LEGISLATIVE COUNCIL ― 24 February 2021 3727

OFFICIAL RECORD OF PROCEEDINGS

Wednesday, 24 February 2021

The Council met at Eleven o'clock

MEMBERS PRESENT:

THE PRESIDENT THE HONOURABLE ANDREW LEUNG KWAN-YUEN, G.B.M., G.B.S., J.P.

THE HONOURABLE ABRAHAM SHEK LAI-HIM, G.B.S., J.P.

THE HONOURABLE YU-YAN, G.B.S., J.P.

THE HONOURABLE KIN-FUNG, G.B.S., J.P.

THE HONOURABLE WONG TING-KWONG, G.B.S., J.P.

THE HONOURABLE STARRY LEE WAI-KING, S.B.S., J.P.

THE HONOURABLE CHAN HAK-KAN, B.B.S., J.P.

THE HONOURABLE CHAN KIN-POR, G.B.S., J.P.

DR THE HONOURABLE PRISCILLA LEUNG MEI-FUN, S.B.S., J.P.

THE HONOURABLE WONG KWOK-KIN, S.B.S., J.P.

THE HONOURABLE MRS LAU SUK-YEE, G.B.S., J.P.

THE HONOURABLE PAUL TSE WAI-CHUN, J.P.

THE HONOURABLE MICHAEL TIEN PUK-SUN, B.B.S., J.P.

3728 LEGISLATIVE COUNCIL ― 24 February 2021

THE HONOURABLE STEVEN HO CHUN-YIN, B.B.S.

THE HONOURABLE FRANKIE YICK CHI-MING, S.B.S., J.P.

THE HONOURABLE YIU SI-WING, B.B.S.

THE HONOURABLE MA FUNG-KWOK, G.B.S., J.P.

THE HONOURABLE CHAN HAN-PAN, B.B.S., J.P.

THE HONOURABLE LEUNG CHE-CHEUNG, S.B.S., M.H., J.P.

THE HONOURABLE ALICE MAK MEI-KUEN, B.B.S., J.P.

THE HONOURABLE KWOK WAI-KEUNG, J.P.

THE HONOURABLE CHRISTOPHER CHEUNG WAH-FUNG, S.B.S., J.P.

THE HONOURABLE ELIZABETH QUAT, B.B.S., J.P.

THE HONOURABLE CHEUNG-KONG, G.B.S., J.P.

THE HONOURABLE POON SIU-PING, B.B.S., M.H.

DR THE HONOURABLE CHIANG LAI-WAN, S.B.S., J.P.

IR DR THE HONOURABLE LO WAI-KWOK, S.B.S., M.H., J.P.

THE HONOURABLE CHUNG KWOK-PAN

THE HONOURABLE JIMMY NG WING-KA, B.B.S., J.P.

DR THE HONOURABLE JUNIUS HO KWAN-YIU, J.P.

THE HONOURABLE HO-DING

THE HONOURABLE SHIU KA-FAI, J.P.

LEGISLATIVE COUNCIL ― 24 February 2021 3729

THE HONOURABLE WILSON OR CHONG-SHING, M.H.

THE HONOURABLE YUNG HOI-YAN, J.P.

DR THE HONOURABLE PIERRE CHAN

THE HONOURABLE CHAN CHUN-YING, J.P.

THE HONOURABLE CHEUNG KWOK-KWAN, J.P.

THE HONOURABLE LUK CHUNG-HUNG, J.P.

THE HONOURABLE LAU KWOK-FAN, M.H.

THE HONOURABLE IP-KEUNG, B.B.S., M.H., J.P.

DR THE HONOURABLE CHENG CHUNG-TAI

THE HONOURABLE VINCENT CHENG WING-SHUN, M.H., J.P.

THE HONOURABLE TONY TSE WAI-CHUEN, B.B.S., J.P.

PUBLIC OFFICERS ATTENDING:

THE HONOURABLE KIN-CHUNG, G.B.M., G.B.S., J.P. CHIEF SECRETARY FOR ADMINISTRATION

THE HONOURABLE PAUL CHAN MO-PO, G.B.M., G.B.S., M.H., J.P. FINANCIAL SECRETARY

THE HONOURABLE TERESA CHENG YEUK-WAH, G.B.S., S.C., J.P. SECRETARY FOR JUSTICE

THE HONOURABLE WONG KAM-SING, G.B.S., J.P. SECRETARY FOR THE ENVIRONMENT

3730 LEGISLATIVE COUNCIL ― 24 February 2021

DR THE HONOURABLE LAW CHI-KWONG, G.B.S., J.P. SECRETARY FOR LABOUR AND WELFARE

THE HONOURABLE JOHN LEE KA-CHIU, S.B.S., P.D.S.M., J.P. SECRETARY FOR SECURITY

THE HONOURABLE FAN, J.P. SECRETARY FOR TRANSPORT AND HOUSING

PROF THE HONOURABLE SIU-CHEE, J.P. SECRETARY FOR FOOD AND HEALTH

THE HONOURABLE TANG-WAH, G.B.S., J.P. SECRETARY FOR COMMERCE AND ECONOMIC DEVELOPMENT

THE HONOURABLE MICHAEL WONG WAI-LUN, J.P. SECRETARY FOR DEVELOPMENT

THE HONOURABLE YUN-HUNG, J.P. SECRETARY FOR

THE HONOURABLE TAK-KUEN, J.P. SECRETARY FOR THE CIVIL SERVICE

THE HONOURABLE WING-HANG, J.P. SECRETARY FOR INNOVATION AND TECHNOLOGY

THE HONOURABLE KWOK-WAI, I.D.S.M., J.P. SECRETARY FOR CONSTITUTIONAL AND MAINLAND AFFAIRS

THE HONOURABLE YING-WAI, J.P. SECRETARY FOR HOME AFFAIRS

THE HONOURABLE CHING-YU, J.P. SECRETARY FOR FINANCIAL SERVICES AND THE TREASURY

LEGISLATIVE COUNCIL ― 24 February 2021 3731

CLERK IN ATTENDANCE:

MR KENNETH CHEN WEI-ON, S.B.S., SECRETARY GENERAL

3732 LEGISLATIVE COUNCIL ― 24 February 2021

PRESIDENT (in ): Good morning. This is the first Legislative Council meeting in the Year of the Ox. I wish you all good health and every success, and the smooth conduct of Legislative Council business in the Year of the Ox. I also wish that will come out of the epidemic expeditiously, for the people to live and work in peace and contentment as well as the business of all trades to thrive.

LAYING OF PAPERS ON THE TABLE OF THE COUNCIL

The following papers were laid on the table under Rule 21(2) of the Rules of Procedure:

Subsidiary Legislation Legal Notice No.

Registration of Persons (Application for New Identity Cards) Order 2018 (Amendment) Order 2021 ... 16 of 2021

Mutual Legal Assistance in Criminal Matters (Mongolia) Order (Commencement) Notice ..... 17 of 2021

Prevention and Control of Disease (Compulsory Testing for Certain Persons) (Amendment) Regulation 2021 ...... 18 of 2021

Dangerous Goods (Control) Regulation ...... 20 of 2021

Dangerous Goods (Application and Exemption) Regulation 2012 (Amendment) Regulation 2021 ...... 21 of 2021

Protection of Endangered Species of Animals and Plants Ordinance (Amendment of Schedules 1 and 3) Order 2021 ...... 22 of 2021

Toys and Children's Products Safety Ordinance (Amendment of Schedules 1 and 2) Notice 2021 ...... 23 of 2021

Compulsory Quarantine of Certain Persons Arriving at Hong Kong (Amendment) Regulation 2021 ...... 24 of 2021

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Prevention and Control of Disease (Disclosure of Information) (Amendment) Regulation 2021 ..... 25 of 2021

Compulsory Quarantine of Persons Arriving at Hong Kong from Foreign Places (Amendment) Regulation 2021 ...... 26 of 2021

Prevention and Control of Disease (Requirements and Directions) (Business and Premises) (Amendment) Regulation 2021 ...... 27 of 2021

Prevention and Control of Disease (Prohibition on Group Gathering) (Amendment) Regulation 2021 ...... 28 of 2021

Prevention and Control of Disease (Regulation of Cross-boundary Conveyances and Travellers) (Amendment) Regulation 2021 ...... 29 of 2021

Prevention and Control of Disease (Wearing of Mask) (Amendment) Regulation 2021 ...... 30 of 2021

Other Papers

Hong Kong Council for Accreditation of Academic and Vocational Qualifications Annual Report 2019-20 (including Financial Report and Independent Auditor's Report)

Vocational Training Council Annual Report and Financial Report 2019/2020 (including Independent Auditor's Report)

Report of the Public Accounts Committee on the Reports of the Director of Audit on the Accounts of the Government of the Hong Kong Special Administrative Region for the year ended 31 March 2020 and the Results of Value for Money Audits (Report No. 75) (February 2021―P.A.C. Report No. 75)

3734 LEGISLATIVE COUNCIL ― 24 February 2021

The Legislative Council Commission Report on the Activities 2019-2020 (including Statement of Accounts and Report of the Director of Audit)

Estimates for the year ending 31 March 2022 Volume I―General Revenue Account (not including the Consolidated Summary of Estimates, the General Revenue Account―Summary, and the Revenue Analysis by Head) Volume II―Fund Accounts

Report No. 12/20-21 of the House Committee on Consideration of Subsidiary Legislation and Other Instruments

WRITTEN ANSWERS TO QUESTIONS

Charitable foundations and charities

1. MR ABRAHAM SHEK (in Chinese): President, the Court of Final Appeal handed down a judgment on 18 May 2015, which held that the Chinachem Charitable Foundation ("the Foundation") was to hold the estate of the late Mrs Nina WANG ("the estate") as a trustee; moreover, the Secretary for Justice and the Foundation's Board of Governors were required to formulate an administration scheme for the estate, including the establishment of a supervisory managing organization, to ensure that the estate would be used for charitable purposes in accordance with the testamentary intention of Mrs WANG. Nevertheless, the judgment has not yet been fully implemented since it was handed down over five years ago. On the other hand, "charity" or "charitable purpose" are not defined in the existing legislation, nor is there dedicated legislation which governs charities and their use of donations. In this connection, will the Government inform this Council:

(1) whether it will, in the light of the current serious unemployment situation in Hong Kong, recommend that the Foundation's Board of Governors set up an unemployment assistance scheme to provide assistance to members of the public who have been affected by the epidemic; if so, of the details; if not, the reasons for that;

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(2) whether it will consider enacting dedicated legislation for the Foundation with a view to monitoring and regulating its operation more effectively; if so, of the details; if not, the reasons for that; and

(3) given that there are currently about 9 200 charities in Hong Kong, and tax-exempt donations amounted to as high as $12.7 billion in 2019, whether the Government will enact dedicated legislation so as to regulate charities more comprehensively and effectively; if so, of the details; if not, the reasons for that?

SECRETARY FOR JUSTICE (in Chinese): President, in relation to the estate of the late Mrs Nina WANG ("Estate"), I provided a detailed oral response at the Legislative Council on 16 December 2020 about the latest developments regarding the scheme of administration ("Scheme") and the work of the interim administrators.

The Secretary for Justice, as the protector of charities, is necessarily a party to charity proceedings and represents the beneficial interest or objects of the charity. The Department of Justice ("DoJ") has been actively following up the blueprint of the Scheme as laid down in the judgment of the Court of Final Appeal dated 18 May 2015 ("CFA Judgment"). Yet it must be emphasized that the relevant legal proceedings could be taken forward in a reasonable time only with the cooperation of all parties, but not just the Secretary for Justice as necessarily a party to charity proceedings, and their active follow-up with the Court's directions and orders.

Except otherwise prescribed by law or order by the Court, charities operate autonomously under their own governing articles and in accordance with their own rules or regulations, and decide the manner in which the public is to be informed about the relevant matters. The role of the Secretary for Justice is to protect charitable interests but the Secretary for Justice does not participate in a charity's decision and arrangement to make donations to others for charitable purposes, and has no power to direct any charity to make donations.

In relation to Mr Abraham SHEK's questions, I now reply as follows:

(1) As aforementioned, even when the Court has approved the Scheme and appointed members to the supervising managing organization, the Secretary for Justice has no power to direct the Chinachem 3736 LEGISLATIVE COUNCIL ― 24 February 2021

Charitable Foundation Limited ("Foundation") or the Chinachem Group to make donations for charitable purposes, including providing unemployment assistance to members of the public who have been affected by the epidemic.

(2) DoJ has been actively following up the blueprint of the Scheme as laid down in the CFA Judgment. An application was made to the Court on 29 March 2019 in respect of the propriety of the Scheme proposed by DoJ and details thereof, in order to seek the Court's determination or directions for DoJ to proceed to complete the remaining tasks. The Scheme has already provided a monitoring mechanism for the Foundation, which includes the setting up of a supervisory managing organization to monitor the Foundation as trustee. As such, there is no need to enact separately a dedicated ordinance to monitor the operation of the Foundation.

Currently, the administration of the Estate is vested with the interim administrators appointed by the Court. DoJ has also filed a caveat against a grant of probate or administration to preserve the status quo of the Estate pending a scheme to be set up and sanctioned by the Court. DoJ will continue to actively pursue the relevant legal proceedings in relation to the Scheme to ensure the early preparation and implementation of the Scheme, and to handle the Estate in accordance with the wishes of the late Mrs Nina WANG. DoJ will also continue to actively follow up the detailed arrangements for the implementation of the will, including handling the court proceedings already commenced, and closely monitoring the management and preservation of the Estate with a view to protecting and safeguarding the relevant charitable interest.

The Court has fixed a directions hearing on 26 May 2021. Given that the relevant legal proceedings have already commenced, it is inappropriate for us to publicly discuss any further details.

(3) The Law Reform Commission ("LRC"), chaired by the Secretary for Justice, published its Report on Charities ("the LRC Report") in December 2013, which made a number of recommendations for reform for more comprehensive and effective regulations of charitable organizations, including: (i) there should be a clear LEGISLATIVE COUNCIL ― 24 February 2021 3737 statutory definition of charitable purposes; (ii) all charitable organizations which (1) solicit from the public for the donation of cash or its equivalent; and/or (2) have sought tax exemption should be subject to the requirement of registration; (iii) a set of specifically formulated financial reporting standard should be adopted for charities in Hong Kong, and the Government should work with the professional accounting body/bodies to formulate this standard; (iv) the Government should ensure that tax-exempt charities make information about their operations available to the public by publishing certain documents, such as their financial statements and activities' reports, on their websites; (v) applicants for different types of charitable fundraising licences or permits should be required to disclose the charity's background and activities, the objective of the charitable fundraising, the use of the funds collected, and the charity's accounts for the most recent accounting year.

The publication of the LRC Report marks the completion of LRC's study of the relevant subject. The LRC Report was then be passed to the Government for the relevant Policy Bureau to consider whether and how to implement the recommendations. In fact, the LRC Report has already been included as an outstanding item for discussion of the Legislative Council Panel on Welfare Services. Members who are concerned with the implementation progress of a specific LRC report may request the relevant Panel to follow up with the responsible bureau.

We have consulted the ("HAB") regarding the implementation progress of the LRC Report. HAB indicates that the recommendations in the LRC Report are relevant to the purviews of various government bureaux and departments. Since many recommendations in the LRC Report carry significant implications on charities in Hong Kong in terms of their definition and operation, the Government needs to consider the recommendations thoroughly and carefully. HAB points out that it has been assigned to coordinate inputs from relevant bureaux and departments in formulating a response to LRC's recommendations for the Government's overall consideration. According to HAB, it has been actively following up the coordination with a view to formulating a response for the Government's consideration as soon 3738 LEGISLATIVE COUNCIL ― 24 February 2021

as possible. In the process of coordinating inputs from relevant bureaux and departments, HAB will make reference to the improvement measures recommended in the Director of Audit's Report No. 68 ("Audit Report") as well as in the Public Accounts Committee Reports No. 68 and 68A ("PAC Reports").

With reference to the recommendations in the LRC Report, the Audit Report as well as the PAC Reports, the Government introduced by phases since 1 August 2018 and 1 April 2019 and put in place a series of administrative measures relating to charitable fund-raising activities.

Importation of labour

2. MR POON SIU-PING (in Chinese): President, persons who possess special skills, knowledge or experience of value to but not readily available in Hong Kong may apply to come to work in Hong Kong under the General Employment Policy ("GEP") (which is not applicable to Chinese residents of the Mainland of China) or the Admission Scheme for Mainland Talents and Professionals ("ASMTP") (which is applicable to Chinese residents of the Mainland of China). There have been comments that despite the sharp deterioration of the employment market in recent months, the Government has not tightened up the criteria for vetting and approval of the applications for importation of labour. For instance, while hundreds of local pilots have been dismissed, the Government has still continued to issue employment visas to non-local pilots, which is in contravention of the policy of safeguarding priority employment of Hong Kong people. In this connection, will the Government inform this Council:

(1) of the respective numbers of applications made under GEP and ASMTP for (i) visa/entry permit and (ii) extension of stay that were received, approved and rejected by the Immigration Department ("ImmD") in each of the years from 2018 to 2020, with a breakdown by industry, job type and range of monthly salary; if there were rejected applications, of the reasons for that; and

LEGISLATIVE COUNCIL ― 24 February 2021 3739

(2) given the serious unemployment problem in Hong Kong at present, whether ImmD has communicated with the Labour Department in processing the aforesaid applications, so as to ensure that the relevant arrangements are in line with the policy of safeguarding priority employment of Hong Kong people; if so, of the details; if not, the reasons for that?

SECRETARY FOR SECURITY (in Chinese): President, it has been the Government's established policy to uphold priority employment of the local workforce. Only overseas and Mainland professionals who possess special skills, knowledge and/or experience of value to and not readily available in Hong Kong are eligible to apply to the Immigration Department ("ImmD") for employment in Hong Kong under the General Employment Policy ("GEP") or the Admission Scheme for Mainland Talents and Professionals ("ASMTP") respectively. Both schemes are non-sector specific. Non-local professionals who wish to come to work in Hong Kong via the above admission schemes will be considered only if they meet the following main criteria:

(a) having a good education background, normally a first degree in the relevant field;

(b) having a confirmed offer of employment and being employed in a job relevant to their academic qualifications or work experience that cannot be readily taken up by the local workforce; and

(c) the remuneration package is broadly commensurate with and not inferior to the local prevailing market level.

In processing each application, ImmD will critically examine whether the applicant meets the specific eligibility criteria under the admission scheme concerned and the normal immigration requirements in accordance with relevant legislation and policies. ImmD will take into account the individual circumstances of each application, so as to ensure that only applicants who meet the relevant immigration policies will be admitted into or permitted to stay in Hong Kong for employment. In addition, ImmD will consult the Labour Department ("LD"), other relevant government departments or professional bodies on individual cases as necessary.

3740 LEGISLATIVE COUNCIL ― 24 February 2021

Regarding Mr POON Siu-ping's question, in consultation with ImmD and LD, our consolidated reply is as follows:

(1) The numbers of new applications for employment visas/entry permits and applications for extension of stay under GEP and ASMTP which were received and approved by ImmD from 2018 to 2020 are tabulated as follows:

Immigration scheme/policy GEP ASMTP Year Number of Number of Number of Number of Type of Type of applications applications applications applications applications applications received approved received approved New 44 963 41 592 New 15 623 13 768 2018 Extension Extension 23 382 22 542 6 329 6 246 of stay of stay New 45 288 41 289 New 16 413 14 053 2019 Extension Extension 22 484 22 159 6 493 6 353 of stay of stay New 17 688 14 617 New 9 026 6 995 2020 Extension Extension 20 457 19 323 5 568 5 342 of stay of stay

Note:

The applications approved in a year may not correspond with the applications received in the same year.

The statistics on applications approved for admission into Hong Kong under GEP and ASMTP from 2018 to 2020 by industry/sector and monthly remuneration of applicants are tabulated as follows:

Immigration scheme/policy Industry/Sector GEP ASMTP 2018 2019 2020 2018 2019 2020 Financial Services 5 057 4 719 2 448 2 141 2 307 1 498 Commerce and 7 511 5 834 2 325 805 832 661 Trade Academic 4 961 4 670 2 158 2 449 2 382 1 720 Research and Education Recreation and 5 180 6 534 1 189 412 347 55 Sports LEGISLATIVE COUNCIL ― 24 February 2021 3741

Immigration scheme/policy Industry/Sector GEP ASMTP 2018 2019 2020 2018 2019 2020 Engineering and 1 187 1 567 1 085 553 691 971 Construction Information 1 381 1 655 652 438 501 426 Technology Arts/Culture 3 439 5 417 556 4 607 4 042 453 Legal Services 464 486 174 109 138 62 Others 12 412 10 407 4 030 2 254 2 813 1 149 (including aviation-related applications) Total 41 592 41 289 14 617 13 768 14 053 6 995

Monthly Immigration scheme/policy remuneration GEP ASMTP (HK$) 2018 2019 2020 2018 2019 2020 Below $20,000 10 238 13 813 2 293 5 570 6 023 1 834 $20,000 to $39,999 13 935 12 547 5 660 4 323 4 181 2 935 $40,000 to $79,999 10 585 9 312 4 038 2 556 2 565 1 559 $80,000 or above 6 834 5 617 2 626 1 319 1 284 667 Total 41 592 41 289 14 617 13 768 14 053 6 995

The numbers of applications for employment visas/entry permits and extension of stay under GEP and ASMTP which were rejected, withdrawn or could not be processed further from 2018 to 2020 are tabulated as follows:

Immigration scheme/policy GEP ASMTP

Year further further Total Total Type of Type of Rejected Rejected Withdrawn/ Withdrawn/ applications applications Could not be Could not be processed processed New 921 1 170 2 091 New 249 1 240 1 489 2018 Extension Extension 8 77 85 2 72 74 of stay of stay 3742 LEGISLATIVE COUNCIL ― 24 February 2021

Immigration scheme/policy GEP ASMTP

Year further further Total Total Type of Type of Rejected Rejected Withdrawn/ Withdrawn/ applications applications Could not be Could not be processed processed New 1 147 2 633 3 780 New 365 2 028 2 393 2019 Extension Extension 12 157 169 0 118 118 of stay of stay New 910 2 657 3 567 New 415 1 683 2 098 2020 Extension Extension 4 121 125 0 229 229 of stay of stay

Note:

The applications rejected, withdrawn or could not be processed further in a year may not correspond with the applications received in the same year.

The common reasons for refusal include:

(a) The employer is unable to demonstrate that the position concerned cannot be readily taken up by a local professional;

(b) The remuneration package offered is not commensurate with the prevailing market level;

(c) The applicant does not have adequate academic qualifications or experience;

(d) Doubtful operating or financial situation of the employing company; or

(e) Doubtful purpose of application.

ImmD does not maintain other breakdown statistics requested in the question.

