is ready
to make some concession to ally their concerns. The deliberation
of this Bill is at its final stages.
||Subcommittee on Securities and Futures Bill
||The Subcommittee is to study the major reform
proposals under the Securities and Futures Bill.
It has suspended all works since the last report pending
the follow-up action by the Administration to provide a summary
of its response to representations received in respect of
the proposals under the Bill. In the meantime, I understand
dialogue between HKSA and the Administration has been very
||Subcommittee on the Five Resolution made under
Section 4 of the Mutual Legal Assistance in Criminal Matters
Ordinance (Cap. 525) - Mutual Legal Assistance
in Criminal Matters (United States of America) Order
||There was only 1 meeting since the last report.
In response to HKSA's representations, the Administration confirmed
that the various provisions in the Mutual Legal Assistance in
Criminal Matters Bill previously proposed by us are not modified
by the Order and will apply to US requests. I have also passed
the Administration's response to our points raised on double
criminality and the vagueness and potential scope of the offences
covering export control etc. to the TD. It seems to me that
we should have no major objection to the Order after clarification
In the light of the clarifications provided by the Administration,
the Subcommittee suggests that the US Order be supported.
Finally, the US Order was passed at the Council meeting on
10 November 1999.
IV. Motion Debate
List attached as Appendix IV. Speeches on my Web Page and
highlights will be published in my circulars to members.
I have asked 5 questions, since the last report which are
attached as Appendix V. The relevant HKSA Committees may wish
to be advised and to consider the replies further.
VI. General Political Background
At the dawn of the new Millennium, I wrote two articles in
my LegCo column for the Hong Kong Accountant. The first, titled
'Hong Kong's Changing Faces', appeared in the just released
November issue. This article mapped out my views on the strategic
position of Hong Kong's economy in the coming decade. The
second, provisionally titled 'The Millennium Shifts', highlighted
some areas where I think a paradigm shift is taking place
and that it will eventually affects our practice environment.
This article will appear in the January 2000 issue.
In brief, I think investments in information technology and
infrastructural projects will gradually replace property development
as the main drive of our economy. Without bricks and mortar
as collateral, bankers and investors are bound to take greater
credit risks. New attitude must develop to consider investing
in people and higher means of productivity rather than capital
assets and companies with predictable trading track records.
Regulators will shift emphasis of their works from enforcing
compliance work to requiring greater disclosure of information.
Government will then legislate in a predictable manner: more
power, more discretion and absolutely no responsibility. The
responsibilities will be shifted to professionals and market
intermediaries, e.g. bankers and sponsors, with highly codified
practices, legislation and all sorts of indemnities. There
will also be a mis-match of our tax net with the newly emerging
economic activities i.e. e-commerce etc. away from the dependency
on property development. There will be much challenge ahead
in finding the right social contact for regulators, company
management, professional / intermediaries and the investors
I believe all eyes will be on the Budget right after the
New Year. The clouds of Y2000 still hang over our heads until
then. The legislative programme has guaranteed harder works
ahead in the next quarter. The theme outlined in the foregoing
paragraph will keep recurring and we must stay alert and vigilant
as a profession thrusted right at the centre of these paradigm