(2) As stated above, ImmD has all along been vetting applications from non-local professionals for entry for employment in Hong Kong in a rigorous manner. ImmD will only consider applications under GEP LEGISLATIVE COUNCIL ― 24 February 2021 3743 and ASMTP from professionals who meet the specific eligibility criteria under the relevant admission schemes, including being employed in a job that "cannot be readily taken up by the local workforce".

The business nature varies from sector to sector, and the demands for talents are also different. In determining whether the position involved in a new application "cannot be readily taken up by the local workforce", ImmD will make reference to information provided by relevant government departments or professional bodies as necessary to ensure that the application concerned is consistent with the respective objectives of the admission schemes. ImmD will also require the employing company to provide justifications for hiring the applicant and furnish proof on reasons for failing to recruit a local professional. The company must also provide a written declaration to confirm that genuine efforts have been made to recruit suitable local candidate without success. If ImmD needs further information about the manpower availability of the market for the relevant position, the employing company will also be required to provide recruitment details and documentary proofs on the position concerned, including recruitment advertisements published, number of local applicants, records of recruitment interviews and results, etc.

To uphold priority employment of local workers, ImmD will also consult LD on applications for importation of workers offering wage levels significantly lower than those of similar job titles in the labour market; applications for importation of a considerable number of workers; or applications which involve job titles with a possible substantial overlap with technicians imported under the Supplementary Labour Scheme administered by LD.

In general, ImmD will only consider applications for extension of stay from persons who are employed in Hong Kong under GEP and ASMTP if the persons continue to meet the specific eligibility criteria under the relevant admission schemes, including being employed in a job that "cannot be readily taken up by the local workforce". ImmD may, based on the actual circumstances of the case, require the applicant or the employing company to provide supplementary information to prove that the position still "cannot be readily taken up by the local workforce".

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In view of the local economic downturn and rising unemployment rate amid the COVID-19 pandemic, the Government understands the public's concerns and reaffirms the established policy of upholding priority employment of the local workforce. In recent months, ImmD has been closely monitoring the employment situation of different industries, including the aviation industry as referred to in the question. In view of the latest employment situation of the local aviation industry, ImmD has, after consultation with the relevant bureaux and departments, critically scrutinized applications from the industry made under GEP and ASMTP for employment visa/entry permit and extension of stay. In fact, ImmD did not approve any new employment visas/entry permits for non-local pilots to work in Hong Kong in the past three months.

Regulating the food trade

3. MR TOMMY CHEUNG (in Chinese): President, one of the functions of the Food and Environmental Hygiene Department ("FEHD") is to regulate the food trade, including issuing licences to food premises and inspecting such premises. In this connection, will the Government inform this Council:

(1) of the number of inspections of licensed food premises conducted by FEHD last year, with a breakdown by type of premises;

(2) of the respective numbers of the various types of food business licences which are valid at present;

(3) of the respective numbers of applications for transfer of food business licences received and approved by FEHD last year; and

(4) of the respective numbers of cases, found by FEHD when conducting the inspections mentioned in (1), in which the premises concerned (a) were not open for business (among such cases, the respective numbers of premises which were not open (i) for the reason that they were under renovation and (ii) for other reasons (not including those premises which had been asked to close for business by the Government due to the epidemic)), and (b) had changed owners but approval had not been given for the relevant applications for licence LEGISLATIVE COUNCIL ― 24 February 2021 3745

transfer; if such figures are unavailable, whether it has plans to compile relevant statistics; if so, of the details; if not, the reasons for that?

SECRETARY FOR FOOD AND HEALTH (in Chinese): President, in accordance with the regulations under the Public Health and Municipal Services Ordinance (Cap. 132), including the Food Business Regulation (Cap. 132X), the Frozen Confections Regulation (Cap. 132AC) and the Milk Regulation (Cap. 132AQ), every person who carries on any food business shall obtain a relevant licence from the Food and Environmental Hygiene Department ("FEHD"). In addition, any person who intends to operate food business for the sale of restricted food shall obtain a permit relevant to the proposed business before commencement of such business. All food premises holding licences or permits issued by FEHD are subject to the regulation of FEHD, and a licensee or permittee must obtain FEHD's approval before transferring the licence or permit to any other person. Health inspectorate officers of FEHD adopt a risk-based approach in conducting inspections to licensed food premises, with a view to safeguarding food safety and environmental hygiene.

My reply to the question raised by the Member is as follows:

(1) and (4)

FEHD conducted over 207 000 inspections to licensed and permitted food premises in 2020. The Department does not have separate breakdown figures on the inspections by types of premises, the number of licensed food premises which were not open for business during the inspections, and the number of premises which had changed owners prior to obtaining approvals for the relevant applications for licence transfer. FEHD is planning to enhance the existing Licensing Management Information System and input the inspection records by electronic means, which are expected to be introduced progressively starting from the end of 2022.

(2) There are 31 475 valid food business licences as of January 2021. Breakdown by licence types is set out at Annex.

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(3) Last year, FEHD received 1 413 applications for transfer of food business licence, 1 396 of which had been approved.

Annex

Numbers of various types of food business licences (as of January 2021)

Type of licence Number of licences General Restaurant Licence 12 362 Light Refreshment Restaurant Licence 4 242 Marine Restaurant Licence 5 Food Factory Licence 9 779 Bakery Licence 573 Factory Canteen Licence 499 Fresh Provision Shop Licence 2 997 Siu Mei and Lo Mei Shop Licence 420 Cold Store Licence 66 Composite Food Shop Licence 3 Frozen Confection Factory Licence 521 Milk Factory Licence 8 Total 31 475

Management of the Tracker Fund of Hong Kong

4. MR CHRISTOPHER CHEUNG (in Chinese): President, State Street Global Advisors Asia Limited ("SSGA"), the manager of the Tracker Fund of Hong Kong ("TraHK"), issued a notice on the 11th of last month to the unitholders of TraHK stating that, as affected by the executive order signed by the President of the United States, TraHK would not make any new investments in those constituent companies of the Hang Seng Index which were sanctioned entities ("the companies concerned") with immediate effect ("the decision"). Two days later, SSGA issued another notice stating that TraHK would resume investments in the companies concerned on the next day. Some investors consider that by contradicting itself within a short period of time and acting recklessly, SSGA has made people lose confidence in its capability to manage TraHK. In this connection, will the Government inform this Council:

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(1) as the Government stated in response to the incident that the decision "did not bring any material impact on the investors of TraHK", of the justifications for such a statement;

(2) whether it has reviewed if SSGA's making the decision constitutes an act of misconduct and has violated the relevant codes/professional conduct; if it has reviewed and the outcome is in the affirmative, whether it will request the Supervisory Committee of TraHK to replace the manager, so as to ensure that TraHK is managed effectively; if the review outcome is in the negative, of the justifications for that; and

(3) as the Government indicated early this month that the Hong Kong Monetary Authority was closely following up the incident with the Supervisory Committee of TraHK and SSGA, of the progress of the follow-up work?

SECRETARY FOR FINANCIAL SERVICES AND THE TREASURY (in Chinese): President, State Street Global Advisors Asia Limited ("SSGA") announced on 11 January 2021 that the Tracker Fund of Hong Kong ("TraHK") would, with effect from the same date, not make any new investments in the Hang Seng Index constituent stocks that were sanctioned by the United States ("US") and that TraHK would no longer be suitable for US person to invest. Subsequently, the company announced on 13 January 2021 that TraHK would resume investment in the sanctioned Hang Seng Index constituent stocks.

Such announcements have given rise to unnecessary market chaos. The Government has earlier expressed deep concern over the situation and immediately requested the Hong Kong Monetary Authority ("HKMA") and the Supervisory Committee of TraHK to seriously follow up on the incident. Having consulted the Securities and Futures Commission ("SFC"), HKMA and the Mandatory Provident Fund Schemes Authority ("MPFA"), our reply to the three parts of the question is as follows:

(1) According to the prospectus of TraHK, "TraHK's investment objective is to provide investment results that closely correspond to the performance of the Hang Seng Index ('Index') … The Manager seeks to achieve TraHK's investment objectives by investing all, or substantially all, of TraHK's assets in shares in the constituent 3748 LEGISLATIVE COUNCIL ― 24 February 2021

companies of the Index in substantially the same weightings as they appear in the Index …". If there is any significant deviation between TraHK's portfolio and the composition and weighting of the Hang Seng Index, the manager will, having considered the transaction costs and the impact, if any, on the market, adjust TraHK's portfolio when it considers appropriate. Under the "risk disclosure" part of the prospectus, it is also suggested that TraHK's return may deviate from that of the Hang Seng Index due to the tracking strategy adopted by the Manager.

TraHK is an exchange-traded fund which currently invests in 52 constituent stocks of the Hang Seng Index. According to the information provided by the regulators, the sanctioned entities which SSGA has earlier announced that it would not make further investments in accounted for around 2.6% of the Hang Seng Index. The tracking error recorded during 11 January to 13 January 2021 was around 1 basis point each day.

Investors who participate in the trading of TraHK generally expect that the fund can closely resemble the performance of the Hang Seng Index. The Government considers that the hasty announcement by SSGA about its investment decision, and that such decision was then altered within a short period of time have inevitably caused confusion to the public. The Government considers the situation highly unsatisfactory and would take follow-up actions seriously.

(2) and (3)

SFC and HKMA have, as soon as they were informed of such investment decision, contacted the manager to understand the justifications and specific arrangements of its decision. Since SSGA is a licensed corporation regulated by SFC, it has to comply with the Fund Manager Code of Conduct ("the Code"). The Code has prescribed certain restrictions and requirements for fund managers in relation to investment management, including making adequate disclosure of information (as well as any material changes to the information) on the fund which is necessary to enable investors to make informed decisions about their investment in the fund.

LEGISLATIVE COUNCIL ― 24 February 2021 3749

SFC has maintained regulatory communication with SSGA, and has urged the company to comply with the Code and make all decisions in an honest, fair and diligent manner taking into account investor protection and market integrity. The enquiry about the incident by SFC is still ongoing. SFC will continue to closely monitor the situation to ensure that the market would operate in an orderly manner and that investors would be adequately protected.

Separately, once HKMA and the Supervisory Committee of TraHK were informed of the decision of the manager, they have immediately got in touch with the company and requested it to explain the reasons of the decision, adopt measures to mitigate the impact to investors, and review its decision. Since SSGA announced resumption of relevant investment on 13 January 2021, HKMA has continued to closely follow up with the Supervisory Committee of TraHK and that company. The follow-up work by the Supervisory Committee of TraHK is still ongoing.

As for the Mandatory Provident Fund ("MPF") schemes, there are currently three index-tracking constituent funds (constituted respectively under three MPF schemes) which appoint SSGA as investment manager and invest wholly in TraHK. The total net asset value of these three funds amounts to HK$ 3.6 billion or 0.32% of the total MPF scheme assets. MPFA has requested relevant trustees to review whether SSGA, as their MPF investment manager, has continued to perform its functions and invested in accordance with the fund's original investment objectives. If the relevant trustees consider that SSGA is no longer suitable to act as an investment manager, they should make necessary arrangements and adopt risk management measures to protect the interests of MPF scheme members. MPFA will continue to monitor the situation and maintain close communication with trustees.

Public works projects

5. DR JUNIUS HO (in Chinese): President, in recent years, a number of large-scale infrastructure projects (e.g. the Hong Kong-Zhuhai-Macao Bridge and the Shatin to Central Link projects) have experienced serious cost overruns and delays. Some members of the public have queried the capability of the 3750 LEGISLATIVE COUNCIL ― 24 February 2021

Government to control the expenditure of public works projects and monitor their progress, and are worried that similar problems may arise in new works projects. In this connection, will the Government inform this Council:

(1) of the number of public works contracts awarded by the Government and the total expenditure involved in each year since the 2018-2019 financial year;

(2) of the following details of the public works projects implemented by the or the Transport and Housing Bureau which were upgraded to Category A as approved by the Finance Committee of this Council in the 2018-2019 legislative session or thereafter (set out by project name in a table):

(i) the numbers and names of the consultancy firms engaged,

(ii) the expenditures on consultancy fees involved, and

(iii) the specific criteria adopted for selecting consultancy firms and contractors; and

(3) regarding those public works projects that experienced serious cost overruns and delays in the past five years, whether the Government has conducted a detailed analysis on and review of the causes for the cost overruns and delays (including whether perfunctory supervision by government officials was involved), and what specific measures are in place to prevent similar problems from occurring in future works projects?

SECRETARY FOR DEVELOPMENT (in Chinese): President, the Government has been continuously investing in capital works to improve people's quality of life, enhance Hong Kong's long-term competitiveness and promote its economic development. The annual capital works expenditure has been maintained at a level of $70 billion since 2017. We expect the annual capital works expenditure will continue to grow and exceed $100 billion in coming years.

LEGISLATIVE COUNCIL ― 24 February 2021 3751

In view of the challenges of high construction cost and ageing construction work force faced by Hong Kong, the Development Bureau ("DEVB") established the Project Cost Management Office ("PCMO") in June 2016, and upgraded it to the Project Strategy and Governance Office ("PSGO") in April 2019 for promoting "Construction 2.0" proactively and implementing various measures to enhance the performance of public works projects.

My reply to the three parts of the question raised by Dr Junius HO is as follows:

(1) The Government has regularly submitted reports to the Public Works Subcommittee, listing out the prices of major contracts awarded (each with a contract sum exceeding $30 million) in each quarter. The total sum and number of major contracts awarded from fiscal year 2018-2019 to 2020-2021 are tabled as follows:

2020-2021 Fiscal Year 2018-2019 2019-2020 (As at the 4th quarter of 2020) Total Contract Sum $79.7 billion $64.6 billion $64.5 billion (Number of Contract) (78) (55) (78)

(2) In the 2018-2019 to 2020-2021 Legislative Council sessions, the Finance Committee ("FC") of Legislative Council approved the upgrading of 58 Public Works Programme ("PWP") items under DEVB and the Transport and Housing Bureau to Category A. The associated consultancy agreements awarded by the works departments under 44 PWP items are tabulated in Annex. For the remaining 14 items, seven of them have not awarded consultancy agreements yet and seven of them have been entrusted to other parties (e.g. the Hong Kong Housing Authority, the Airport Authority Hong Kong, etc.) for implementation.

When selecting a consultant or a contractor, the works departments will take into account the technical capability and past performance of a tenderer in addition to the tender price. Generally, a "two-envelope two-stage" approach is adopted in tendering for consultancy agreements and works contracts. Tenderers are required to submit technical proposals and price proposals separately to the Tender Assessment Panel of the works departments. The 3752 LEGISLATIVE COUNCIL ― 24 February 2021

Tender Assessment Panel will evaluate the tenders in two stages, first the technical proposal and then the price proposal. Afterwards, the overall score will be calculated based on the weightings stipulated in the tender documents and only the tenderer with the highest overall score will be awarded the contract. Depending on the complexity of the project, the weightings of a tender's scores on technical aspects against the overall score are 54% to 72% for consultancy agreements, and 40% to 60% for works contracts.

For those works contracts of simple nature, the Tender Assessment Panel will consider both the tender price and past performance of a tenderer in evaluating the tender. Tenderers are not required to submit technical proposals.

(3) Although some large-scale infrastructure projects have experienced delays or have to apply for additional funding in recent years, in fact, the overall estimation and management performance of the Capital Works Programme ("CWP") have remained sound. FC approved a total of 515 Category A projects with funding amounting to about $890 billion over the past 10 years. Among these approved projects, 27 required application to FC for additional provisions totalling about $67 billion mainly due to unforeseen circumstances. In other words, increased estimates were deemed necessary in about 5% of the approved projects and their corresponding additional provisions amounted to about 7.5% of the total funding approved.

On the other hand, despite the fact that there were projects requiring additional provisions owing to individual circumstances, projects under CWP have generally been completed within the original Approved Project Estimates ("APE"), and some even managed to have surplus. For example, for the 605 Category A projects with their final accounts settled in the past 10 years, their final expenditure totalled about $162.5 billion while their total original APE was about $180 billion. Though some projects needed to apply for additional provisions from FC, the surplus from other projects were not only able to offset the cost overruns but also managed to secure a balance of $17.5 billion. In short, the total expenditures of these projects only accounted for about 90% of their total original APEs.

LEGISLATIVE COUNCIL ― 24 February 2021 3753

We have reviewed the major causes of cost overruns in PWP items in the past five years. The major reasons for applying for additional funding provisions include additional works due to unforeseen circumstances; higher-than-expected tender returns; increased project contingencies to cover unforeseen adverse ground/underground condition; and increased provision for price adjustments to cope with higher-than-expected increase in construction costs.

As for progress delays in some major projects, the causes were mainly due to unforeseen circumstances, which include unforeseen site condition affecting the works progress, inclement weather, as well as delay in obtaining funding approval.

As mentioned above, DEVB established PCMO in June 2016, and upgraded it to PSGO in April 2019, to enhance the performance of infrastructure projects through various measures, such as:

(a) Strengthening the cost management process

- Conduct project vetting process starting from inception stage with regular reviews and take follow-up actions to track project development from the detailed design stage to the funding application stage. Monitor the performance of projects by the Project Surveillance System on a continuous basis until project completion.

(b) Enhancing project delivery capability

- Establish the Centre of Excellence for Major Project Leaders to provide high-level project management and leadership development programme.

(c) Leading strategic developments to enhance cost-effectiveness

- Promote "Construction 2.0", and reform the construction industry by advocating innovation, professionalization and revitalization.

3754 LEGISLATIVE COUNCIL ― 24 February 2021

(d) Enhancing collaboration with international counterparts and local industry stakeholders

- Collaborate with the Construction Industry Council and local industry stakeholders to promote cost monitoring measures to construction projects in private sector.

- Communicate with authorities in the Mainland, Australia, Singapore and the United Kingdom, and draw on relevant practice and experience when devising policies for enhancing the performance of public works projects.

Since its establishment, PCMO/PSGO has scrutinized more than 280 public works projects.(1) These projects have commenced smoothly, and some have reached the final stage of construction. We are confident that these projects will not experience cost-overruns or serious delays. Moreover, by adopting the above strategies and collaborating with the industry to promote cost management measures, we are happy to see that the industry has given more weight to cost management culture.

Annex

Major Consultancy Agreements Awarded by Works Departments under the Category A Items of DEVB and THB (2018-2019 Legislative Council Session)

Consultants' Project Project Title Consultants fees(1) Code ($ million) 4425DS Relocation of Sha Tin AECOM Asia Company Limited 21.7 Sewage Treatment Mott MacDonald Hong Kong Works to caverns―site Limited preparation and access tunnel construction

(1) The total estimated project cost was $520 billion, and $70 billion has been saved through optimizing project designs. LEGISLATIVE COUNCIL ― 24 February 2021 3755

Consultants' Project Project Title Consultants fees(1) Code ($ million) 7822CL Kai Tak development― AECOM Asia Company Limited 23.8 infrastructure for Ramboll Hong Kong Limited developments at the former runway and south apron 7832CL Kai Tak AECOM Asia Company Limited 16.2 Development―stage 5B Acuity Sustainability Consulting infrastructure works at Limited the former north apron area 7747CL Advance site formation AECOM Asia Company Limited 53.0 and engineering Mott MacDonald Hong Kong infrastructure works at Limited Kwu Tung North new development area and Fanling North new development area 7759CL First stage of site AECOM Asia Company Limited 2.8 formation and Mott MacDonald Hong Kong engineering Limited infrastructure at Kwu Tung North new development area and Fanling North new development area 7835CL Remaining phase of site Atkins China Limited 174.9 formation and AECOM Asia Company Limited engineering Black & Veatch Hong Kong infrastructure works at Limited Kwu Tung North new development area and Fanling North new development area―detailed design and site investigation 3756 LEGISLATIVE COUNCIL ― 24 February 2021

Consultants' Project Project Title Consultants fees(1) Code ($ million) 7793CL Site formation and AECOM Asia Company Limited 8.3 infrastructure works for Acuity Sustainability Consulting Police facilities in Kong Limited Nga Po 6863TH Widening of western Ove Arup & Partners Hong 1.7 section of Lin Ma Hang Kong Limited Road between Ping Yuen River and Ping Che Road

Major Consultancy Agreements Awarded by Works Departments under the Category A Items of DEVB and THB (2019-2020 Legislative Council Session)

Consultants' Project Project Title Consultants fees(1) Code ($ million) 7785TH Trunk Road T2 and Cha Hyder-Meinhardt Joint Venture 15.1 Kwo Ling Ramboll Hong Kong Limited Tunnel―Construction 7833CL Kai Tak Hyder-Meinhardt Joint Venture 0.8 development―remaining infrastructure works for developments at the former runway and south apron, phase 1 9357WF Design and construction Black & Veatch Hong Kong 74.0 for first stage of Limited desalination plant at ANewR Consulting Limited Tseung Kwan O 6188TB Footbridge near MTR WSP (Asia) Limited 1.6 Kowloon Bay Station Exit B 5051TF Reconstruction of Pak Acuity Sustainability Consulting 0.2 Kok Pier on Lamma Limited Island LEGISLATIVE COUNCIL ― 24 February 2021 3757

Consultants' Project Project Title Consultants fees(1) Code ($ million) B780CL Site formation and Ove Arup & Partners Hong 4.2 infrastructure works for Kong Limited public housing development at Wang Chau, Yuen Long 4186CD Rehabilitation of Black & Veatch Hong Kong 1.6 underground stormwater Limited drains stage 2 4171CD Revitalization of Tsui Atkins China Limited 5.4 Ping River 3468RO Improvement of Lam TLS & Associates Limited 0.7 Wah Street Playground and adjacent area 7846CL Hung Shui Kiu/Ha Ove Arup & Partners Hong 37.5 Tsuen New Kong Limited Development Area stage 2 works―detailed design and site investigation 7845CL Hung Shui Kiu/Ha Ove Arup & Partners Hong 31.6 Tsuen New Kong Limited Development Area AECOM Asia Company Limited advance works phases 1 & 2―site formation and engineering infrastructure and phase 3―detailed design and site investigation 7796CL Hung Shui Kiu/Ha Mott MacDonald Hong Kong 4.1 Tsuen New Limited Development Area stage 1 works―site formation and engineering infrastructure 3758 LEGISLATIVE COUNCIL ― 24 February 2021

Consultants' Project Project Title Consultants fees(1) Code ($ million) 7831CL West Kowloon Mott MacDonald Consultants 5.4 Reclamation―main (HK) Limited works (remainder)―footbridge at the junction of Sham Mong Road and Hing Wah Street West in Sham Shui Po B795CL Site formation and Ove Arup & Partners Hong 11.0 infrastructure works for Kong Limited public housing developments at Pok Fu Lam South 7666CL Formation, roads and ANewR Consulting Limited 0.4 drains in Area 54, Tuen PYPUN Engineering Mun―phase 1 stage 2 Consultants Limited 7844CL Formation, roads and ANewR Consulting Limited 2.0 drains in Area 54, Tuen PYPUN Engineering Mun―phase 2, stage 4B Consultants Limited works B812CL Site formation and WSP (Asia) Limited 7.1 infrastructure works for public housing developments at Pik Wan Road, Yau Tong 6875TH Noise enclosures at Mott MacDonald Hong Kong 1.0 Gascoigne Road Flyover Limited 6853TH Widening of Castle Peak AECOM Consulting Services 4.1 Road―Castle Peak Bay Limited 9181WF In-situ reprovisioning of AECOM Asia Company Limited 40.5 Sha Tin water treatment works (South Works)―main works 9368WF Improvement to Meinhardt Infrastructure and 4.3 Dongjiang water mains Environment Limited P4 at Sheung Shui and Fanling LEGISLATIVE COUNCIL ― 24 February 2021 3759

Consultants' Project Project Title Consultants fees(1) Code ($ million) 9369WF Uprating of Sheung Meinhardt Infrastructure and 4.3 Wong Yi Au fresh water Environment Limited supply system―stage 1 9196WC Implementation of Water Black & Veatch Hong Kong 9.4 Intelligent Network Limited Meinhardt (Hong Kong) Limited 6850TH New Wang Tong River ANewR Consulting Limited 0.3 Bridge 7265RS Cycle tracks connecting Ho Tin & Associates Consulting 0.3 North West New Engineers Limited Territories with North East New Territories―Sam Mun Tsai extension 4185CD Drainage improvement Atkins China Limited 0.8 works at Yuen Long, stage 1 5052CG Greening master plans ACLA Ltd.―Hyder Consulting 17.0 for Southwest and Ltd. Joint Venture Northeast New Mott MacDonald Hong Kong Territories―priority Limited greening works

Major Consultancy Agreements Awarded by Works Departments under the Category A Items of DEVB and THB (2020-2021 Legislative Council Session)

Consultants' Project Project Title Consultants fees(1) Code ($ million) 3133KA Drainage Services C.S. Toh & Sons & Associates 11.9 Department Office Limited Building at Cheung Sha Wan Sewage Pumping Station 3760 LEGISLATIVE COUNCIL ― 24 February 2021

Consultants' Project Project Title Consultants fees(1) Code ($ million) 7765CL Development of AECOM Asia Company Limited 2.1 Anderson Road Quarry site―remaining pedestrian connectivity facilities works 3129KA Water Supplies Ronald Lu & Partners (Hong 36.7 Department Kong) Ltd Headquarters with Hong Rider Levett Bucknall Limited Kong and Islands Regional Office and Correctional Services Department Headquarters building in Chai Wan 7716CL Tseung Kwan O AECOM Asia Company Limited 1.9 further development― infrastructure works for Tseung Kwan O stage 1 landfill site 4445DS Relocation of Sha Tin AECOM Asia Company Limited 37.2 Sewage Treatment Works to caverns―main caverns construction and upstream sewerage works B857CL Site formation and Black & Veatch Hong Kong 5.7 infrastructure works for Limited public housing developments at Tuen Mun Central―Phase 1 7856CL Development of Lok Ma AECOM Asia Company Limited 34.5 Chau Loop―Main Works Package 1―site formation and infrastructure works LEGISLATIVE COUNCIL ― 24 February 2021 3761

Consultants' Project Project Title Consultants fees(1) Code ($ million) 4172CD Rehabilitation of Black & Veatch Hong Kong 2.4 underground stormwater Limited drains―remaining works B858CL Site formation and AECOM Asia Company Limited 8.7 infrastructure works for public housing developments at Kam Tin South, Yuen Long―Phase 1

Note:

(1) Consultants' fees funded under respective Project.

Art Tech

6. MR LAU KWOK-FAN (in Chinese): President, the Chief Executive has indicated in the 2020 Policy Address that the Government will actively promote and support the development of Art Tech. To this end, the Secretary for Home Affairs will take the lead in setting up a cross-bureau task force ("task force") and invite the participation of representatives from the relevant sectors and non-governmental organizations in the formulation of strategies and measures to develop and promote Art Tech. Furthermore, the Government has set aside a total of $100 million under four relevant funds (i.e. the Arts and Sport Development Fund, the Innovation and Technology Fund, the Film Development Fund and the CreateSmart Initiative) for the relevant sectors to apply for funding for implementing projects on developing and promoting the integration of technology and arts. In this connection, will the Government inform this Council:

(1) of the criteria adopted by the Government for inviting representatives from the relevant sectors to be members of the task force, as well as the (i) definition of "Art Tech", (ii) long-term goals and (iii) key performance indicators to be adopted by the task force;

3762 LEGISLATIVE COUNCIL ― 24 February 2021

(2) of the respective portions of the $100 million funding coming from the four aforesaid funds, the criteria to be adopted (e.g. the goals to be achieved) for vetting and approving the relevant funding applications, as well as the maximum amount of subsidy to be provided for each approved application; whether the subsidies provided by these funds for art projects of non-Art Tech categories will be correspondingly reduced;

(3) whether the Government will collaborate with those institutions which currently offer relevant courses (e.g. The Hong Kong Academy for Performing Arts, City , Hong Kong Baptist University, Hong Kong Design Institute, and Hong Kong Institute of Vocational Education) in promoting Art Tech, and encourage qualified persons to teach the relevant courses, so as to train Art Tech talents and facilitate the alignment of the courses offered by institutions and the demand of the industry; and

(4) given that the East Kowloon Cultural Centre, which is currently under construction and will be commissioned in 2023, will provide Testbed Studio for applying Art Tech, how the Government ensures that the Testbed Studio and the entire Cultural Centre will (i) be equipped with the facilities needed for developing and trying out Art Tech and (ii) provide the relevant sectors with convenient channels for hiring facilities; whether it has formulated eligibility criteria for hiring the Testbed Studio?

SECRETARY FOR HOME AFFAIRS (in Chinese): President,

(1) The Inter-departmental Task Force on Arts Technology ("the Task Force") led by the Secretary for Home Affairs convened its first meeting on 17 February 2021. The meeting discussed the strategies and measures of the Task Force in developing and promoting arts technology ("arts tech") in the future. The Task Force will consult the relevant industries and their representatives on the work plan as appropriate, and will invite representatives from the relevant industries or non-governmental organizations to attend the Task Force meetings as necessary.

LEGISLATIVE COUNCIL ― 24 February 2021 3763

Arts tech is developing rapidly and can cover a wide area. It may not be appropriate to give an official definition to it. Broadly speaking, arts tech can be interpreted as applying technology (such as virtual reality, extended reality, real-time animation, etc.) in artistic creation to enhance the content and delivery of artistic creation, support the succession of arts and deepen audience engagement and experience. The long-term goal of the Task Force is to provide employment and industry development opportunities for arts practitioners and technology talents and to bring new experience to audience simultaneously so as to further promote Hong Kong's cultural essence where the East meets the West. As the development of arts tech is still in the preliminary stage, we have not set any key performance indicators at this stage.

(2) As mentioned in the 2020 Policy Address, relevant Policy Bureaux have set aside a total of $100 million under funds or schemes of their respective purview (including the Arts and Sports Development Fund, the Innovation and Technology Fund, the Film Development Fund and the CreateSmart Initiative) for individuals interested in promoting arts tech to apply. The schemes above have dedicated objectives with different target applicants (details are at Annex). Applicants may submit application to the relevant funds or schemes, depending on the content of their proposals. The Government will continue to support the development of different arts projects.

For the Arts and Sports Development Fund, the Home Affairs Bureau launched the application of the 10th round of the Arts Capacity Development Funding Scheme ("ACDFS") in December 2020. A new category of "Arts Tech" was added in the 10th round of ACDFS to support proposals that seek to integrate arts and technology, as well as encourage applicants to creatively apply technology to meet their artistic goals and vision. The proposals should contribute to the four objectives of ACDFS, including capacity development of arts practitioners, arts groups, art forms and/or the arts sector; programme/content development; audience building; and arts education.

As for the CreateSmart Initiative and the Film Development Fund, the Commerce and Economic Development Bureau will actively encourage and consider funding applications with arts tech elements while fulfilling the established eligibility criteria and strategic 3764 LEGISLATIVE COUNCIL ― 24 February 2021

directions. Application of new technologies in the local film industry and other creative sectors will enhance the quality, variety and user experiences of products and services. It will help promote Hong Kong as Asia's creative capital.

The Innovation and Technology Fund welcomes funding applications from the arts tech industry to help promote its development through different schemes. The Technology Voucher Programme and the General Support Programme under the Innovation and Technology Fund are relevant to the application of technology and IT culture for the promotion of arts tech. The Technology Voucher Programme provides funding to enterprises and organizations to use technological services and solutions to improve productivity, or upgrade or transform their business processes. The General Support Progamme supports non-research and development projects that contribute to the upgrading and development of our industries as well as the fostering of an innovation and technology culture in Hong Kong. There is no cap on the number of funded projects and funding amounts under the funding schemes of the Innovation and Technology Fund. The Innovation and Technology Commission welcomes applications from the arts sector, applications from which had been accepted by the Innovation and Technology Fund in the past.

(3) The existing programmes related to arts or creative media offered by the post-secondary institutions cover topics related to arts tech, which helps to equip students with knowledge relevant to arts tech and inspire them to progress with the times. Moreover, the post-secondary institutions enjoy academic freedom and autonomy in programme development. They would liaise with stakeholders from time to time to keep abreast of the latest manpower trends and industry needs, with a view to ensuring that their programmes continue to serve the needs of the community and nurture talents in arts tech.

The Hong Kong Academy for Performing Arts has also provided programmes covering arts tech under the School of Theatre and Entertainment Arts to nurture talents for the industry.

(4) Kowloon East is a pilot area to develop a smart city in Hong Kong. As a catalyst for the implementation of the Smart City Blueprint for Hong Kong, the East Kowloon Cultural Centre ("EKCC") will LEGISLATIVE COUNCIL ― 24 February 2021 3765

promote arts tech at community level through diversified arts tech programmes and interactive education activities in a bid to foster interests in and understanding of the arts and technology in the community, particularly among young people. In the meantime, novel and interactive theatre experience will help broaden the audience base for performing arts and promote cultural inclusiveness.

EKCC will inject new impetus into the performing arts through innovative technology, and explore the infinite possibilities of innovative technology with artists. EKCC will provide local artists with an incubation platform to support them from the stage of developing creative concept and connect them with partners from different sectors. They can join hands to develop arts tech programmes from an experimental "work-in-progress" creation to a complete and mature work. EKCC will also actively encourage community engagement in art projects to arouse public interest and understanding of arts tech by bringing diversified arts tech programmes, art installation, exhibitions, workshops, and interactive educational activities.

Annex

Funds and Schemes that can support Arts Tech

Responsible Bureau Objectives Arts Capacity Home Affairs Bureau With the objectives of strengthening Development the cultural software and building the Funding capacity of the arts sector of Hong Scheme Kong, ACDFS provides funding ("ACDFS") support for innovative and impactful proposals that contribute to the objectives of: - capacity development of arts practitioners, arts groups, art forms and/or the arts sector; - programme/content development; - audience building; and - arts education. 3766 LEGISLATIVE COUNCIL ― 24 February 2021

Responsible Bureau Objectives Film Commerce and Economic FDF aims to support projects and Development Development Bureau activities conducive to the long-term Fund ("FDF") ("CEDB") development of the Hong Kong film industry along four strategic directions (namely, nurturing talent, enhancing local production, expanding markets and building the audience). CreateSmart CEDB CSI aims to provide funding support Initiative for projects that are conducive to the ("CSI") development of the seven non-film creative industries against three strategic foci, namely nurturing talents and facilitating start-ups; exploring markets; and promoting Hong Kong as Asia's creative capital and fostering a creative atmosphere in the community. Technology Innovation and To support local Voucher Technology Bureau enterprises/organizations in using Programme ("ITB") technological services and solutions under the to improve productivity, or upgrade Innovation or transform their business processes. and Technology Fund ("ITF") General ITB To support non-research and Support development projects that contribute Programme to the upgrading and development of under ITF our industries as well as the fostering of an innovation and technology culture in Hong Kong.

Foreign companies' regional headquarters and offices in Hong Kong

7. MR CHAN KIN-POR (in Chinese): President, in a survey conducted in 2020, the Census and Statistics Department successfully surveyed 9 025 regional headquarters ("RHQs"), regional offices ("ROs") and local offices ("LOs") in LEGISLATIVE COUNCIL ― 24 February 2021 3767

Hong Kong the parent companies of which were located outside Hong Kong (collectively known as "foreign companies"), and around 400 foreign companies did not respond. Among the foreign companies successfully surveyed, the number of RHQs and ROs totalled 3 980, which is 48 less than the figure in the 2019 survey. Besides, among the foreign companies surveyed, 4% of them planned to phase out or relocate outside Hong Kong part or all of their business in Hong Kong, while another 21% of them were uncertain about their business plans in Hong Kong. Some members of the business sector worry that the situation will deteriorate. In this connection, will the Government inform this Council:

(1) of the number of RHQs/ROs which were not enumerated in the 2020 survey but had been enumerated in the previous year; whether it knows (i) the locations of the parent companies of such RHQs/ROs, (ii) the trades in which such RHQs/ROs were engaged, and (iii) if such RHQs/ROs have terminated their business in Hong Kong (if so, of the reasons for that);

(2) whether it will proactively implement measures to retain those foreign companies which are planning or may plan to terminate their business in Hong Kong; if so, of the details; and

(3) whether it will roll out new measures to attract multinational companies to set up RHQs in Hong Kong; if so, of the details?

SECRETARY FOR COMMERCE AND ECONOMIC DEVELOPMENT (in Chinese): President, my reply to the three parts of the question is as follows:

(1) The Annual Survey of Companies in Hong Kong with Parent Companies Located outside Hong Kong is jointly conducted by Invest Hong Kong ("InvestHK") and the Census and Statistics Department. The 2020 survey enumerated a total number of 9 025 companies, while around 400 did not respond. This rate has been about the same as previous years.

These 400 companies which participated in the 2019 survey had either declined to take part in the 2020 survey or could not be reached during the survey period. We are unable to identify from 3768 LEGISLATIVE COUNCIL ― 24 February 2021

companies which could not be reached the number which might have ceased operation in Hong Kong. Indeed, the failure to reach these companies may be due to a change of addresses.

Among the some 400 companies, 135 were enumerated as regional headquarters or regional offices in the 2019 survey. According to the information collected from the 2019 survey, the parent companies of these 135 companies were located in various countries, including France, Germany, Japan, Mainland of China, the United Kingdom and the United States of America, etc. As for the line of business in Hong Kong of these 135 companies, they were mainly in the financing and banking sector, the import/export trade, wholesale and retail sector and the professional, business and education services sector.

(2) As an important part of its investment promotion work, InvestHK provides aftercare services to companies which it has previously assisted; as well as other major overseas and Mainland companies which have set up operations in Hong Kong, so as to keep track of their development and help them seize opportunities to grow, expand and create jobs in Hong Kong.

InvestHK has a dedicated team to enhance the provision of aftercare services for overseas and Mainland companies in Hong Kong. The team has developed a programme to reach out to companies in a structured and systematic manner. The programme includes holding strategic discussions with key personnel to help them consider and evaluate new areas and opportunities for growth, particularly those arising from the Guangdong-Hong Kong-Macao Greater Bay Area ("Greater Bay Area") development, the Belt and Road Initiative and innovation and technology development.

InvestHK's aftercare programme also extends to meetings with the headquarters of its client companies. Such meetings affirm Hong Kong's commitment to supporting investors from outside Hong Kong and to give the senior management of the companies concerned the confidence to continue doing business in Hong Kong.

LEGISLATIVE COUNCIL ― 24 February 2021 3769

Despite the travel restrictions arising from the COVID-19 pandemic, InvestHK continues to hold conferences and round-tables via virtual platforms with senior business leaders round the world to update them on Hong Kong's business environment and government policies. These help to retain foreign companies' interest and confidence in Hong Kong as a place for investment and doing business.

(3) InvestHK is committed to promoting Hong Kong as a prime investment destination and encouraging overseas and Mainland companies to establish operations, in particular regional headquarters and regional offices, in Hong Kong. To this end, InvestHK will continue to:

(i) strengthen global investment promotion efforts by focusing on the business opportunities arising from the Association of Southeast Asian Nations, Greater Bay Area development and the Belt and Road Initiative;

(ii) strengthen aftercare services for overseas and Mainland companies in Hong Kong to facilitate expansion; and

(iii) focus on priority sectors such as financial services, family offices, transport and logistics, innovation and technology as well as creative industries.

In meeting the challenges of the COVID-19 pandemic, InvestHK has been dynamically adjusting its strategies by leveraging digital platforms to attract and assist companies from both traditional and emerging markets to set up their businesses in Hong Kong. In addition, the Chief Executive announced in the 2020 Policy Address the establishment of the Pan-Greater Bay Area Inward Investment Liaison Group. This set up would enable InvestHK and its counterparts in other cities in Greater Bay Area to develop holistic and joint inward investment propositions with a view to enhancing synergy.

3770 LEGISLATIVE COUNCIL ― 24 February 2021

Three-runway system

8. MR MICHAEL TIEN (in Chinese): President, the Chief Executive stated in the 2020 Policy Address that the Airport Authority Hong Kong would, as originally planned, commission the third runway and the entire three-runway system ("3RS") in 2022 and 2024 respectively. In this connection, will the Government inform this Council:

(1) of the respective forecasts, made by the Government when it approved in principle the construction of 3RS in 2012, on Hong Kong's long-term air traffic demand (i.e. the annual number of air traffic movements at the Hong Kong International Airport) (i) in 2030 and (ii) after 2030;

(2) of the maximum number of air traffic movements that 3RS can handle annually upon its commissioning, as forecasted by the Government in 2012; and

(3) of the time, as anticipated by the Government in 2012 on the basis of the forecasts mentioned in (1) and (2), when the handling capacity of 3RS will reach its full capacity?

SECRETARY FOR TRANSPORT AND HOUSING (in Chinese): President, the Hong Kong Special Administrative Region Government is committed to consolidating and enhancing Hong Kong's status as an international aviation hub. In March 2012, the Executive Council ("ExCo") approved in principle the recommendation of the Airport Authority Hong Kong ("AAHK") to adopt the Three-Runway System ("3RS") as the future development direction for Hong Kong International Airport ("HKIA"). In March 2015, the ExCo advised and the Chief Executive affirmed the need for the 3RS project at HKIA to cater for the long-term economic and development needs of Hong Kong. Thereafter, AAHK commenced construction of the 3RS in August 2016.

According to the estimates of an international air traffic expert commissioned by AAHK during the planning stage of the 3RS, the annual traffic demand of HKIA would reach 97 million passengers, 8.9 million tonnes of cargo and 602 000 air traffic movements ("ATM") by 2030.

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According to the estimates available at the time, upon the commissioning of the 3RS, the runway capacity of HKIA would increase progressively to the maximum of 102 ATMs per hour; the practical maximum annual capacity of the 3RS would be about 620 000 ATMs.

As AAHK plans for the long-term development of HKIA, the 3RS is one of the major projects to address the growing demand for air traffic in Hong Kong. To cater for long-term air traffic demand, as noted in AAHK's report titled "From City Airport to Airport City", AAHK will enhance the handling capacity of HKIA through a series of measures and development projects. The relevant report can be viewed on the following website: .

In view of the impact of the pandemic and the rapid changes in the current market environment, a continuous planning process for HKIA is needed. AAHK will continue to closely monitor market changes in order to formulate its long-term development strategy.

Anti-epidemic measures in public hospitals

9. DR CHENG CHUNG-TAI (in Chinese): President, it has been reported that earlier on, a woman under quarantine who was feeling unwell was arranged to take a test for the Coronavirus Disease 2019 ("the test") at a Triage and Test ("T&T") Centre set up by erecting tents in the outdoor area of a public hospital, and she was asked to wait there for the test result. Only after that woman had shivered in the outdoor area for almost eight hours under very cold weather was she admitted to the hospital for treatment. In addition, the Hospital Authority ("HA") has strongly recommended that patients receiving day services present a negative test report when attending their first scheduled appointments, and patients attending regular follow-up consultations take the test once a week. Some patients have relayed that the fact that some public hospitals do not provide the testing service has caused great inconvenience to them when they attend follow-up consultations. Furthermore, some healthcare personnel have relayed that implementing the anti-epidemic measures has aggravated their heavy workload. In this connection, will the Government inform this Council whether it knows if HA will:

3772 LEGISLATIVE COUNCIL ― 24 February 2021

(1) improve the arrangements for the T&T Centres by setting up, during inclement weather, such T&T Centres in hospitals' indoor areas or in nearby community halls; and

(2) provide testing service for all patients receiving day services, and improve the work arrangements for healthcare personnel during the epidemic so as to alleviate their work pressure?

SECRETARY FOR FOOD AND HEALTH (in Chinese): President, in consultation with the Hospital Authority ("HA"), I provide a reply to the various parts of the question raised by Dr CHENG Chung-tai as follows:

(1) In light of the development of the Coronavirus Disease 2019 ("COVID-19") epidemic, public hospitals under HA have started setting up Triage and Test ("T&T") Centres at their Accident and Emergency Departments ("AED") since late March 2020 for conducting tests for suspected cases in relatively stable condition, with a view to relieving pressure on isolation beds in public hospitals. Patients will have their nasopharyngeal swab taken at AED direct for testing without admission and will wait for the test results at a designated area. Certain hospitals have designated specific wards as the waiting area while some have set up tents or cubicles outdoors in a well-ventilated environment, which satisfies infection control requirements, for patients to wait for the results. Patients who are tested positive will be admitted to hospitals for isolation and treatment. For public hospitals which have set up outdoor T&T Centre, HA has reminded them to render assistance to patients as appropriate having regard to the weather condition (e.g. when it gets cold or hot), and allow them to wait indoors, where practicable, for the test results.

(2) Since 6 January 2021, HA has strengthened testing for patients attending day care centres and receiving day services. Day patients are strongly advised to obtain a negative result for COVID-19 test within 72 hours prior to the first appointment. Those with regular attendance for day services are recommended to repeat the COVID-19 test on a weekly basis. Patients who will stay in the hospital for less than two hours can be exempted from the testing LEGISLATIVE COUNCIL ― 24 February 2021 3773 requirement provided that they would wear surgical masks at all times in the hospital. Public hospitals will arrange for day patients to undergo testing one or two days prior to their appointments, while weekly testing will be arranged for those with regular attendance. Such arrangements will not affect the day services or follow-up consultations.

In addition, the Government has all along been providing convenient testing services to the public through various channels, including free testing service. People who feel they have a higher risk of exposure or are experiencing mild discomfort can obtain deep throat saliva specimen collection packs from any of the 47 designated general outpatient clinics ("GOPCs") of HA, 121 post offices and 20 MTR stations. After obtaining deep throat saliva specimens as per instructions, they shall return the specimens to any of the 47 designated GOPCs of HA, 13 designated clinics of the Department of Health or designated specimen collection points at 23 government premises. The 19 community testing centres across the territory also provide self-paid testing services to the public for general community or private purposes. In accordance with the epidemic situation and the testing need, the Government also sets up mobile specimen collection stations from time to time at different locations. Patients receiving day services of HA can also undergo testing through the above channels.

The Government has allocated $4.7 billion from the first round of the Anti-epidemic Fund to support HA in tackling the epidemic, in particular for ensuring sufficient support and protection for frontline healthcare staff. HA has been flexibly deploying the resources on various fronts to combat the epidemic, including personnel-related expenditure for frontline staff involved in anti-epidemic efforts; procuring additional personal protective equipment and other relevant accessories; offering Special Rental Allowance ("SRA") and temporary accommodation arrangements; enhancing support for laboratory testing and procuring drug and medical equipment; and enhancing hospital support services, such as cleansing, transportation and supplies, etc.

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To further support HA in combating the winter surge and the fourth wave of the epidemic, and to enhance the capacity of the public healthcare system to manage more new cases, the Government has sought the Legislative Council Finance Committee's approval to allocate $3,044 million additional funding to HA for its establishment and operation of Community Treatment Facility at the AsiaWorld-Expo and North Lantau Hospital Hong Kong Infection Control Centre. The resources provided would also allow HA to sustain its current anti-epidemic efforts and support for frontline healthcare staff.

As for manpower support, HA introduced Special Emergency Response Allowance on 24 February 2020 as a token of appreciation and recognition for staff engaging in high risk duties in response to the COVID-19 epidemic. HA has also introduced SRA starting from 1 February 2020 for staff working in high risk areas or surveillance wards with temporary accommodation needs. In addition, HA has set up the Locum Office to recruit part-time staff in a more flexible and efficient manner, and implemented the Special Honorarium Scheme to strengthen manpower with a view to alleviating the pressure on frontline healthcare staff.

Secondary school students participating in activities that may be unlawful

10. MR WONG TING-KWONG (in Chinese): President, it has been reported that recently, some secondary school students, aided and abetted by some members of District Councils ("DC members"), set up street counters in a number of districts in the name of student bodies. Ostensibly, such students and DC members voiced their objection to the Government's proposed reform of the subject of Liberal Studies for senior secondary education, but in substance they openly spread views that aimed at discrediting the Government and advocating the independence of Hong Kong, which may be in contravention of the law. In this connection, will the Government inform this Council:

(1) of the Government's procedure for vetting and approving applications for setting up street counters; whether the considerations in the vetting and approval of such applications include the background and the source of funding of the applicant organizations, as well as the purposes of setting up street counters;

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(2) whether the co-hosting of the aforesaid street counters falls within the scope of responsibilities of DC members; if not, whether the DC members concerned have been reimbursed public funds for the expenses incurred in setting up the street counters; if they have been reimbursed public funds, whether the Government will ask them to return the money concerned;

(3) whether it knows the current number of secondary school student bodies whose objects are to follow social issues, and the detailed information of such bodies (including the date of establishment, number of members and background);

(4) whether it has enhanced the communication with secondary schools to prevent students from joining student bodies which may engage in unlawful activities; and

(5) given that the authorities may, under certain circumstances, treat offenders under the age of 18 leniently (e.g. by cautioning them under the Police Superintendent's Discretion Scheme in place of institution of prosecution, or by the prosecution offering no evidence when the accused has agreed to be bound over) so as to give them an opportunity for rehabilitation, whether the Government has examined if such arrangements will embolden minors to participate in activities that may be unlawful?

SECRETARY FOR EDUCATION (in Chinese): President, students are the future pillars and hopes of the society. The Government has been, through different channels, cultivating their outlook on life and positive social awareness and establishing their correct values. No one should incite students to indicate their stance on controversial or evolving political issues, stir up their emotions, or even mobilize them to take part in inappropriate or even unlawful activities. We strongly condemn any organizations or people who use students as political chips. Their acts have been causing harm to our students and affecting their normal learning as well as development of psychological well-being.

After consulting the Development Bureau, the Home Affairs Bureau and the Security Bureau, our consolidated reply to the question raised by Mr WONG is as follows:

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(1) Prior application to is required for setting up street counters on Government lands for holding non-profit making and non-fund raising activities. Designated spots available for application can be ascertained at the relevant District Lands Offices or the "GeoInfo Map" web page of the Government. According to existing guidelines, the following parties may submit applications, including: incumbent Legislative Council members/District Council members, charitable institutions or trusts of a public character which are exempt from tax under Section 88 of the Inland Revenue Ordinance (Cap. 112), societies registered under the Societies Ordinance (Cap. 151) and other legally registered bodies, government departments and statutory organizations. No commercial promotions or commercial advertisements are permitted at these street counters. An applicant is required to fill in an application form and provide the necessary information including scheduled date(s), time and location(s), and a brief description of the non-profit-making activity. Once an application is received, Lands Department would process it in accordance with established mechanism, including checking the applicant's eligibility according to the aforementioned criteria and checking whether the location(s) under application is/are within the designated spots available for application and available for use.

(2) The Guidelines on the Remuneration Package for Members of the District Councils of the HKSAR ("Remuneration Guidelines") formulated by the set out the eligibility criteria for claiming various types of expenses reimbursements. If a District Council member claims for expenses which are not related to the District Council duties, the related expenses will not be reimbursed. The District Council Secretariat can also recover the amount concerned in accordance with Remuneration Guidelines.

(3) The Government does not possess related information on organizations which are established by students on their own initiative outside schools with objectives related to social issues.

(4) The ("EDB") has been maintaining close communication with schools. Earlier on, in view of the social incidents, we have issued guidelines to schools from time to time to LEGISLATIVE COUNCIL ― 24 February 2021 3777

remind them to adopt appropriate measures to shield schools from political interference coming from sources outside schools. We also issued a Circular titled "National Security: Maintaining a Safe Learning Environment Nurturing Good Citizens" in February to provide schools with guidelines and specific measures on school administration and education with a view to maintaining a safe and orderly learning environment in schools and nurturing students to be good law-abiding citizens. If students are identified to have joined activities or bodies which may be unlawful outside schools, we will provide timely advice to schools. If necessary, we will also contact relevant law enforcement agencies to understand the incident and follow up as appropriate.

EDB adopts the strategy of "prevention is better than cure". We strongly encourage home-school cooperation and strengthen schools' guidance and discipline support. EDB encourages schools to establish correct values and virtues through learning activities inside and outside classrooms.

(5) For arrestees under the age of 18 who have expressed contrition and are not involved in serious offences, in consideration of the fact that some of them committed criminal offences under peer pressure, if they admit their wrongdoings, the Police are prepared to consider handling the cases with measures conducive to their rehabilitation as appropriate, for example, by cautioning them under the Police Superintendent's Discretion Scheme ("PSDS") or imposing bind over orders, with the prerequisite that the minors must admit their wrongdoings. Under PSDS, a police officer at the rank of Superintendent or above may exercise his discretion in considering the issue of a caution to a juvenile offender in place of criminal prosecution with a view to facilitating the rehabilitation of juvenile offenders and promoting law-abiding awareness. Regarding the persons arrested in relation to the violent and illegal acts since 9 June 2019, as at 31 December 2020, 19 persons were released after being issued with superintendent's cautions and around 130 students being bound over.

In deliberating whether to administer a caution, a police officer will carefully take into account a number of factors related to the case, such as whether the juvenile offender was under the age of 18 at the 3778 LEGISLATIVE COUNCIL ― 24 February 2021

time the caution is administered; whether the offender voluntarily and unequivocally admits the offence; and whether the offender and his parents or guardian(s) agree(s) to the superintendent's caution; the nature, seriousness and prevalence of the offence (e.g. the harm suffered by the victim, the degree of damage done to the property, the value of the property stolen, etc.); the offender's previous criminal record, etc. The Police have also been implementing measures on various fronts to facilitate the rehabilitation of juveniles issued with superintendent's cautions in an effort to reduce recidivism, for example considering to refer them to the Social Welfare Department, Education Bureau and/or non-governmental organizations.

Processing of applications for building small houses

11. MS YUNG HOI-YAN (in Chinese): President, according to the New Territories Small House Policy ("the Policy"), a New Territories male indigenous villager over 18 years old is entitled to one concessionary grant during his lifetime to build one small house. However, following a judgement handed down by the Court of First Instance ("CFI") of the High Court on 8 April 2019 on a judicial review case of the Policy, the Government has suspended the receipt and processing of applications for building small houses on government land granted through Private Treaty Grant ("PTG") and Land Exchange. It has been reported that such an arrangement has led to a huge backlog of applications for building small houses awaiting to be processed, thereby arousing grave dissatisfaction among quite a number of indigenous villagers of the New Territories. In a judgement handed down on the 13th of January this year on the appeals against the ruling of the said case, the Court of Appeal ("CA") ruled that the arrangements of Free Building Licence, PTG and Land Exchange under the Policy are lawful traditional rights and interests of the indigenous villagers of the New Territories within the meaning of Article 40 of the Basic Law, and are lawful and constitutional. Besides, I wrote to the Secretary for Development in September last year relaying that the overly long time taken (five to 10 years needed in general and even as long as 20-odd years in some cases) by the Government to vet and approve applications for building small houses, coupled with the incessantly rising construction costs, have greatly increased the financial burden on indigenous villagers in building small houses. In this connection, will the Government inform this Council:

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(1) of the respective numbers of applications for building small houses which were (i) received, (ii) approved, (iii) rejected, and (iv) still being processed by the Lands Department ("LandsD") in each of the past three years;

(2) of the number of applications for building small houses which have been submitted after CFI handed down the aforesaid judgement and are awaiting to be processed, and among such cases, the respective numbers of those applications for building small houses on government land granted through PTG and Land Exchange;

(3) of the respective numbers of small houses which were (i) under construction and (ii) completed in each of the past five years, as well as the total area of the sites in Village Type Development zones involved;

(4) of LandsD's staffing establishment responsible for processing applications for building small houses, as well as the average, longest and shortest time taken to vet and approve those applications which had been approved, in each of the past five years;

(5) how the Government will follow up the aforesaid judgement of CA; of the anticipated earliest time for resuming the receipt and processing of applications for building small houses on government land granted through PTG and Land Exchange; whether it will allocate additional resources and manpower to LandsD to expedite the processing of backlog applications; if so, of the details and implementation timetable; if not, the reasons for that; and

(6) whether it has conducted any detailed assessment on (i) the number of persons eligible for applying for building small houses in the coming 10 years, (ii) the number of applications for building small houses to be made by them, and (iii) the demand for lands in different districts across the New Territories arising from such applications; if so, of the details, the criteria based on which such assessments were made, and the new measures in place to cope with the relevant land demand; if not, the reasons for that and whether it will conduct relevant assessments in the near future?

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SECRETARY FOR DEVELOPMENT (in Chinese): President,

(1) and (2)

A breakdown of the number of small house applications in the past three years is set out below:

Number of Number of Number of Number of applications small house Year applications applications being applications approved rejected processed received (at year end) 2018 1 350 830 1 080 8 223 2019 2 175 565 815 6 419 2020 814 278 567 7 113 Total 4 339 1 673 2 462 Not applicable

Notes:

(1) As applications received in a year may not have their processing completed in the same year, the applications approved, rejected and being processed in a year may not correspond with the applications received during the same year.

(2) The number of applications being processed does not cover applications that have been received and pending processing.

(3) In light of the judgment of the Court of First Instance ("CFI") on the judicial review of the Small House Policy, the Lands Department ("LandsD") suspended the receipt and processing of applications for government land for building small houses by way of Private Treaty Grant ("PTG") and Land Exchange between 8 April 2019 and 21 February 2021. Therefore, the cases being processed as at end-2019 and end-2020 do not cover these two types of applications.

(3) The number of small houses completed with Certificate of Compliance ("CC") issued by LandsD in the past five years is set out below:

Year Number of small houses completed with CC issued 2016 814 2017 799 2018 851 LEGISLATIVE COUNCIL ― 24 February 2021 3781

Year Number of small houses completed with CC issued 2019 817 2020 397 Total 3 678

LandsD does not compile statistics on the number of small houses under construction each year and the total land area of "village type development" zones involved.

(4) Since some of the staff members involved in processing small house applications are also responsible for other land administration duties, and the department reviews and redeploys manpower from time to time in light of changing operational requirements, LandsD does not have precise information on the number of staff members dedicated to the processing of small house applications. As a general reference, around 100 staff members are involved in processing small house applications in LandsD.

The processing time of small house applications depends on the complexity of individual application, such as whether there are local objections, land title or boundary problems, or whether there are requirements to be fulfilled in advance under other regulatory regimes. LandsD does not compile statistics on processing time.

(5) The Court of Appeal ("CA") handed down the judgment on the appeals against the CFI's ruling on the judicial review on the Small House Policy on 13 January 2021. CA ruled that all components under the Policy, namely the arrangements of Free Building Licence, PTG and Land Exchange, are the lawful traditional rights and interests of the indigenous inhabitants of the New Territories within the meaning of Article 40 of the Basic Law, hence lawful and constitutional. The Government will continue to implement the Policy. Regarding applications for government land to build small houses by way of PTG and Land Exchange with the receipt and processing suspended earlier in light of the CFI's judgment, LandsD has resumed the receipt and processing of these two types of applications with effect from 22 February 2021.

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LandsD will, taking into account the workload in different District Lands Offices, continue to keep in view the deployment of manpower with a view to making suitable arrangements when necessary.

(6) The number of applications for small houses is affected by factors such as the birth of indigenous villagers, their family and financial considerations etc., and whether individual indigenous villager will apply for a small house grant also depends on his own circumstances and wishes. LandsD does not conduct forecast on eligible applicants and small house applications. According to the established policy, whether a small house application can be approved depends on whether the relevant land is suitable for small house construction, in which a series of planning, lands and technical factors have to be considered. LandsD will continue to consult relevant departments and examine each individual application in accordance with the established mechanism.

Supporting the operators of scheduled premises and their employees

12. MR JEFFREY LAM (in Chinese): President, to cope with the epidemic, the Government made the Prevention and Control of Disease (Requirements and Directions) (Business and Premises) Regulation (Cap. 599F) in March last year, and has since invoked the Regulation on a number of occasions to direct scheduled premises to suspend operation during a specified period. Some operators of such premises have relayed to me that their applications for subsidies made to the Anti-epidemic Fund ("the Fund") have been approved but the subsidies have not been disbursed to them after a protracted period of time. As a result, they are on the brink of closing down due to cash flow problems, and their employees have to take prolonged no-pay leave and are unable to sustain their living. In this connection, will the Government inform this Council:

(1) of the dates on which, and the total up-to-date number of days for which, the various types of scheduled premises suspended operation pursuant to the requirements of Cap. 599F, as well as the respective estimated numbers of affected employees in the various types of such premises;

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(2) of the latest implementation situation of the various support measures for scheduled premises introduced by the Government under the Fund, including (i) the number of applications received, (ii) the number of applications for which subsidies have been disbursed, (iii) the number of applications for which approval has been given but subsidies have not yet been disbursed, (iv) the average amount of subsidy granted for each approved application, (v) the total amount of subsidies disbursed, and (vi) the current balance of the commitment (set out in a table by name of measure); and

(3) of the further measures in place to assist the operators of scheduled premises and their employees in tiding over the difficult times?

SECRETARY FOR FINANCIAL SERVICES AND THE TREASURY (in Chinese): President, having consulted relevant Policy Bureaux and departments, our response to Mr LAM's question is set out below:

(1) The dates on which, and the total number of days for which, various scheduled premises suspended operation pursuant to the requirements of Cap. 599F are detailed at Annex. The Government does not compile statistics on the number of employees for the scheduled premises.

(2) The Government established the Anti-epidemic Fund ("AEF") last year to enhance Hong Kong's capability in combating the coronavirus disease-19 ("COVID-19") epidemic and to provide timely assistance or relief to enterprises and members of the public hard hit by the epidemic or affected by anti-epidemic measures. The AEF Steering Committee chaired by the Chief Secretary for Administration considers and approves proposals for initiatives, and oversees and coordinates matters relating to the operation of AEF.

Since the establishment of AEF, the Government has been regularly submitting reports on the implementation progress of various AEF measures to the Legislative Council, including the number of applications received and approved, the amount of subsidy disbursed, etc. The latest report was submitted on 19 February 3784 LEGISLATIVE COUNCIL ― 24 February 2021

2021 and uploaded onto . Members may make reference to the aforementioned report for the implementation progress of individual measures.

(3) The Government recognizes that many businesses and individuals have done their part in complying with anti-epidemic measures of the Government since the onset of COVID-19. To prevent the spread of COVID-19 in time, it is still necessary for the Government to impose restrictions on certain premises in response to the development of the epidemic. These restrictions have inevitably affected the business operators of the relevant premises. Therefore, the Government has rolled out various measures to provide relief for affected businesses and individuals over the past year or so.

As the epidemic is continuously evolving and numerous businesses and individuals are affected, the Government must take into account the affordability on the public purse when considering relief measures. We will continue to provide timely relief in a targeted approach to businesses and individuals hard hit by the pandemic based on the pandemic development, and at the same time, ensure healthy public finance to cope with unforeseen needs.

Annex

Dates and Duration of Closure of Scheduled Premises Pursuant to Cap. 599F

Suspension period in accordance with the requirements and directions under Scheduled premises Total days Cap. 599F (As at 17 February 2021) 1 Amusement game 28 March 2020 to 7 May 2020; 177 centre 15 July 2020 to 10 September 2020; 2 December 2020 to 17 February 2021 2 Bathhouse 28 March 2020 to 28 May 2020; 211 15 July 2020 to 17 September 2020; 26 November 2020 to 17 February 2021 LEGISLATIVE COUNCIL ― 24 February 2021 3785

Suspension period in accordance with the requirements and directions under Scheduled premises Total days Cap. 599F (As at 17 February 2021) 3 Fitness centre 28 March 2020 to 7 May 2020; 162 15 July 2020 to 3 September 2020; 10 December 2020 to 17 February 2021 4 Place of amusement 28 March 2020 to 7 May 2020; 170 15 July 2020 to 3 September 2020 (Public (Public skating rinks were closed until skating rink: 10 September 2020); 177) 2 December 2020 to 17 February 2021 5 Place of public 28 March 2020 to 7 May 2020; 163 entertainment―cinema 15 July 2020 to 27 August 2020; 2 December 2020 to 17 February 2021 Place of public 28 March 2020 to 7 May 2020; 184 entertainment―theme 15 July 2020 to 17 September 2020; park 2 December 2020 to 17 February 2021 Place of public 28 March 2020 to 7 May 2020; 184 entertainment― 15 July 2020 to 17 September 2020; exhibition venue 2 December 2020 to 17 February 2021 (excluding museum) Place of public 28 March 2020 to 7 May 2020; 169 entertainment― 15 July 2020 to 10 September 2020; performance venue 10 December 2020 to 17 February 2021 Other place of public 28 March 2020 to 7 May 2020; 177 entertainment (except 15 July 2020 to 10 September 2020; cinema, theme park, 2 December 2020 to 17 February 2021 exhibition venue and performance venue) 6 Premises (commonly 28 March 2020 to 28 May 2020; 215 known as party room) 15 July 2020 to 17 September 2020; that are maintained or 22 November 2020 to 17 February 2021 intended to be maintained for hire for holding social gatherings 3786 LEGISLATIVE COUNCIL ― 24 February 2021

Suspension period in accordance with the requirements and directions under Scheduled premises Total days Cap. 599F (As at 17 February 2021) 7 Beauty parlour 10 April 2020 to 7 May 2020; 142 15 July 2020 to 27 August 2020; 10 December 2020 to 17 February 2021 8 Club-house 15 July 2020 to 27 August 2020 (During 44 the aforesaid period, all facilities within club-houses must be closed, except catering premises therein.) (Note: Scheduled premises within club-houses must be closed in accordance with the applicable directions.) 9 Establishment 1 April 2020 to 28 May 2020; 207 (commonly known as 15 July 2020 to 17 September 2020; club or nightclub) that 26 November 2020 to 17 February 2021 is open late into the night, usually for drinking, and dancing or other entertainment 10 Karaoke establishment 1 April 2020 to 28 May 2020; 201 15 July 2020 to 17 September 2020; 2 December 2020 to 17 February 2021 11 Mahjong-tin kau 1 April 2020 to 7 May 2020; 173 premises 15 July 2020 to 10 September 2020; 2 December 2020 to 17 February 2021 12 Massage establishment 10 April 2020 to 7 May 2020; 149 15 July 2020 to 3 September 2020; 10 December 2020 to 17 February 2021 13 Sports premises 29 July 2020 to 10 September 2020 114 (reopening by phases since 28 August 2020); 10 December 2020 to 17 February 2021 (Some outdoor sports premises have been reopened since 4 February 2021.) LEGISLATIVE COUNCIL ― 24 February 2021 3787

Suspension period in accordance with the requirements and directions under Scheduled premises Total days Cap. 599F (As at 17 February 2021) 14 Swimming pool 29 July 2020 to 17 September 2020; 129 2 December 2020 to 17 February 2021 15 Hotel or guesthouse Not applicable Not (except the premises (Note: Scheduled premises within hotels applicable specified in the or guesthouses must be closed in Schedule to the Hotel accordance with the applicable and Guesthouse directions.) Accommodation (Exclusion) Order (Cap. 349 sub. leg. C))

Alleviating the burden of tax

13. MS STARRY LEE (in Chinese): President, the Coronavirus Disease 2019 epidemic has dealt a heavy blow to Hong Kong's economy, resulting in quite a number of employees earning substantially less income and even being out of a job, as well as quite a number of enterprises making substantially less profits and even closing down. On the other hand, taxpayers with financial difficulties may apply to the Inland Revenue Department ("IRD") for payment of tax by instalments. The Government has implemented the following temporary arrangements: for those taxpayers who have been approved on grounds of financial difficulties to settle by instalments their salaries tax, profits tax and personal assessment demand notes issued between August 2020 and August 2021 for the year of assessment 2019-2020, surcharge may be waived for a maximum period of one year counting from the respective due dates of the demand notes, provided that they settle all the instalment payments on schedule. In addition, if taxpayers anticipate that there will be a decrease of more than 10% in their net chargeable income or assessable profits for the current year of assessment, they may apply to IRD for holding over part of or the whole of the provisional tax. Such holding over arrangement applies to salaries tax, profits tax and property tax. In this connection, will the Government inform this Council:

3788 LEGISLATIVE COUNCIL ― 24 February 2021

(1) of the respective numbers of applications received by IRD up to the end of last month for (a) payment by instalments of (i) salaries tax, (ii) profits tax and (iii) property tax for the year of assessment 2019-2020, and (b) holding over of provisional tax in respect of those three taxes for the year of assessment 2020-2021; how these figures compare to the relevant figures of the same period last year;

(2) regarding the respective applications for (a) payment of tax by instalments and (b) holding over of provisional tax mentioned in (1), of the respective total amounts of (i) salaries tax, (ii) profits tax and (iii) property tax involved; among these cases, the respective largest amounts of tax and provisional tax involved in respect of those three taxes, and the respective occupations and trades in which the applicants concerned were engaged; and

(3) whether it has examined new measures to help relieve the burden of tax on those employees with decreased income and those companies with dropped profits, such as allowing companies with dropped profits to defer the payment of profits tax for one year, or reducing the tax rates concerned, so that they could have more operating funds?

SECRETARY FOR FINANCIAL SERVICES AND THE TREASURY (in Chinese): President, my response to each part of the Member's question is set out below:

(1) and (2)

For taxpayers with financial difficulties who were approved by the Inland Revenue Department ("IRD") for instalment settlement of their salaries tax, profits tax and personal assessment demand notes issued between December 2019 and December 2020 for the year of assessment ("YA") 2018-2019, or those issued between August 2020 and August 2021 for the YA 2019-2020, no surcharge will be imposed(1) for a maximum period of one year counting from the

(1) Taxpayers paying property tax may also apply for payment of tax by instalments, but the waiver of surcharge is not applicable to them. About 60 applications (involving $4.2 million) and 80 applications (involving $3.9 million) for payment of property tax by instalments were recorded in the financial years of 2019-2020 and 2020-2021 (by the end of January 2021) respectively. LEGISLATIVE COUNCIL ― 24 February 2021 3789 respective due dates of the demand notes, provided that the instalment plans are duly adhered to.

Statistics on the instalment plans approved for settlement of tax for the YA 2019-2020 from August 2020 to January this year are as follows:

Amount of tax involved Payment by instalments Number of cases ($ million) Salaries Tax 1 280 184 Profits Tax 150 1,037 Personal Assessment 50 6

Statistics on the instalment plans approved for settlement of tax for the YA 2018-2019 from December 2019 to January this year are as follows:

Amount of tax involved Payment by instalments Number of cases ($ million) Salaries Tax 5 000 730 Profits Tax 870 1,837 Personal Assessment 130 9

As some taxpayers may have yet to submit their applications for payment by instalments for the YA 2019-2020, a direct comparison cannot be made between the figures concerned and those recorded in the previous year.

IRD also provides for a holding over arrangement of provisional tax. Taxpayers anticipating a decrease of more than 10% in their net chargeable income or assessable profits for the current YA may apply for holding over the whole or part of the provisional tax.

The number of approved applications for holding over of provisional tax from April 2020 to January this year, and the amount of tax involved are as follows:

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Holding over of Amount of tax involved Number of cases provisional tax ($ million) Salaries tax 89 800 4,454 Profits tax 6 700 21,419 Property tax 5 100 95

The number of approved applications for holding over of provisional tax for the financial year ("FY") 2019-2020, and the amount of tax involved are as follows:

Holding over of Amount of tax involved Number of cases provisional tax ($ million) Salaries tax 47 200 3,564 Profits tax 6 100 16,766 Property tax 3 000 47

Since the Inland Revenue (Amendment) (Tax Concessions) Bill 2019 was only passed in November 2019, taxpayers received their tax bills for the YA 2019-2020 later than usual. Thus, the number of applications for holding over of provisional tax for the FY 2019-2020 cannot be directly compared with that recorded in this year.

Pursuant to section 4 of the Inland Revenue Ordinance on official secrecy, IRD must not disclose information of individual taxpayers.

(3) With a view to helping hard-hit business sectors and individuals tide over the difficult times, the Government has introduced a series of measures since early 2020 amounting to over $300 billion through the 2020-2021 Budget and four rounds of injections into the Anti-epidemic Fund to relieve the financial pressure of businesses and individuals.

As mentioned in the response to the first two parts of the question, businesses and individuals may make use of the tax instalment payment and holding over of provisional tax arrangements to improve their cash flow. Salaries tax and profits tax are key sources of government revenue. When assessing any related LEGISLATIVE COUNCIL ― 24 February 2021 3791

proposals, we will take into consideration a range of factors, including the overall economic situation, the Government's fiscal position, and the needs of the community. The new Budget will maintain a counter-cyclical fiscal policy, with appropriate measures to alleviate the impact of the economic downturn on people's livelihood and to lay the foundation for economic recovery from the epidemic.

Procurement of face masks by the Government

14. MR CHUNG KWOK-PAN (in Chinese): President, in the early days of the outbreak of the Coronavirus Disease 2019 epidemic at the beginning of last year, there was a shortage of face masks ("masks") across the globe. The Government Logistics Department ("GLD") sourced masks globally, and awarded direct procurement contracts without going through the tendering procedure. It has been reported that GLD procured a total of 1.12 billion masks last year; quite a number of the delivered masks had quality problems, and a significant quantity of masks have not been delivered although the deadlines have expired. In this connection, will the Government inform this Council:

(1) in respect of those masks which have not been delivered although the deadlines have expired, of (i) their quantity, (ii) the originally scheduled and latest anticipated delivery dates, and (iii) the reasons for their not being delivered although the deadlines have expired (set out in a table by procurement contract number and name of supplier); the average unit price of such masks, the total amount of deposits involved, and the total amount of remaining payments; whether GLD has requested the suppliers concerned to return the deposits or make compensation; and

(2) of the quantity of masks with quality problems, with a breakdown by place of origin, name of manufacturer and type of quality problems (e.g. bearing false trade descriptions, and bacteria counts exceeding limits); how GLD uncovered that such masks had quality problems; the quantity of such masks that had been distributed to various government departments before quality problems were uncovered, 3792 LEGISLATIVE COUNCIL ― 24 February 2021

the disposal methods for the undistributed masks, and the follow-up actions taken by GLD against the suppliers concerned?

SECRETARY FOR FINANCIAL SERVICES AND THE TREASURY (in Chinese): President, our reply to Mr CHUNG Kwok-pan's question is as follows:

(1) Amongst the masks procured by the Government Logistics Department ("GLD") in 2020, excluding those rescinded contracts, there are 400 000 masks of overdue delivery concerning two local suppliers as listed in the following table. The relevant contracts are for the supply of 2.6 million small-sized masks with an average unit price of about $0.65, of which 2.2 million masks have already been delivered to GLD. For the remaining 400 000 masks, the suppliers indicated that the delivery of these masks had to be postponed due to export restrictions at the place of manufacture. Details are set out in the following table. The Government is not required to pay any deposit or advance payment under the contracts. GLD will closely monitor the delivery of the masks concerned.

Number of masks Contract Name of of overdue delivery Delivery date number supplier (pieces) L/M (538) to China 300 000 Original: October GLDPA/1-90 International 2020 Import & Export Latest estimation: Company March 2021 Limited L/M (581) to China 100 000 Original: GLDPA/1-90 Resources November 2020 Textiles Company Latest estimation: Limited March 2021

(2) As at end December 2020, GLD has identified that around 83.7 million masks might be problematic. Details are as follows:

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Not All Originated Suspected From the Quality Problems False Trade Purported Place of Description Manufacture How the Through random GLD learnt from a Noting problems inspections and newspaper report C&ED's arose laboratory tests that the supplier investigation, arranged by GLD concerned had GLD allegedly suspected repackaged masks that the from another place supplier of manufacture as concerned masks produced in had the place specified submitted in the contract. false After enquiries documents with the supplier and referred concerned, GLD the matter to suspected that the the Police for place of origin of follow-up the masks delivered by the supplier was not the same as the one specified in the contract and reported the case to the Customs and Excise Department ("C&ED") Quantity Around 45 million Around 32 million Around involved 6.7 million (pieces) Place of Mainland, Japan, Japan Mainland origin India, Russia, (purported by the Turkey, supplier) Kazakhstan, 3794 LEGISLATIVE COUNCIL ― 24 February 2021

Not All Originated Suspected From the Quality Problems False Trade Purported Place of Description Manufacture Malaysia, Indonesia, Sri Lanka, the United States of America, Ireland, Dubai and Germany Number of Around Not distributed Around masks 3.27 million 3.12 million distributed to government departments Number of Around Not used Around masks used 3.21 million 820 000 by government departments Disposal GLD had informed The masks are GLD had means for relevant temporarily kept by informed the unused departments to GLD pending relevant masks cease using the action by the departments masks and return relevant law to cease the remaining enforcement using the stock to GLD for department masks, and follow-up had passed the undistributed masks and the unused masks from relevant departments to C&ED for action LEGISLATIVE COUNCIL ― 24 February 2021 3795

Not All Originated Suspected From the Quality Problems False Trade Purported Place of Description Manufacture Follow-up GLD is following GLD has referred the cases to action taken up with the relevant law enforcement agents by GLD suppliers to and will render full cooperation against the request on their evidence collection and suppliers replacement/refund investigation work. GLD has for the whole batch rescinded the procurement of masks contracts concerned and is seeking to recover all losses and compensation from the suppliers concerned

To avoid compromising negotiations or law enforcement work and causing implications to any possible litigations, GLD is not in a position to disclose the details of individual contracts and information about the suppliers concerned.

Supporting street sleepers amid the epidemic

15. MR MARTIN LIAO (in Chinese): President, it has been reported that some street sleepers have recently been confirmed, one after another, to have been infected with the Coronavirus Disease 2019. As revealed by a survey conducted by a grassroots concern group and some media reports, the number of street sleepers has surged amid the epidemic. Among the street sleepers, quite a number of them have become street sleepers for the first time upon losing their jobs or are Hong Kong people who originally resided on the Mainland and have moved back to Hong Kong. Some children are even found street-sleeping with their family members. The situation of street sleepers is made more difficult under the stringent anti-epidemic measures. For example, some voluntary organizations have reduced the distribution of food and materials, street sleepers gathering and sleeping in the streets for mutual care may be in breach of the "No-gathering Order", and the closure of some public shower facilities has reduced the places available for street sleepers to keep their personal hygiene. The relevant situation has aroused social concern. In this connection, will the Government inform this Council:

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(1) whether it has assessed the risks of street sleepers contracting the epidemic disease and spreading it to the community, and whether it has put in place special support measures to help them fight against the epidemic, so as to protect their health and that of the relevant communities;

(2) whether it has compiled statistics on the monthly numbers of street sleepers since the outbreak of the epidemic in December 2019 (and among them, the respective numbers of those who have become street sleepers for the first time upon losing their jobs and those who have moved back from the Mainland), and the main reasons leading to their street sleeping;

(3) whether it has found underage street sleepers; if so, whether it will take special measures to provide them with appropriate support; and

(4) of the respective numbers of street sleepers of new cases, since January 2020, who have been arranged to be admitted to residential places subvented by the Social Welfare Department and those operated by non-governmental organizations on a self-financing basis, and the number of street sleepers who have extricated themselves from street sleeping upon receiving other assistance?

SECRETARY FOR LABOUR AND WELFARE (in Chinese): President, with regard to the Member's question, having consulted the ("FHB"), I set out the reply as follows:

(1) Street sleeping is a complex social problem involving policies and work of various bureaux and departments. Concerned government departments and local service units have been in close collaboration to assist street sleepers.

According to the information provided by FHB, since street sleepers would generally use public bathhouses or public toilets more frequently, eat and rest in places with relatively poor environmental hygiene conditions and might not be equipped with or use appropriate protective gear, they might be more susceptible to LEGISLATIVE COUNCIL ― 24 February 2021 3797

infection. The Centre for Health Protection of the Department of Health has enhanced collaboration with the Social Welfare Department ("SWD"), Home Affairs Department and non-governmental organizations ("NGOs") in tracing confirmed cases involving street sleepers and strengthening anti-epidemic education, etc.

SWD provides subvention to NGOs to operate three Integrated Service Teams ("ISTs") for Street Sleepers. Through outreaching services, ISTs reach out to street sleepers for early identification of welfare needs and service referral. During the pandemic, ISTs continued to conduct outreaching visits so as to identify the social welfare needs of street sleepers and provide them with the services required, including dissemination of up-to-date pandemic-related information and distribution of protective gear. ISTs could make use of SWD's emergency fund for meeting the urgent needs of street sleepers as and when required. In addition, to assist welfare units to step up preventive measures against the spread of the virus, SWD has provided four rounds of special allowance to subvented NGOs (including service units serving street sleepers) and NGOs operating hostels for street sleepers on a self-financing basis to purchase personal protective equipment and disinfection supplies.

(2) According to the information collected by SWD-subvented NGOs which provide services to street sleepers, there were about 1 500 street sleepers in 2020, and the main reason for street sleeping was the inability to pay rent. SWD does not have information on the monthly statistics on the number of street sleepers, number of persons who have become street sleepers for the first time upon losing their jobs and street sleepers who have moved back from the Mainland.

(3) ISTs have not reported any cases of street sleeper being a minor. If any such cases are found, ISTs will make referral to relevant social service units or departments for follow up in accordance with the case situation and service needs.

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(4) In 2020, the cumulative number of admissions for residential service in emergency/temporary shelters/hostels/short-term hostels subvented by SWD was 523, and the utilization rate was 78%. The number of cases having given up street sleeping after receiving support and follow-up from ISTs was 299 in the same year. SWD does not have information on cases who have given up street sleeping after admittance to residential places operated by NGOs on a self-financing basis and receipt of other assistance.

Caring for the nature

16. MR YIU SI-WING (in Chinese): President, it has been reported that quite a number of members of the public turned to the countryside for recreation and amenity since they could not travel abroad and most of the cultural, recreational and sports facilities had been closed amid the epidemic. However, a small number of countryside visitors who are uncivic-minded have performed acts which ruin the natural environment, such as recklessly discarding used face masks which may spread diseases and other rubbish, illegally riding motocross bikes which has intensified soil erosion, climbing up trees for photo taking, as well as camping and lighting a fire at non-designated locations. In this connection, will the Government inform this Council:

(1) of the number of visitor arrivals to the countryside and the quantity of rubbish collected therein, in each of the past three years;

(2) of the respective numbers of prosecutions instituted, in each of the past three years, against countryside visitors for commissioning offences in (i) the country parks and (ii) other countryside areas, with a breakdown by the offence involved and the penalty handed down by the court (if any);

(3) of the expenditure and manpower involved in the maintenance of the facilities in the country parks (e.g. country trails), as well as the total area/length rehabilitated, in each of the past three years; and

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(4) what new measures are in place to raise countryside visitors' awareness of caring for the nature?

SECRETARY FOR THE ENVIRONMENT (in Chinese): President, there have been many visitors going to the country parks and other countryside areas since the epidemic last year. Relevant government departments have stepped up patrol and law enforcement against illegal activities in country parks and popular locations in other countryside areas. A series of measures have been taken to strengthen publicity on caring for the countryside.

Having consulted the relevant departments, the Government's reply to the question raised by Mr YIU is as follows:

(1) Over the past three years, the number of visitors to country parks and the amount of litter collected are tabulated in Table 1 in Annex. Concerned departments do not maintain relevant statistics on countryside areas other than country parks.

(2) The Agriculture, Fisheries and Conservation Department ("AFCD") is committed to combating illegal activities in country parks so as to protect the natural environment. Over the past three years, the number of convicted cases under the Country Parks and Special Areas Regulations (Cap. 208A) were 724 (2018), 574 (2019) and 678 (2020) respectively. These cases mainly involved littering, unauthorized possession or driving of bicycles or vehicles, damage of plants, and use of fire or camping outside the designated areas in country parks, etc. Offenders were fined from $100 to $2,000. Details are tabulated in Table 2 in Annex. Concerned departments do not maintain relevant statistics on countryside areas other than country parks.

(3) The repair and maintenance of country park facilities (including hiking trails, barbecue sites and campsites) form part of AFCD's regular management work for country parks. There is no breakdown of the manpower and expenditure involved. Over the past three years, on top of the departmental staff, AFCD also employed more than one hundred non-civil servants with a total of 3800 LEGISLATIVE COUNCIL ― 24 February 2021

over $20 million to assist in the trail maintenance work in various country parks. During these three years, the total length of trails constructed and repaired in country parks was about 40.5 km. AFCD also carried out minor improvement works in country parks such as installation of water dispensers.

(4) AFCD has been implementing the "Take Your Litter Home" public education programme together with green groups and hiking groups since 2015 and has installed water dispensers in country parks. The programme gets the public involved in the protection of the countryside by nurturing their good habits of taking away their own litter after visiting the country parks and bringing their own water bottles. The department also displayed promotional banners and posters at suitable locations of country parks, appealed to the public through social media and radio programmes to maintain environmental hygiene while visiting the countryside, as well as placing advertisements on public transport and media to carry out relevant promotion.

To minimize the impact to the natural environment brought by the increase in visitors due to the epidemic, the Environmental Protection Department ("EPD") ran the Green Hiking Etiquette Campaign from September to November last year. Under joint efforts with non-profit-making organizations ("NPOs"), over a dozen of green ambassadors were employed to promote the "Leave No Trace at Mountain and Sea" hiking concept, such as "Take Your Litter Home", "bring own bottle to reduce single-use plastic consumables", "proper disposal of masks", etc. to the general public at popular hiking spots (such as Tai Tong in Yuen Long and the Tsing Yi Nature Trails) during the weekends. Since September last year, EPD has also engaged about 100 shoreline wardens to assist in promoting clean shorelines, which includes conducting regular shoreline clean-ups and refuse surveys at over 50 coastal sites across the territory, as well as producing promotional and educational videos. Furthermore, the , through various social platforms such as "Clean Shorelines", "Big Waster" and "Environmental Campaign Committee" and collaboration with NPOs, also promotes relevant messages with multichannels.

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Annex

Table 1: Over the past three years, the number of visitors to country parks and the amount of litter collected are tabulated as follows:

Year Number of visitors (million) Amount of litter (tonnes) 2018 12.3 3 000 2019 11.2 2 500 2020 12.0 2 300(1)

Note:

(1) The litter collected within country parks were mainly from the campsites and barbecue sites. Since the campsites and barbecue sites were closed for certain periods in 2020, there was a decrease in the amount of litter collected despite the increase in the overall number of visitors to country parks.

Table 2: Over the past three years, the number of convicted cases and the fine by type of offence under the Country Parks and Special Areas Regulations (Cap. 208A) are tabulated as follows:

Number of convicted cases Types of offence Fine ($) 2018Note 2019Note 2020Note Littering 164 92 77 1,500 Unauthorized possession or driving of 481 435 493 200 to 2,000 bicycles or vehicles Damage of plants 14 15 19 100 to 1,000 Illegal use of fire 3 2 8 400 to 600 Illegal camping 50 23 12 100 to 1,500 Entry of closed sites 0 0 61 400 to 1,200 Others 12 7 8 500 to 1,000 Total 724 574 678

Note:

Due to the time required for prosecution, the year in which the offence took place may be different from that of conviction for the above prosecution cases.

3802 LEGISLATIVE COUNCIL ― 24 February 2021

Irregularities concerning law firms

17. DR CHIANG LAI-WAN (in Chinese): President, recently, the Law Society of Hong Kong ("Law Society") intervened in the operation of a law firm ("the firm") because the Law Society suspected after investigation that a former staff member of the firm had dishonestly misappropriated the money of the clients of the firm and was satisfied that the firm had committed serious breaches of the provisions of the Solicitors' Accounts Rules (Cap. 159F). The firm forthwith ceased practice, and all the money of the firm has been held by the Council of the Law Society ("Council") on trust. It has been reported that as the firm was mainly engaged in business relating to the sale and purchase ("S&P") of second-hand property units, quite a number of property buyers had deposited money, amounting to nearly $130 million, under the client accounts of the firm. Some affected clients could not complete property transactions by the deadlines specified in the S&P agreements as they could not get back in time their money deposited with the firm, hence suffering huge losses. Similar incidents also occurred in 2016. In this connection, will the Government inform this Council:

(1) whether it will amend Cap. 159F to prevent the occurrence of the following situation: upon the intervention of the Law Society in the operation of a law firm which has breached regulations, the clients' money deposited in the client accounts of the law firm concerned has to be held by the Council on trust; if so, of the details; if not, the reasons for that;

(2) whether it will consider in future (i) requiring that the transaction money of both the buyer and the seller of a property shall no longer be handed to the law firms for depositing into the relevant client accounts, but instead be put in the custody of an independent third party, or (ii) establishing a compensation fund to compensate those clients of a law firm who have suffered losses caused by the winding up of the law firm or the Law Society's intervention in the firm's operation; if so, of the details; if not, the reasons for that;

(3) whether, in the event that a staff member of a law firm has committed criminal offences or negligence resulting in losses on the part of the firm's clients, the relevant solicitors or partners of the law firm concerned will be penalized under the current mechanism; if so, of the details; if not, the reasons for that; and

LEGISLATIVE COUNCIL ― 24 February 2021 3803

(4) of (i) the number of law firms whose operation was intervened by the Law Society, (ii) the number of affected clients and the amount of money involved, and (iii) the respective longest, shortest and average time taken for returning the clients' money concerned, in each of the past five years, and set out the information by reason for the intervention?

SECRETARY FOR JUSTICE (in Chinese): President, as pointed out in my written response to a relevant question from the Legislative Council on 20 January this year, the implementation of a self-regulatory regime for Hong Kong's legal profession is to ensure the professionalism and independence of Hong Kong legal practitioners. The profession itself is also best placed to respond to the ever-changing landscape of international and local legal practices. This regime is crucial to upholding the rule of law and at the same time maintaining Hong Kong's position as an international legal hub for deal-making and the provision of legal and dispute resolution services.

The Legal Practitioners Ordinance (Cap. 159) ("the Ordinance") and its subsidiary legislation provide that The Law Society of Hong Kong ("Law Society") is the only organization authorized by law to regulate the professional branch of solicitors. Law Society must, in compliance with the relevant laws, exercise its powers and discharge its duties independently in relation to the regulation of solicitors.

Amongst others, section 26A of the Ordinance specifies the circumstances under which the Council of Law Society ("the Council") may pass a resolution to exercise its statutory power to intervene into a law firm's practice ("intervened firm"), including where there is reason to suspect dishonesty on the part of a solicitor or an employee of a solicitor, and exercise the powers set out in Schedule 2 to the Ordinance, including those relating to the handling of money, documents and mail of the intervened firm and appointing an intervention agent to assist in the intervention, for the protection of the interests of the clients of that firm and the public.

In respect of the case mentioned in the question, Law Society intervened into the practice of the relevant law firm on 24 December 2020. Since then, the Department of Justice ("DoJ") has been in contact with Law Society so as to be appraised of developments.

3804 LEGISLATIVE COUNCIL ― 24 February 2021

In relation to the questions raised by Dr CHIANG Lai-wan, DoJ, having made enquires with Law Society, replies as follows:

(1) Schedule 2 to the Ordinance provides the Council with various statutory powers, including the power to handle the money, documents and mail of the intervened firm, and to appoint an intervention agent to assist in the intervention, for the protection of the interests of the clients of the relevant firm and the public.

Amongst others, section 2 under Schedule 2 of the Ordinance provides that if the Council passes a resolution to the effect that all sums of money of the intervened firm (including all sums of money deposited by clients of the intervened firm in any client accounts of that firm) shall vest in the Council, all such sums shall vest accordingly (whether they were received by the person holding them before or after the Council's resolution) and shall be held by the Council on trust for the persons beneficially entitled to them.

The purpose of exercising this power is to preserve the money of the intervened firm and to prevent the money concerned from being misappropriated, so as to protect the interests of the clients and the public. Law Society indicates that generally, the major concerns of the Council in most intervention cases are the risk of further misappropriation of client funds, and the immediate need to take action to preserve the money that is under the control of the intervened firm. The power of intervention granted to Law Society under the Ordinance, including the power to handle the money of the intervened firm, is designed to deal with such kind of urgent situation for the protection of the interests of the clients of the intervened firm as well as the public.

The mechanism which provides for Law Society to intervene into the practice of a law firm, as stipulated under the Ordinance, is an important regulatory tool. DoJ is willing to be in liaison with the industry and other stakeholders over the possibilities of enhancing the relevant regulations under the Ordinance on the basis that both the interests of the clients of the intervened firm and of the public are protected.

LEGISLATIVE COUNCIL ― 24 February 2021 3805

(2) We understand that the current payment method in property transactions are generally matters to be agreed between the vendors and purchasers.

In relation to views on further strengthening the protection of clients of solicitors' firms and the public interests, DoJ is ready to communicate with the industry.

(3) The Solicitors Disciplinary Tribunal Panel ("Panel") set up pursuant to section 9 of the Ordinance is responsible for inquiring or investigating into the conduct of a solicitor, a foreign lawyer, a trainee solicitor or an employee of a solicitor or foreign lawyer. The tribunal convenor of the Panel ("Tribunal Convenor") and the members of the Panel are appointed by the Chief Justice of the Court of Final Appeal.

Pursuant to section 9A(1) of the Ordinance, where the Council considers that the conduct of a person who is, or was at the relevant time, a solicitor, a foreign lawyer, a trainee solicitor or an employee of a solicitor or foreign lawyer should be inquired into or investigated as a result of a complaint being made to it or otherwise, the Council shall submit the matter to the Tribunal Convenor.

Upon receipt of the matter submitted by the Council, the Tribunal Convenor shall, pursuant to section 9B(1) of the Ordinance, appoint from the Panel two solicitors and one lay person to constitute a Solicitors Disciplinary Tribunal ("Tribunal") to inquire into and investigate the matter.

Section 10(2) of the Ordinance stipulates the sanctions that the Tribunal could impose, including striking off the roll of solicitors the name of a solicitor and suspending a solicitor from practice for a specified period, etc. Section 10(4) of the Ordinance provides that an order made under section 10(2) may also be made in respect of a person who was, at the relevant time, an employee of a solicitor or foreign lawyer.

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In addition, according to the Practising Certificate (Special Conditions) Rules (Cap. 159Y) ("the Rules"), under specified circumstances, Law Society is empowered to impose additional conditions on a practising certificate already issued to a solicitor. For example, section 7(2)(c) of the Rules provides that, where a solicitor has been charged with, or convicted of:

(i) an offence involving dishonesty or deception; or

(ii) an offence which in the opinion of the Council has compromised or impaired or is likely to compromise or impair the reputation of the profession,

Law Society could impose one or more conditions specified in Schedule 1 to the Rules on that solicitor's practising certificate; for example, that solicitor may only practise under the supervision of a solicitor holding an unconditional practising certificate, or that solicitor may only practise in an employment that has been approved by the Council, or that solicitor shall not sign cheques on a client account, etc.

(4) DoJ does not have the information requested in the question. On our enquiry, Law Society agrees to disclose the following information:

From 2016 to 2020, there were 15 interventions. Among them,

(i) two were due to the death or incapacity of the sole proprietor;

(ii) three were due to suspected dishonesty of an employee or a partner (two of these cases also involved breaches of the Solicitors' Accounts Rules);

(iii) nine were due to breaches of the Solicitors' Accounts Rules; and

(iv) one was due to being in practice without a practising certificate.

LEGISLATIVE COUNCIL ― 24 February 2021 3807

In connection with the above interventions, Law Society received a total of 941 claims (excluding claims that were subsequently withdrawn). The total amount of claims was about HK$120 million. According to the statistics maintained by Law Society, it would take an average of approximately one and a half years (counting from the date of the intervention) to have the fund released with the court's approval.

Estate offices of public rental housing

18. MR WILSON OR (in Chinese): President, some residents of public rental housing ("PRH") have relayed that the estate office of the estate in which they live has adopted improper practices. For example, in respect of the work on vetting and approval of the publicity materials to be posted by mutual aid committees and enforcing the Marking Scheme for Estate Management Enforcement, the judgements made and the way of handling by the estate offices concerned are inappropriate and are different from those by other estate offices. In this connection, will the Government inform this Council:

(1) whether the ("HD") has issued practice guidelines to its estate offices; if so, (i) whether HD has regularly updated such guidelines, and (ii) whether PRH residents may have access to such guidelines; if so, whether HD received complaints in the past three years about the violation of such guidelines by estate offices; if so, of the number of complaints, with a breakdown by year and subject of complaint; and

(2) whether HD has regularly deployed staff to inspect its estate offices (especially those against which relatively more complaints have been lodged); if so, of the details; if not, the measures put in place to monitor the work of the estate offices and ensure that they act strictly in accordance with HD's directions and guidelines?

SECRETARY FOR TRANSPORT AND HOUSING (in Chinese): President, my reply to the question raised by Mr Wilson OR is as follows:

3808 LEGISLATIVE COUNCIL ― 24 February 2021

(1) Each public rental housing ("PRH") estate under the Hong Kong Housing Authority ("HA") has an estate management office ("EMO"). Some of EMOs are directly managed by the Housing Department ("HD"), some are managed by staff of outsourced management companies. HA has promulgated guidelines on various management work (including handling of applications for display of publicity materials ("PMs") and execution of the Marking Scheme for Estate Management Enforcement ("the Marking Scheme") in PRH estates) for implementation by staff of EMOs. The relevant vetting principles on the display of PMs (including poster, banner, etc.) in PRH estates and information about the Marking Scheme can be browsed at HA's website.(1)

Regarding the display of PMs, applications are generally handled by EMOs in accordance with the relevant guidelines. PMs should be informative, the content of which should be welfare- or service-providing and non-profit-making in nature. They should not carry messages that are unlawful, obscene, defamatory, insinuating, criticizing or denouncing individual persons or parties. To ensure consistency among EMOs on the principles of handling PMs, EMOs should refer applications for PMs with controversial content to the HD Headquarters for handling. Applicants may lodge an appeal if they are not satisfied with the way the applications are handled. In addition, notice boards ("NBs") are provided in some PRH estates for the exclusive use of district council members/legislative councillors and local residents' groups (including mutual aid committees, residents' associations, etc.), or non-governmental organizations. Contents of PMs displayed on these NBs should also comply with the aforementioned principles. EMO staff will inspect these NBs regularly and, depending on the actual situation, take necessary follow-up actions.

(1) Arrangements on Display of PMs and Arrangements on Electioneering Activities during Election Period:

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We do not have a central record of the number of complaints against EMOs of non-compliance with the guidelines for handling PMs and the Marking Scheme. Individual complaints will be followed up and handled in accordance with HD's prevailing mechanism. HA will review the estate management policies from time to time in the light of changing social circumstances.

(2) Each EMO is supervised by their respective HD Regional Management Offices. If HD is aware that individual EMO does not comply with the various estate management guidelines promulgated by HD, HD will assign staff to follow up and increase the frequency of supervisory checks on the relevant EMO.

Compulsory testing and exemptions of compulsory quarantine

19. DR PIERRE CHAN (in Chinese): President, recently, the Government has invoked on a number of occasions the Prevention and Control of Disease (Compulsory Testing for Certain Persons) Regulation (Cap. 599J) to (i) issue compulsory testing notices ("Notices") requiring that any person who has been present at the premises specified in the Notice for more than two hours during a specified period to undergo a polymerase chain reaction-based nucleic acid test for the Coronavirus Disease 2019 ("COVID-19") by a specified deadline, and (ii) make restriction-testing declarations ("Declarations") requiring that persons within the "restricted area" specified in the Declaration stay in their premises and undergo compulsory testing in accordance with the Government's arrangement, and they may leave only after the test results have mostly been ascertained. All premises within the restricted areas have been included in the relevant Notices. On the other hand, it has been reported that from time to time there were cases as follow: persons who had been exempted from compulsory quarantine when entering Hong Kong ("exempted persons") were not confirmed, until a number of days after their arrival in Hong Kong, to have contracted COVID-19. In this connection, will the Government inform this Council:

(1) of the following information related to each Declaration (set out in Table 1 in chronological order of the date of the Declaration):

(i) the date on which the Declaration was made,

3810 LEGISLATIVE COUNCIL ― 24 February 2021

(ii) the boundaries of the restricted area(s),

(iii) the affected residents-

(a) the number of households, and

(b) the number of residents,

(iv) the testing and law enforcement situations-

(a) the number of persons who underwent the testing,

(b) the number of persons confirmed to have contracted COVID-19,

(c) the number of households not answering the door and the number of residents involved, and

(d) the number of fixed penalty notices ("FPNs") issued to persons for non-compliance with the Declaration, and

(v) the manpower and public expenditure involved in the entire operation-

(a) the number of staff members of the Government,

(b) the number of staff members of the contractor(s), and

(c) the public expenditure;

Table 1

(iii) (iv) (v) (i) (ii) (a) (b) (a) (b) (c) (d) (a) (b) (c)

(2) of the following information related to the residential buildings covered by each Notice (set out in Table 2 in chronological order of the date of the Notice);

LEGISLATIVE COUNCIL ― 24 February 2021 3811

(i) the date on which the Notice was issued,

(ii) the name(s) of the building(s) involved,

(iii) the affected residents of each building-

(a) the number of households, and

(b) the number of residents,

(iv) the testing and law enforcement situations of each building-

(a) the number of persons who underwent the testing,

(b) the number of persons confirmed to have contracted COVID-19, and

(c) the number of FPNs issued to persons for non-compliance with the Notice, and

(v) the manpower and public expenditure involved in the entire operation-

(a) the number of staff members of the Government,

(b) the number of staff members of the contractor(s), and

(c) the public expenditure;

Table 2

(iii) (iv) (v) (i) (ii) (a) (b) (a) (b) (c) (a) (b) (c)

(3) of the respective numbers of exempted persons who entered Hong Kong from (i) the Mainland, Macao and Taiwan, as well as (ii) foreign places, in each month since January last year; and

3812 LEGISLATIVE COUNCIL ― 24 February 2021

(4) of the number of exempted persons, since January last year, who were confirmed to have contracted COVID-19 within 14 days after their entry into Hong Kong, with a breakdown by the country/region from which they came?

SECRETARY FOR FOOD AND HEALTH (in Chinese): President, in consultation with the Home Affairs Bureau, which is responsible for coordinating the enforcement operations for compulsory testing notices ("CTNs") and operations for "restriction-testing declaration" ("RTD"), as well as other related government departments, my reply to the various parts of the question raised by Dr Pierre CHAN is as follows:

(1) and (2)

The Government has been refining its anti-epidemic strategies in accordance with the development of the epidemic, including following the three key principles of "compulsory testing on a mandatory basis, targeted testing on an obligatory basis and testing on a voluntary basis" to conduct large-scale COVID-19 testing for groups of different risks with a view to achieving "early identification, early isolation and early treatment", and cutting the transmission chains in the community as far as possible.

Regarding compulsory testing on a mandatory basis, the Government has implemented the Prevention and Control of Disease (Compulsory Testing for Certain Persons) Regulation (Cap. 599J) since 15 November 2020. As at 18 February 2021, the Government has exercised the power under the regulation multiple times to issue CTNs and require any person who had been present during specified periods at more than 470 specified premises (including dance clubs/venues, restaurants, residential buildings, workplaces, construction sites, a department store and hospitals) to undergo compulsory testing. Those who are subject to the notices include but are not limited to residents, visitors and workers.

Generally speaking, persons subject to compulsory testing may choose to undergo testing via multiple routes as follows: (i) to visit any of the mobile specimen collection stations; (ii) to attend any of the community testing centres; (iii) to obtain a deep throat saliva LEGISLATIVE COUNCIL ― 24 February 2021 3813 specimen collection pack from any of the 121 post offices, vending machines set up at 20 MTR stations or 47 designated general outpatient clinics ("GOPCs") of the Hospital Authority and return the specimen to one of the designated specimen collection points; (iv) to undergo testing at any of GOPCs of the Hospital Authority as instructed by a medical professional of the Hospital Authority; (v) to self-arrange testing provided by private laboratories which are recognized by the Department of Health ("DH") and can issue SMS notifications in respect of test results ; or (vi) to use a specimen bottle distributed by the Centre for Health Protection (if applicable), and return the specimen bottle with the sample collected as per the relevant guidelines.

The Government enforces CTNs by arranging staff to verify the testing certifications of residents at the entrances/exits of buildings covered by CTNs and conduct checks in the buildings to ask residents to provide the SMS notification received through a mobile phone, or related certification to verify whether they had complied with the requirement. As at 18 February 2021, the Government had deployed about 890 people to conduct 12 times blitz operations and checked the test reports of more than 5 000 residents, of which about 300 had violated CTN. The Government has issued fixed penalties of $5,000 and/or compulsory testing orders to them, requiring them to undergo testing within a specified period. Non-compliance with a compulsory testing order is an offence, and offenders are liable to a fine of $25,000 and imprisonment for six months. The enforcement actions are ongoing, and expenses involved are yet to be calculated.

Subject to the epidemic development and the infection control need, the Government will also delineate restricted areas and make an RTD. Persons within the areas are required to stay in their premises and undergo compulsory testing in accordance with the arrangements by the Government, and can only leave after the relevant test results are mostly ascertained. All buildings within the restricted areas, whether or not confirmed cases were found therein, would be included in CTN. Any person who had been present in buildings in the restricted area for more than two hours in the past 14 days, even if they were not present in the restricted area at the time when RTD took effect, also have to undergo compulsory testing.

3814 LEGISLATIVE COUNCIL ― 24 February 2021

From 23 January to 10 February, the Government has delineated 26 restricted areas in multiple districts (including Yau Tsim Mong District, Eastern District, Kwun Tong District, Yuen Long District, Sham Shui Po District, Kowloon City District, Tuen Mun District and Sha Tin District) with RTDs issued, and carried out enforcement operations to verify that all people in the "restricted areas" had undergone compulsory testing. Nearly 12 000 man-time of civil servants were mobilized in the relevant operations, during which more than 24 000 people were tested in designated restricted areas. 20 confirmed cases were found and 234 persons were found not having undergone compulsory testing. Compulsory testing orders and/or fixed penalties of $5,000 were issued to them. The Government will continue to step up enforcement, and handle those persons who have not complied with CTN in a strict manner.

Please refer to the following link for details of CTNs issued in respect of specified premises and RTDs for restricted areas issued by the Government: .

(3) Pursuant to the Compulsory Quarantine of Certain Persons Arriving at Hong Kong Regulation (Cap. 599C) and Compulsory Quarantine of Persons Arriving at Hong Kong from Foreign Places Regulation (Cap. 599E), all persons having stayed in places outside Hong Kong for any period prior to their arrival in Hong Kong, with the exception of persons exempted by the Chief Secretary for Administration in accordance with the relevant regulations, must be subject to compulsory quarantine, regardless of nationality and travel documents used.

To maintain necessary operation of the society and economy of Hong Kong, and to ensure an uninterrupted supply of all daily necessities to the public, the Chief Secretary for Administration has, in accordance with the relevant regulations, exempted persons (for example, consular and diplomatic officers, crew members of aircraft and cross-boundary goods vehicle drivers, etc.) from the compulsory quarantine requirement upon arrival in Hong Kong. Nevertheless, in a bid to guard against the importation of cases as far as LEGISLATIVE COUNCIL ― 24 February 2021 3815 practicable, the Government has been adjusting relevant quarantine and testing measures based on ongoing prevention and control risk assessments.

In view of the severity of the global pandemic situation, the Government has time after time tightened the testing, quarantine and isolation arrangements for persons arriving Hong Kong (including normal inbound travellers and exempted persons) in accordance with the development of the epidemic situation. In response to the raging of virus variant, the Government tightened the quarantine arrangement for persons who have stayed in places outside China in December 2020 and January 2021. All persons who have stayed in Group A specified places under the Prevention and Control of Disease (Regulation of Cross-boundary Conveyances and Travellers) Regulation (Cap. 599H) ("Group A specified places"), which currently includes Brazil, Ireland, South Africa and the United Kingdom, will not be allowed to board for Hong Kong. Exempted persons (including air crew members) having stayed in Group A specified places must be subject to self-isolation at designated quarantine hotels for 21 days upon arrival in Hong Kong. They must also be subject to "test-and-hold" arrangement (i.e. undergo testing and wait for the result at the Hong Kong International Airport ("HKIA") or designated location) and undergo testing on the 12th and 19th or 20th day upon arrival in Hong Kong. Meanwhile, the Government has also extended the quarantine period to 21 days for all inbound travellers who have stayed in non-Group A specified places outside China.

In accordance with the prevention and control risk assessments, the Government announced on 5 February 2021 to further tighten the testing and isolation arrangements for exempted persons. With effect from 20 February 2021, all exempted persons entering Hong Kong at HKIA must be subject to "test-and-hold" arrangement. To further mitigate possibility of exempted persons' contact with the local community during the exemption period, the Government has set up designated quarantine channels for air crew members and other exempted persons at HKIA. After undergoing testing and immigration procedures, air crew members and other exempted persons will use the respective designated channels to arrive at the 3816 LEGISLATIVE COUNCIL ― 24 February 2021

designated pick-up points for travelling to their accommodation by point-to-point transportation. The new measure is in place with a view to minimizing the chance of transmission of the virus from imported cases into the community.

All air crew members who have stayed in any places outside China but have not stayed in Group A specified places during the 21 days prior to arrival in Hong Kong must self-isolate at the airport hotel (i.e. Headland Hotel or Hong Kong SkyCity Marriott Hotel) arranged by airlines until their next duty flight after undergoing testing. If the aforementioned air crew members are local-based crew who wish to leave the airport area, they must self-isolate at a designated quarantine hotel for 14 days (with testing to be done on the 12th day following their arrival) before entering the local community. They must also be subject to medical surveillance for seven days afterwards (with testing to be done on the 15th and 19th or 20th day following their arrival) before operating again. Freight crew who have only laid over in Anchorage in Alaska of the United States of America, which is subject to closed-loop management in segregation from the local community during the layover, will be exempted and they will not be subject to self-isolation at designated quarantine hotels. They will still be subject to 21-day medical surveillance and undergo testing on the 7th, 12th, 15th and 19th or 20th day following their arrival.

All other exempted persons must also be subject to "test-and-hold" arrangement and undergo repeated testing during their stay in Hong Kong. In addition, except Consul Generals or representatives in Hong Kong and government officials at equivalent/higher level, all other government officials carrying out governmental duties who have stayed in any places outside China (but have not stayed in Group A specified places) during 21 days prior to arrival in Hong Kong must be subject to self-isolation for 21 days at an accommodation arranged by respective organizations. They must also be subject to repeated testing during the self-isolation period.

As for persons who are arriving Hong Kong from China at land boundary control points under Cap. 599C, normal inbound travellers will be subject to compulsory quarantine for 14 days at home or LEGISLATIVE COUNCIL ― 24 February 2021 3817 other accommodation, while exempted persons (except those under regular testing arrangement) must undergo testing.

Apart from the testing arrangement, DH would arrange 21-day/14-day medical surveillance for the above mentioned exempted persons during their stay in Hong Kong. Persons under medical surveillance are required to wear masks and check their body temperature twice daily, and they should report to DH if feeling unwell. In addition, exempted persons are also subject to body temperature check and health declaration procedures performed by DH at boundary control points during arrival clearance.

The number of Notification of Medical Surveillance issued to exempted persons (including those exempted under Cap. 599C and 599E) between February 2020 and January 2021 at various boundary control points are as follows:

Number of Notification of Medical Month Surveillance issued to exempted persons at various boundary control points in service February 2020 93 602 March 2020 39 211 April 2020 36 039 May 2020 40 220 June 2020 45 943 July 2020 53 405 August 2020 41 155 September 2020 45 689 October 2020 43 885 November 2020 45 440 December 2020 46 145 January 2021 42 584

Notes:

(1) Boundary control points in service include HKIA, Hong Kong-Zhuhai-Macao Bridge Hong Kong Port, Shenzhen Bay, Man Kam To, Lok Ma Chau, Sha Tau Kok and Heung Yeun Wai (commenced service on 26 August 2020).

3818 LEGISLATIVE COUNCIL ― 24 February 2021

(2) Exempted persons are issued with new Notification of Medical Surveillance every time when they enter Hong Kong (except in cases set out in note (3) below).

(3) Currently, "cross-boundary goods vehicle drivers and necessary accompanying personnel" with valid Notification of Medical Surveillance issued in the past 14 days are not issued with new Notification of Medical Surveillance afresh every time they enter Hong Kong.

DH does not maintain the breakdown figures of exempted persons arriving at boundary control points by countries/places.

(4) Since July 2020 (as at 15 February 2021), the Centre for Health Protection of DH recorded 227 COVID-19 cases involving sea crew and air crew members, with 14.1% from the Philippines, 12.3% from Russia, 11.9% from the United States of America and 10.6% from India. DH does not maintain the figures of confirmed cases for other exempted persons.

Measures on promoting the development of Art Tech

20. MR MA FUNG-KWOK (in Chinese): President, the Chief Executive has indicated in the 2020 Policy Address that the Government will actively promote the development of Art Tech. To this end, the Secretary for Home Affairs will take the lead in setting up a cross-bureau task force ("task force"), and invite the participation of representatives from the relevant sectors and non-governmental organizations in the formulation of relevant strategies and measures. In this connection, will the Government inform this Council:

(1) when the task force will be set up, and what sectors and organizations the representatives of which will be invited to participate in the work of the task force;

(2) given that the Government has set aside a total of $100 million under four funds (i.e. the Arts and Sport Development Fund, the Innovation and Technology Fund, the Film Development Fund and the CreateSmart Initiative) for the relevant sectors to apply for funding for implementing projects on integrating technology and arts, of the division of labour among these funds;

LEGISLATIVE COUNCIL ― 24 February 2021 3819

(3) whether the Government will draw reference from the strategies of the authorities in the United Kingdom, South Korea and Taiwan for developing Art Tech, and in the long run establish a dedicated subsidy fund for Art Tech; if so, of the details; if not, the reasons for that;

(4) apart from providing a Testbed Studio for applying Art Tech in the East Kowloon Cultural Centre which is under construction, whether the Government will gradually upgrade the facilities in the performance venues under the Leisure and Cultural Services Department ("LCSD"), such as upgrading the stage equipment, providing free WiFi and increasing the bandwidth of the wireless network, so as to offer more venues for applying Art Tech;

(5) whether LCSD will support arts groups in conducting more creative activities that integrate technology and arts, including assisting them in online live broadcasting or re-broadcasting of the relevant activities, as well as sponsoring and procuring more programmes of online live broadcast performances; if so, of the details; if not, the reasons for that;

(6) whether LCSD will incorporate more Art Tech elements in the exhibits of its museums to enhance the viewing experience of visitors; if so, of the details; if not, the reasons for that; and

(7) of the measures in place to promote the exchanges and collaboration between arts workers and members of the technology sector, so as to spur the development and innovation of Art Tech?

SECRETARY FOR HOME AFFAIRS (in Chinese): President,

(1) The interdepartmental Task Force on Arts Technology ("the Task Force") led by the Secretary for Home Affairs convened its first meeting on 17 February 2021. The members of the Task Force include representatives of the Commerce and Economic Development Bureau ("CEDB"), Education Bureau, Innovation and Technology Bureau ("ITB"), Innovation and Technology Commission and Leisure and Cultural Services Department 3820 LEGISLATIVE COUNCIL ― 24 February 2021

("LCSD"). Arts and technology have wide coverage. Arts tech is even rapidly developing. The interfacing and connection of arts and technology with other industries are also constantly changing. The Task Force will consult the relevant industries and their representatives on its work plan as appropriate, and invite representatives from the industries or non-government organizations to attend the meeting, taking into account the development of arts tech and other needs.

(2) and (3)

As mentioned in the 2020 Policy Address, relevant Policy Bureaux have set aside a total of $100 million under funds or schemes of their respective purview (including the Arts and Sports Development Fund, the Innovation and Technology Fund ("ITF"), the Film Development Fund ("FDF") and the CreateSmart Initiative ("CSI")) for those who are interested in promoting arts tech to apply. ITF does not have a cap on the number of applications of a particular category. The funds or schemes above have dedicated objectives and different target applicants, the details of which are at Annex. In order to assist the industry to take forward proposals related to arts tech, the Task Force will provide a one-stop service to answer applicants' queries and refer them to the suitable fund or scheme.

(4) LCSD plans to join hands with artists, creative media schools and technology professionals in the promotion of arts tech development. The East Kowloon Cultural Centre ("EKCC"), which is now under construction, will provide a testbed studio to be equipped with the following advance technology:

- Stage computerized execution system and real-time tracking system for incorporating and automating various stage facilities, including projection mapping and audio/visual systems to create immersive and multi-sensational experience;  - three-dimensional flying system and hanging system for enhancing stage effects;

LEGISLATIVE COUNCIL ― 24 February 2021 3821

- optical fibre that connects multiple venues inside EKCC for live streaming of performances onto the digital displays/signage, as well as webcasting to audience outside EKCC;  - augmented/virtual/mixed/extended reality equipment including 270° LED screens that enable different modes of presentation in stage productions incorporating synchronized virtual reality and physical stage sets; and

- live streaming and recording with cinematographic and image processing system to reach out and interact with a larger number of audience outside the theatres.

In addition to EKCC which is under construction, LCSD is also actively enhancing the broadband network facilities of its performance venues to provide high-speed and secure data transmission services for live streaming or recorded performances of art groups. It is expected that 70% of performance venues will be equipped with optical fiber broadband facilities in the first quarter of 2021. Currently, the public space in performance venues is equipped with free GovWiFi. Performance venues will gradually expand their Wi-Fi networks in major and ancillary facilities for art groups and the public use from 2021-2022 onwards so that arts groups and members of the public can enjoy Internet connection. We will discuss with the Office of the Government Chief Information Officer and stakeholders to explore the feasibility of using 5G Internet access in performance venues.

In addition, the LCSD performance venues are procuring by phases 4K digital light processing projector, 4K pan-tilt-zoom camera, camera remote controller and related digital equipment for live streaming, immersive effect sound system, digital sound console and LED moving lights to support visual art creations of arts groups that incorporate arts tech as well as live streaming or video recording.

(5) To dovetail with the Government's broad direction in developing high technology and adopting technology in service delivery, LCSD has launched the Edutainment Channel, a brand new one-stop online 3822 LEGISLATIVE COUNCIL ― 24 February 2021

resources centre which enables the watching of live-streaming/recorded cultural programmes any time comfortably at home as well.

In 2020-2021, LCSD engaged and supported small- and medium-sized local arts groups and artists in curating and producing online programmes for the Edutainment Channel under the contents of "101 Academy Series", "WeWeWebWeb Carnival", "ReNew Vision" and "Click for Arts". Ranging from performances, basics of arts appreciation to interactive and learning programmes, these online programmes are well-received by the public.

In 2021-2022, LCSD will continue to produce and offer programmes for broadcasting on its platforms so that cultural programmes of a wide variety suiting different tastes and ages could be provided online. More diverse and quality performing arts programmes from around the world will continue to be provided to members of the public, and live relays at different locations or live streaming will be arranged for selected mega shows free-of-charge. Apart from enhancing Hong Kong's status as an international cultural metropolis, this initiative will also serve the purpose of providing quality programmes to people from different communities and all walks of life.

In addition, owing to the COVID-19 pandemic, arts groups were not able to conduct outbound cultural exchange activities and performances in the Mainland and overseas; and have thus switched to online. In order to provide more performance opportunities to local arts groups as well as to enhance the understanding of Hong Kong arts groups by Mainland and overseas audiences, some programmes, including selected Greater Bay Area touring programmes and some from the upcoming Hong Kong Week 2021@Guangzhou, have been recorded and switched to online viewing on the Mainland online platforms.

(6) LCSD museums will continue to explore application of new technology when staging exhibitions to enhance visitors' experience. A recent example is the "Honouring Tradition and Heritage: Min Chiu Society at Sixty" exhibition currently showing at the Hong Kong Museum of Art. The exhibition applied augmented reality LEGISLATIVE COUNCIL ― 24 February 2021 3823

technology complemented with interactive exhibits and animations to facilitate visitors' appreciation of the production of traditional paintings, ceramics, jade carvings and silk work in an interesting way.

(7) LCSD is planning an expo in April 2021 for the technology and arts and cultural sectors to explore the integration of arts and technology and to foster potential collaborations. LCSD expects that nine companies from the innovation and technology industry and about 1 600 arts practitioners would join the expo. Besides, with the set-up of the testbed studio at EKCC, LCSD plans to collaborate with artists, creative media schools under tertiary institutions and technology professionals in the promotion of arts tech development. With the support of the technology professionals on the curating and application of arts tech, artists and local young people aspiring to start a career in the arts industry may use the testbed studio as an incubator to exchange, create, experiment and rehearse their works before staging. Alternatively, they may showcase their newly created works in the form of art installation, exhibition, workshop, etc. It is anticipated that productions staged at EKCC throughout the year will create more job opportunities in the arts and related technical areas, and offer more chances for the young people to showcase their talents.

Annex

Funds and Schemes that can support Arts Tech

Responsible Objectives Bureau Arts Home With the objectives of strengthening the cultural Capacity Affairs software and building the capacity of the arts sector Development Bureau of Hong Kong, ACDFS provides funding support Funding for innovative and impactful proposals that Scheme contribute to the objectives of: ("ACDFS") - capacity development of arts practitioners, arts groups, art forms and/or the arts sector; - programme/content development; - audience building; and - arts education. 3824 LEGISLATIVE COUNCIL ― 24 February 2021

Responsible Objectives Bureau FDF CEDB FDF aims to support projects and activities conducive to the long-term development of the Hong Kong film industry along four strategic directions (namely, nurturing talent, enhancing local production, expanding markets and building the audience). CSI CEDB CSI aims to provide funding support for projects that are conducive to the development of the seven non-film creative industries against three strategic foci, namely nurturing talents and facilitating start-ups; exploring markets; and promoting Hong Kong as Asia's creative capital and fostering a creative atmosphere in the community. Technology ITB To support local enterprises/organizations in using Voucher technological services and solutions to improve Programme productivity, or upgrade or transform their business under ITF processes. General ITB To support non-research and development projects Support that contribute to the upgrading and development of Programme our industries as well as the fostering of an under ITF innovation and technology culture in Hong Kong.

Rare diseases

21. MR LEUNG CHE-CHEUNG (in Chinese): President, it is learnt that as the costs of developing drugs for rare diseases are high but the market is small, the drugs for such diseases are extremely expensive or even non-existent. Regarding rare diseases, will the Government inform this Council:

(1) whether it will consider afresh laying down a definition for "rare diseases"; if so, of the details;

(2) as the Government indicated in June last year that it was planning to progressively develop with the Hospital Authority databases for individual uncommon disorders, of the progress of the relevant work; the diseases for which databases have been/will be developed, LEGISLATIVE COUNCIL ― 24 February 2021 3825

and the respective drugs for treating such diseases (i) which are registered in Hong Kong and (ii) whose registration process is underway;

(3) whether it knows the respective numbers of applications for subsidies made to (i) the Samaritan Fund and (ii) the Community Care Fund Medical Assistance Programmes for treating rare diseases which were received and approved by the authorities in each of the past three years, with a breakdown by name of disease; the average amount of subsidies approved for each successful applicant in respect of each type of diseases;

(4) of the long-term strategies to support patients suffering from rare diseases in the following aspects: laying down a definition for such diseases, conducting clinical research, introducing or manufacturing drugs, developing databases, and stepping up public education and publicity; and

(5) as it has been reported that on the Mainland, there are currently over 20 million patients suffering from rare diseases and 61 drugs available for treating such diseases, whether the Government has plans to collaborate with the Mainland authorities in respect of the research on and treatment of such diseases; if so, of the details; if not, the reasons for that?

SECRETARY FOR FOOD AND HEALTH (in Chinese): President, in consultation with the Department of Health ("DH") and the Hospital Authority ("HA"), my reply to the various parts of the question raised by Mr LEUNG Che-cheung is as follows:

(1) At present, there is no common definition of rare diseases/ uncommon disorders worldwide. Same with other regions, Hong Kong makes arrangements on how to treat various diseases depending on the characteristics of its healthcare system and local situation. The optimal treatment for a patient hinges on professional judgment, the seriousness (not just rarity) of the disease, and the availability of clinical facilities and resources, etc.

3826 LEGISLATIVE COUNCIL ― 24 February 2021

If we lay down a definition of rare diseases, it is difficult to determine the patients' appropriate treatment and support solely based on the prevalence rate. The other more important considerations (including the severity of the diseases) may also be neglected. This may deviate from addressing the specific clinical needs of individual patients.

(2) to (4)

The Government and HA highly values provision of sustainable, affordable and optimal treatments and care for all patients (including those with uncommon disorders). Currently, mechanisms have been put in place to provide support for patients with uncommon disorders in various aspects, including clinical diagnosis, multi-disciplinary care and rehabilitation services, introduction of new drugs, as well as subsiding drug treatments.

To further support patients with uncommon disorders, the Government and HA plan to implement progressively a series of targeted measures. These measures include developing databases for individual uncommon disorders (e.g. spinal muscular atrophy and inborn errors of metabolism covered under the existing newborn screening programme) starting from 2021-2022 to facilitate clinical diagnosis and treatment; enhancing public awareness of such disorders through the HA's Smart Patient Website; strengthening support for patients with uncommon disorders through the safety net mechanism; reviewing manpower support and deploying resources to help meet the needs of patients and promote technological development and clinical research relating to uncommon disorders. We also plan to further refine the means test mechanism of the Samaritan Fund ("SF") and the Community Care Fund ("CCF") Medical Assistance Programmes in the first half of 2021.

The Government and HA will continue to work closely to discuss, formulate and review the policy support for patients with uncommon disorders, while maintaining communication with stakeholders (including patient groups) to keep reviewing and enhancing relevant mechanisms and measures for supporting such patients.

LEGISLATIVE COUNCIL ― 24 February 2021 3827

On drug registration, according to the Pharmacy and Poisons Ordinance (Cap. 138), pharmaceutical products should meet the criteria of safety, efficacy and quality, and be registered with the Pharmacy and Poisons Board of Hong Kong ("the Board") before they can be sold or distributed in Hong Kong. The Government has introduced various measures to expedite the registration of pharmaceutical products in recent years. Since 2015, legislative amendments relating to new chemicals or biological entities ("NCEs") could be made via the negative vetting procedure. The Board also implemented the Enhanced Procedures for Registration of New Drugs in 2018, under which the time required for processing application for registration of pharmaceutical products is generally shortened by two to three months. As at February 2021, DH had handled 68 pharmaceutical products containing NCEs since the implementation of Enhanced Procedures.

On drug subsidy, HA supports needy patients (including those with uncommon disorders) to receive drug treatment through the recurrent funding from the Government, SF and the CCF Medical Assistance Programmes.

Currently, HA makes use of the designated funding from the Government to provide enzyme replacement therapy under a special drug programme for treatment of eligible patients with specific lysosomal storage disorders.

Taking into account the increasing demand for ultra-expensive drug treatments for uncommon disorders, the Government and HA introduced a CCF Medical Assistance Programme in August 2017 to provide subsidy for eligible patients to purchase ultra-expensive drugs (including those for treating uncommon disorders) (the CCF Ultra-expensive Drugs Programme). The HA's Expert Panels will assess the clinical benefits of drug treatments under the relevant arrangement on a case-by-case basis according to the clinical conditions of individual patients and the established clinical guidelines. HA will also liaise with pharmaceutical companies on providing risk sharing or capping programmes to facilitate early access to drug treatment for specific patients.

3828 LEGISLATIVE COUNCIL ― 24 February 2021

The following table sets out the number of applications approved and the amount of subsidies granted for the drugs under the CCF Ultra-expensive Drugs Programme since its implementation in August 2017 (as at 31 December 2020):

Amount of Number of Ultra-expensive drug and clinical subsidies applications indication granted approved ($ million) 1. Eculizumab for Paroxysmal Nocturnal 41 161.39 Haemoglobinuria(1) 2. Eculizumab for Atypical Haemolytic 3 11.04 Uraemic Syndrome(2) 3. Nusinersen for Spinal Muscular 31 85.35 Atrophy(3) 4. Tafamidis for Familial Amyloid 2 1.72 Polyneuropathy(4) 5. Dinutuximab beta for - - Neuroblastoma(5) Total 77 259.50

Notes:

(1) From 1 August 2017 to 31 December 2020. The drug and specified clinical indication have been repositioned to SF safety net since 11 July 2020. The application statistics includes the applications approved under SF since that date.

(2) From 25 November 2017 to 31 December 2020

(3) From 25 September 2018 to 31 December 2020

(4) From 13 July 2019 to 31 December 2020

(5) From 29 December 2020 to 31 December 2020

(5) HA has all along been keeping abreast of clinical evidence and technological development on treatment options for uncommon disorders worldwide, and has exchanges with overseas and Mainland experts on issues of common concern from time to time, so as to learn from each other's experiences and promote service development.

LEGISLATIVE COUNCIL ― 24 February 2021 3829

HA has an established mechanism for regular evaluation of new drugs and review of the coverage of the safety net. Based on scientific and clinical evidence, the process evaluates the safety, efficacy and cost-effectiveness of drugs, taking into account relevant considerations, such as the views of professionals and patient groups, so as to procure drugs that meet the statutory requirements and relevant quality standards for patients' use, and to ensure equitable and effective use of limited public resources in the provision of appropriate treatment and support for patients.

HA will continue to pay close attention to international medical researches on uncommon disorders and the development of healthcare policies on uncommon disorders in other regions. It will also review the Drug Formulary through the established mechanism and include suitable self-financed drugs in the scope of subsidy under the safety net so as to benefit more patients in need.

The systems of judicial review and legal aid

22. MR KENNETH LAU (in Chinese): President, it is learnt that the number of judicial review ("JR") cases has increased sharply in recent years, and the applicants in quite a number of such cases have been granted legal aid by the Legal Aid Department. Some members of the public have queried that the present systems of JR and legal aid have been abused, leading to much wastage of judicial resources and public money. In this connection, will the Government inform this Council:

(1) of the statistics on JR related cases in each of the past five years as set out in Table 1;

Table 1 JR related cases 2016 2017 2018 2019 2020 (i) Leave applications (a) Number of cases filed (b) Number of cases in which the applicants were granted legal aid (c) Number of cases in which the applicants were granted leave 3830 LEGISLATIVE COUNCIL ― 24 February 2021

JR related cases 2016 2017 2018 2019 2020 (ii) Appeals against refusal to grant leave (a) Number of cases filed (b) Number of cases in which the applicants were granted legal aid (iii) Substantive proceedings of JR (a) Number of cases filed (b) Number of cases in which the applicants were granted legal aid (iv) Appeals against JR decisions (a) Number of cases filed (b) Number of cases in which the applicants were granted legal aid

(2) of the statistics on the legal aid applications made by applicants of JR related cases in each of the past five years as set out in Table 2; and

Table 2 JR related cases 2016 2017 2018 2019 2020 (i) Legal aid applications made by applicants (a) Number of cases received (b) Number of cases approved (c) Public expenditure incurred for the approved cases (ii) Cases in which the applicants were granted legal aid and the Government was one of the parties involved in the proceedings (a) Number of cases filed (b) Public expenditure incurred LEGISLATIVE COUNCIL ― 24 February 2021 3831

JR related cases 2016 2017 2018 2019 2020 (c) Number (percentage) of cases with decisions made in favour of the Government (d) Number (percentage) of cases with decisions made not in favour of the Government

(3) of the new measures put in place by the authorities to prevent the systems of JR and legal aid from being abused; whether mechanisms will be put in place to regularly review the procedures for vetting and approving applications of the two systems, so as to prevent abuse from happening?

CHIEF SECRETARY FOR ADMINISTRATION (in Chinese): President, in consultation with the Judiciary and the Legal Aid Department ("LAD"), my reply to the various parts of the question is as follows:

(1) and (2)

According to the Judiciary, the number of applications for leave to apply for judicial review ("JR") filed in the Court of First Instance of the High Court from 2016 to 2019 and the number of leave applications granted are as follows:

Year of filing 2016 2017 2018 2019 (a) Number of applications for leave 228 1 146 3 014 3 889 for JR (b) Number of leave applications 30 56 97 25 granted (as at 10 November 2020)#

Notes:

# The figures represent the number of leave granted (as at 10 November 2020) amongst the applications for leave to apply for JR filed in the year. Such statistics are live data which may vary at different report generation dates and time.

The number of cases filed in 2020 is being compiled. As a rough indication, more than 2 000 applications for leave for JR had been filed. 3832 LEGISLATIVE COUNCIL ― 24 February 2021

Apart from the above statistics on applications for leave for JR, the numbers of JR related cases filed from 2016 to 2019 are as follows:

Year of filing (a) Number of appeals against refusal of leave 2016 13 2017 57 2018 410 2019 372 Year of filing (b) Number of substantive JR cases filed 2016 31 2017 29 2018 40 2019 15 Year of filing (c) Number of appeals against JR decisions 2016 21 2017 18 2018 20 2019 21

The numbers of legal aid applications for JR received and legal aid certificates granted (including the Government or a public organization being one of the parties of the proceedings) by LAD between 2016 and 2020 are tabulated below:

Legal aid cases related to JR 2016 2017 2018 2019 2020 (a) Number of applications 437 1 046 1 547 797 359 received (b) Number of applications 27 29 60 81 82 approved

Note:

The numbers of legal aid certificates granted, as listed above, cover all circumstances mentioned in the question, including applications for leave for JR to Court of First Instance of the High Court, JR proceedings with leave granted, substantive proceedings of JR and appeals against refusal to grant leave and JR decisions. Legal aid certificates may not be granted in the same year as the applications were received.

LEGISLATIVE COUNCIL ― 24 February 2021 3833

The expenditures on legal aid cases involving JR in the past five financial years are tabulated below:

Legal expenditure on JR cases# Financial year ($ million) 2016-2017 36.3 2017-2018 26.6 2018-2019 29.5 2019-2020 37.6 2020-2021 29.1* (As at 31 January)

Notes:

# The total legal expenditure on JR cases is the total legal aid expenditure on JR cases of the same year, including the expenditure on JR cases where the legal aid certificates were not granted in the same year.

* The amount may be subject to changes after year-end closing.

When processing applications for legal aid (including legal aid applications involving JR), LAD will consider whether the applicants satisfy both the merits test and the means test. The stage of judicial proceedings of an application or the parties involved in the legal proceedings of a JR case (e.g. Government or a public organization) are not LAD's considerations when processing legal aid applications. Therefore, LAD does not keep the relevant detailed statistical breakdown.

(3) According to the Judiciary, Order 53 of the Rules of the High Court (Cap. 4A) provides that no application for JR shall be made unless the leave of the Court has been obtained. The Court shall not grant leave unless it considers that the applicant has a sufficient interest in the matter to which the application relates. Based on the Judiciary's operational experience, this requirement of obtaining leave from court helps screen out applications for JR which are not reasonably arguable with a realiztic prospect of success.

From 2016 to 2019, the total number of applications for leave to apply for JR increased substantially from 228 to 3 889, mainly from non-refoulement claim-related applications for leave to apply for JR. The number of such applications increased from 60 in 2016 to 3 727 3834 LEGISLATIVE COUNCIL ― 24 February 2021

in 2019. For the year of 2020 (as at 30 September), 1 879 non-refoulement claim-related applications for leave to apply for JR were filed. As for other JR cases in general, the number has remained stable at an annual average of around 160 cases with no apparent trend of increase.

The Judiciary has all along been adopting a stringent approach in handling leave applications for JR. Between 2016 and 2019, among the 3 610 cases concluded as at 10 November 2020, leave was granted in only 208 cases (i.e. about 6%), and among the 3 071 cases relating to non-refoulement claims, leave was granted in only 112 cases (about 4% of the concluded cases).

In respective of legal aid, the policy objective is to ensure that no one with reasonable grounds for taking or defending a legal action is denied access to justice because of lack of means. LAD has an established mechanism to guard against abuse of legal aid. The Legal Aid Ordinance (Cap. 91) ("LAO") provides that legal aid will only be granted to applicants who satisfy both the merits test and the means test. These criteria are also applicable to the legal aid applications for JR. As such, all legal aid applications (including the applications for JR) are processed by Legal Aid Counsel employed by LAD. In assessing the merits of an application, LAD will carefully look into and consider the facts of the case, evidence available and the legal principles applicable to the case to determine whether there are reasonable grounds for legal aid to be granted. Even if an applicant is successfully granted legal aid, LAD will still monitor his/her case from time to time to ensure that there are sufficient grounds for the aided person to continue to receive legal aid. Otherwise, LAD will discharge the legal aid certificate. In fact, JR cases only account for a small proportion of civil legal aid cases and of all legal aid cases. In 2019 and 2020, legal aid applications for JR which were granted legal aid certificates only accounted for 1.6% of all civil legal aid certificates and 1% of all legal aid certificates.

Besides, the Legal Aid Regulations (Cap. 91A) ("the Regulations") also provides the penalties against abuse of legal aid services. Section 9 of the Regulations requires that LAD may revoke a legal aid certificate if the applicant or aided person knowingly made a false statement concerning any information furnished by him/her, and recover from the person all costs incurred on his/her behalf. LEGISLATIVE COUNCIL ― 24 February 2021 3835

LAD will also refer the case to the Police for follow-up actions. The aided person will be liable on conviction to a fine and to imprisonment for six months. Furthermore, LAD has put in place a mechanism for making "representations". Any person can report to LAD if he/she believes that an applicant or aided person withheld information or furnished false information for LAD's investigation.

Furthermore, according to section 11 of the Regulations, where a person has applied for legal aid and been refused on two or more occasions where the applications relate to substantially the same cause or matter; or in any other case, on four or more occasions, and it appears to the Director of Legal Aid that his/her conduct has amounted to an abuse of the facilities provided by LAO, the Director may order that no consideration shall be given to any future application by that person for a maximum of three years.

GOVERNMENT BILLS

First Reading and Second Reading of Government Bills

First Reading of Government Bills

PRESIDENT (in Cantonese): Government Bills: First Reading.

APPROPRIATION BILL 2021

ARBITRATION (AMENDMENT) BILL 2021

EMPLOYEES' COMPENSATION (AMENDMENT) BILL 2021

ROAD TRAFFIC (AMENDMENT) BILL 2021

CLERK (in Cantonese): Appropriation Bill 2021 Arbitration (Amendment) Bill 2021 Employees' Compensation (Amendment) Bill 2021 Road Traffic (Amendment) Bill 2021.

Bills read the First time and ordered to be set down for Second Reading pursuant to Rule 53(3) of the Rules of Procedure.

3836 LEGISLATIVE COUNCIL ― 24 February 2021

Second Reading of Government Bills

PRESIDENT (in Cantonese): Government Bills: Second Reading.

APPROPRIATION BILL 2021

FINANCIAL SECRETARY (in Cantonese): President, Honourable Members and fellow citizens, good morning. I move the Second Reading of the Appropriation Bill 2021.

Introduction

President, over the past year, we all have experienced a very different life. The epidemic has aggravated the economic recession. Face masks have become a daily necessity. We might have spent more time at home, but we have fewer opportunities to gather with our relatives and friends. The year 2020 has become our common memory.

The epidemic has made us realize that globalization is not only a driving force for economic development, but also the key to victory in the fight against viruses and epidemics. No place on earth can stay aloof and remain unaffected. Only with concerted efforts can we successfully beat this pandemic of the century that has plagued the entire world.

Hong Kong went through tribulations in the past two years. International political tensions have dampened local exports and market sentiments; violent clashes have endangered the stability and safety of our society; and the epidemic has exerted additional pressure on the whole community and economy. In the past year, Hong Kong's economy recorded a negative growth of 6.1% with the latest unemployment rate rising to 7%. The Government of the Hong Kong Special Administrative Region has committed a total of nearly $300 billion for supporting measures, with a view to stabilizing the economy and relieving people's burden. However, this has also brought the fiscal deficit to a record high.

With the epidemic still lingering, our economy is yet to come out of recession. Our most urgent task is to contain the epidemic and press ahead with the vaccination programme, so that people and businesses can be back on track, LEGISLATIVE COUNCIL ― 24 February 2021 3837 and safe travelling between Hong Kong and the Mainland as well as the rest of the world can be resumed as soon as possible. I will, as always, provide the resources required to fully support the anti-epidemic work.

This year's Budget focuses on stabilizing the economy and relieving people's burden. It aims to alleviate the hardship and pressure caused by the economic downturn and the epidemic through the introduction of counter-cyclical measures costing over $120 billion; and seeks to create a leverage effect to benefit our people, workers as well as enterprises. It is equally important that we should grasp the major directions and new trends of future development to strategically enhance our policy steering, support measures and resources allocation in key areas. This will not only bring new impetus to our industries, but also enable them to have a more dynamic, diverse and interactive development. I will go into more details in the ensuing paragraphs.

Economic Situation in 2020

Last year, the COVID-19 pandemic ravaged the world, causing unprecedented repercussions on the global economy. The International Monetary Fund ("IMF") estimated that the global economy contracted significantly by 3.5% for the year as a whole. At the onset of the outbreak, governments around the world implemented stringent social distancing requirements and widespread lockdowns, plunging many major economies into a deep recession in the first half of last year. Amid a sharp fall in external demand caused by the epidemic, Hong Kong's total exports of goods tumbled by 9.7% year-on-year in real terms in the first quarter of last year. Later, with a strong rebound in the Mainland economy after its epidemic situation was kept under control and the gradual recovery of other major economies in the second half of the year, Hong Kong's total exports of goods resumed growth in the second half of the year. Yet, there was still a mild decrease of 0.3% for the year as a whole.

Under the threat of the epidemic, inbound tourism was brought to a frozen state for most of the time last year amid extensive travel restrictions worldwide. Exports of travel services fell drastically by 90.5% for the year as a whole. Exports of financial services saw a moderate growth in the period, but total exports of services still registered a record decline of 36.8% for the year as a whole.

3838 LEGISLATIVE COUNCIL ― 24 February 2021

Given the volatile local epidemic situation, social distancing measures were tightened from time to time. This, coupled with the weak job and income conditions, has dampened local consumer sentiments. Private consumption expenditure dropped significantly by 10.1% for the year as a whole despite some narrowing of the decline in the second half of the year. Amid the highly uncertain business outlook, investment expenditure fell by 11.5%.

Hong Kong's overall economy contracted substantially by 9% in the first half of last year. While a slight improvement was seen in the third quarter, it has been hit again by the epidemic since the latter part of the fourth quarter. For 2020 as a whole, the economy contracted by 6.1%, the largest annual decline on record. It is also the first time for Hong Kong to register two consecutive years of negative growth.

The labour market deteriorated sharply. The seasonally adjusted unemployment rate went up from 3.3% in the fourth quarter of 2019 to 7% in the latest period, the highest in close to 17 years. Amid the epidemic, the consumption- and tourism-related sectors were hit hard. The unemployment rate of the retail, accommodation and food services sectors combined rose to 11.3%. In particular, the unemployment rate of the food and beverage services sector reached a high level of 14.7%. The unemployment rate of the construction sector also reached a double-digit level. Household incomes fell markedly in the year.

Amid a lacklustre economy, pressures on consumer price inflation were modest. Netting out the effects of the Government's one-off measures, the underlying inflation rate was 1.3% for last year as a whole, down 1.7 percentage points from the year before.

As for the property market, the residential property market was generally stable last year. Prices of commercial and industrial properties fell visibly from their peak in 2019, and transaction volume dropped to a record low. Following the relaxation of macro-prudential measures for mortgage loans on non-residential properties by the Hong Kong Monetary Authority ("HKMA"), as well as the abolition of the Doubled Ad Valorem Stamp Duty on non-residential property transactions by the Government, there was a slight rebound in transactions in the latter part of last year.

LEGISLATIVE COUNCIL ― 24 February 2021 3839

Economic Outlook for 2021 and Medium-term Outlook

With the launch of vaccination schemes in various places around the world, the global economy may see relatively significant improvements starting from the latter half of 2021. Last month, IMF forecast that the global economy will rebound by 5.5% this year.

The Mainland economy was hard hit by the epidemic in early 2020. Nevertheless, with the epidemic swiftly put under control and vigorous macro policies implemented in a timely manner, the Mainland economy experienced a strong rebound since the second quarter with an annual growth of 2.3%, making our country the only major economy in the world that achieved a positive growth. Looking ahead, though there are still uncertainties arising from the global epidemic situation and the China-United States relations, the Mainland economy is fundamentally sound. The Central Economic Work Conference held at the end of last year emphasized that the continuity, stability and sustainability of the macro policies would be maintained to provide the necessary support for economic recovery on an ongoing basis. All these would be conducive to robust economic growth in the Mainland.

The United States ("US") economy has begun to pick up since the third quarter of last year. With the rollout of a vaccination programme and the support of fiscal stimulus measures, as well as the easy monetary environment, market forecasts generally point to faster economic growth in US this year. The economy in Europe has slowed down again recently due to the resurgence of the pandemic. Nevertheless, with stronger policy support provided by the European Central Bank since late last year, the eurozone economy is expected to rebound later this year, provided that vaccines are widely applied. Once the epidemic is contained, Japan and other economies in Asia will also see a visible recovery this year.

Honourable Members, the foreign and economic policy directions of the US administration is the attention of the whole world. Their implications on the China-US relations and their economies are of particular significance. The global community hopes that China-US economic and trade relations can gradually be back to normal, thereby supporting further revival of global trade and business activities. However, as seen from the developments in the past few years, there remain many deep-seated conflicts between the two nations. Looking ahead, relations between the two nations will remain in a state of 3840 LEGISLATIVE COUNCIL ― 24 February 2021 continued tensions, and on-going competition but without a total break-down. Changes in China-US relations will affect the global trade, finance and political landscape. External factors such as geopolitical situations and possible financial risks associated with the surging global public debt also warrant attention.

Hong Kong's economy is expected to resume positive growth this year, but the progress of economic recovery will hinge on the development of the epidemic. As cross-boundary movement of people and tourism activities take time to resume normal, the economy will still face significant challenges in the first half of the year. Nevertheless, as long as the community gathers together to control the epidemic and social stability is maintained, economic recovery will likely gain a stronger momentum in the second half of the year in tandem with an expected rebound in the global economy. Having regard to the latest internal and external situations as well as the stimulus effect of the fiscal measures, I forecast that our economy will grow by 3.5% to 5.5% in real terms this year.

On inflation, external price pressures are expected to remain modest. After two consecutive years of contraction, overall economic activities will remain below the pre-recession level this year and should not pose notable pressure on local costs. I forecast that the headline inflation rate and the underlying inflation rate will be 1.6% and 1% respectively this year.

In the medium term, Hong Kong will continue to benefit from the ongoing development of the Mainland and the shift in global economic gravity from West to East. The economic outlook is positive. Our country's economy will continue to advance during the 14th Five-Year Plan period. The signing of the Regional Comprehensive Economic Partnership ("RCEP") Agreement will further promote economic integration in the region. Hong Kong can open up greater room for development by leveraging the advantages under "One Country, Two Systems", playing its unique role as a gateway and an intermediary, integrating into the new overall development of our country, actively participating in the national dual circulation development strategy and seizing the opportunities brought by the development of the Guangdong-Hong Kong-Macao Greater Bay Area ("the Greater Bay Area") and the Belt and Road ("B&R") Initiative. On the other hand, the Government will strive to overcome land and talent constraints, promote innovation and technology ("I&T") development, invest in education and nurture talent, and strengthen connection with the world. Considering the above factors and taking into account the catch up growth that LEGISLATIVE COUNCIL ― 24 February 2021 3841 would follow the initial economic recovery this year, I forecast that Hong Kong's economy will grow by an average of 3.3% per annum in real terms from 2022 to 2025, while the underlying inflation rate will average 2%.

Riding out the Storm

Fighting the Virus Together

It is the Government's top priority to contain the epidemic so that businesses and the public can be back to their daily routines. A high-level Steering Committee cum Command Centre led by the Chief Executive was set up in January 2020 to formulate strategies and measures swiftly in response to the development of the epidemic with a view to achieving the target of "zero infection". I would like to extend my heartfelt thanks to those joining the fight against the epidemic, including healthcare staff as well as businesses and individuals who have been supporting the Government's anti-epidemic measures. I will continue to provide adequate resources to fully support the anti-epidemic work.

The Government strives to step up surveillance and testing efforts. In order to identify cases in the community as early as possible to help cut the transmission chains, various means are provided to collect specimens up to about 100 000 for testing each day. At present, the actual testing capacity of public and private laboratories in Hong Kong has reached the level of over 100 000 tests per day.

The Government has allocated $4.7 billion from the Anti-epidemic Fund ("AEF") to support the anti-epidemic work of the Hospital Authority ("HA"), ensuring sufficient support and protection for frontline healthcare staff. The Government also provides an additional allocation of $3,044 million mainly for HA to establish and operate the Community Treatment Facility at the AsiaWorld-Expo and the Hong Kong Infection Control Centre at the North Lantau Hospital. The former has commenced services in phases since last August, and the latter will commence services from the end of this month.

The Government has earmarked over $8.4 billion for the procurement and administration of COVID-19 vaccines. Our target is to have the majority of the population vaccinated for free within 2021. The COVID-19 Vaccination Programme which started yesterday will provide vaccination for five priority 3842 LEGISLATIVE COUNCIL ― 24 February 2021 groups of citizens. The Government will seek funding support from the Finance Committee ("FC") of the Legislative Council in the end of this month to establish a vaccination indemnity fund with $1 billion.

Overcoming the Epidemic

AEF is set up to enhance Hong Kong's capability in combating the epidemic and provide relief for industries and members of the public hit hard by the epidemic. The measures launched under AEF and the relief measures that I put forward in my last Budget involve a total of over $300 billion, providing an expected support effect of more than 5% of Gross Domestic Product ("GDP").

Having regard to the financial affordability of the Government, I will implement the following measures to continue to support enterprises, safeguard jobs and relieve people's burden.

Support Enterprises

To support enterprises, I will implement the following measures involving a total of about $9.5 billion:

(a) reducing profits tax for the year of assessment 2020-2021 by 100%, subject to a ceiling of $10,000. The reduction will be reflected in the final tax payable for the year of assessment 2020-2021. This will benefit 128 000 businesses and reduce government revenue by $1,050 million;

(b) providing rates concession for non-domestic properties for four quarters of 2021-2022, subject to a ceiling of $5,000 per quarter in the first two quarters and a ceiling of $2,000 per quarter in the remaining two quarters for each rateable property. This proposal is estimated to involve 420 000 non-domestic properties and reduce government revenue by $3.4 billion;

(c) waiving the business registration fees for 2021-2022. This will benefit 1.5 million business operators and reduce government revenue by $3 billion;

LEGISLATIVE COUNCIL ― 24 February 2021 3843

(d) continuing to waive 75% of water and sewage charges payable by non-domestic households for eight months starting from April 2021, subject to a monthly ceiling of $20,000 and $12,500 respectively per household. This will benefit 250 000 non-domestic households and reduce government revenue by $680 million; and

(e) continuing to grant the 75% rental or fee concession currently applicable to eligible tenants of government properties and eligible short-term tenancies and waivers under the Lands Department ("LandsD") for six months starting from April 2021. During the period, tenants who have to close their properties at the request of the Government will continue to receive full rental waiver for the duration of the closure. This will reduce government revenue by $1.4 billion.

The Government has introduced a number of enhancements to the SME Financing Guarantee Scheme, including the rollout of the 90% Guarantee Product and the one-year Special 100% Guarantee Product to provide enterprises with low-interest loans or interest subsidies, as well as principal moratorium during which only interest payments have to be made, thus giving them some breathing space for recovery. As at the end of January, a total of $42.7 billion in loans was approved under the 100% Guarantee Product, benefiting over 20 000 enterprises, involving 260 000 employees. As the epidemic has been lingering on for over one year, in order to continue to relieve the cash flow pressure of small and medium enterprises ("SMEs"), I will extend the application period of the Special 100% Guarantee Product to the end of this year; further increase the maximum loan amount per enterprise from the total amount of employee wages and rents for 12 months to that for 18 months and raise the loan ceiling from $5 million to $6 million; extend the maximum repayment period from five years to eight years; and extend the maximum duration of principal moratorium from 12 months to 18 months. The Hong Kong Mortgage Corporation Insurance Limited ("HKMCIL") will announce the details later.

Further to the launching of the Pre-approved Principal Payment Holiday Scheme together with the banking sector in response to the epidemic in May last year, HKMA announced in November that the scheme would be extended for six months to April 2021 having regard to the ongoing impact of the epidemic on economic activities. Some 120 000 eligible corporate customers are covered by the scheme. Under this scheme and other relief initiatives offered by banks, about 59 000 cases have been approved by banks to support enterprises as at end January 2021, involving an amount of about $750 billion.

3844 LEGISLATIVE COUNCIL ― 24 February 2021

Support Employment

Following the allocation of funding to enhance the Love Upgrading Special Scheme run by the Employees Retraining Board ("ERB") in last year's Budget, ERB launched the third tranche of the scheme in January this year to provide training and allowance for 20 000 trainees affected by the economic situation. The Government will ask ERB to launch the fourth tranche of the scheme in July, which will last for six months until the end of this year, benefiting 20 000 trainees. ERB will continue to provide more training options under the scheme and more online courses for trainees to engage in distance learning during the epidemic.

Having regard to the advancement in technology and changes in learning mode, the Government plans to expand the scope of the Continuing Education Fund to include online courses to provide learners with more diversified ways of continuing learning. At the same time, we will ensure effective supervision over the quality of courses and teaching. The Government will consult the sector with a view to implementing the measure upon commencement of the new school term in September.

In 2020-2021, the Government created about 31 000 time-limited jobs in the public and private sectors through AEF. As at end January, some 16 000 appointments were made. I propose to further allocate $6.6 billion to create around 30 000 time-limited jobs for a period up to 12 months.

Relieve People's Hardship

I will also introduce the following one-off measures to alleviate the impact of the economic downturn on the public:

(a) reducing salaries tax and tax under personal assessment for the year of assessment 2020-2021 by 100%, subject to a ceiling of $10,000. The reduction will be reflected in the final tax payable for the year of assessment 2020-2021. This will benefit 1.87 million taxpayers and reduce government revenue by $11.4 billion;

(b) providing rates concession for domestic properties for four quarters of 2021-2022, subject to a ceiling of $1,500 per quarter in the first two quarters and a ceiling of $1,000 per quarter in the remaining two LEGISLATIVE COUNCIL ― 24 February 2021 3845

quarters for each rateable property. This proposal is estimated to involve 2.95 million domestic properties and reduce government revenue by $11.6 billion;

(c) granting each residential electricity account a subsidy of $1,000. This measure will involve an expenditure of about $2.8 billion and benefit over 2.7 million eligible residential households;

(d) providing an allowance to eligible social security recipients, equal to one half of a month of the standard rate Comprehensive Social Security Assistance ("CSSA") payments, Old Age Allowance, Old Age Living Allowance or Disability Allowance. This will involve additional expenditure of $2,382 million. Similar arrangements will apply to recipients of the Working Family Allowance ("WFA") and Individual-based Work Incentive Transport Subsidy, involving additional expenditure of $121 million; and

(e) paying the examination fees for school candidates sitting for the 2022 Hong Kong Diploma of Secondary Education Examination, incurring $150 million.

President, Honourable Members, this prolonged economic downturn has plunged some people into financial difficulties. In view of this, many people have demanded temporary unemployment assistance. The Government has reiterated the policy considerations it has taken into account for not accepting the proposal, and instead provided a time-limited special scheme under the CSSA Scheme to help the unemployed.

Considering that many grass roots have been suffering from underemployment amid the epidemic, the Government proposes to relax the working hour requirements under the WFA Scheme. Among them, the current basic working hour requirement of not fewer than 144 hours per month for non-single parent households will be substantially lowered by half for one year. The measure will be implemented in June this year at the earliest subject to FC approval.

In order to provide an extra financing option for the unemployed, I suggest setting up a Special 100% Loan Guarantee for Individuals Scheme as a supplementary measure. The Government will offer a guarantee for loans 3846 LEGISLATIVE COUNCIL ― 24 February 2021 provided under the scheme. The maximum loan amount per applicant is set at six times of his/her average monthly income during employment, subject to a ceiling of $80,000. There will be a principal moratorium for the first 12 months. Afterwards, the principal and interest can be repaid over a period of up to five years with an interest rate fixed at 1% per annum. Applicants who have repaid loans in full as scheduled will be offered full reimbursement for the interest paid. Freelancers who provide proof of loss of income may also apply for the loan. The Government will provide a total guarantee commitment of $15 billion. The application period will last for six months. The Financial Services and the Treasury Bureau ("FSTB") will, in collaboration with HKMCIL, announce the details in due course.

Amid the epidemic, the public are increasingly concerned about environmental hygiene issues such as misconnection and dilapidation of the drainage pipes of buildings. I will earmark $1 billion to provide subsidies for owners of more than 3 000 old buildings with relatively low rateable values to carry out drainage repair or enhancement works. For buildings with owners having difficulties in organizing the works by themselves, such as "three-nil" buildings, the ("BD") will exercise its power under the Buildings Ordinance to carry out the works in default of their owners in an orderly manner based on the risk profile. The owners concerned may also benefit from the subsidy scheme.

Reviving the Economy after the Epidemic

While having a profound impact on the global economic development and structure, as well as people's lifestyles, the epidemic has also created new business opportunities. To enable our economy to revive after the epidemic, we should adopt a targeted approach. Apart from helping enterprises adapt to the economic "new normal" after the epidemic and stimulating consumption, we should also promote our advantages outside Hong Kong. I will elaborate on the relevant measures in the ensuing parts of my speech.

Digital Economy

Many traditional industries have accelerated the application of technology in their operations due to the epidemic. Examples include digital payment; smart self-service systems; and various online businesses, customer services and workflow management. For many people who stay at home during the LEGISLATIVE COUNCIL ― 24 February 2021 3847 epidemic, the use of online shopping services, video streaming platforms and online conference software has become their new mode of working, studying and entertainment. For various trades, it has now become a trend to speed up digital transformation in order to adapt to the new consumption modes and habits of the people. Only by making good use of information technology can enterprises seize the opportunities of development when the epidemic is over.

In view of the above, we have launched the Distance Business Programme under AEF to provide funding support for enterprises to adopt information technology solutions and cover the expenses for providing relevant training to their employees. The programme has received an overwhelming response since its launch in mid-2020, and a total funding of nearly $800 million has been granted. We have subsequently allocated an additional funding of $1 billion for the continuation of the programme and further enhancement.

The challenges posed by the epidemic have also catalysed local I&T development. They not only incentivize businesses to conduct research and development ("R&D") for products or innovative services but also provide enterprises with suitable contexts for application. The electronic wristbands used for home confinement and the touchless lift button system are some good examples. The Government will continue to support enterprises or manufacturers through, among others, the Public Sector Trial Scheme, the Technology Voucher Programme and the Re-industrialisation Funding Scheme in realizing and commercializing their R&D outcomes, using technological services to improve their productivity or business processes, and setting up smart production lines in Hong Kong. This will enable them to better grasp the opportunities brought by the new economy.

I will allocate a total of $375 million to the Hong Kong Trade Development Council ("TDC") in three years starting from 2021-2022 for developing virtual platforms to enhance its capability to organize online activities and to proceed with digitalization. Moreover, TDC will promote Hong Kong's strength in the development of the Greater Bay Area and in healthcare products and services. It will also explore the use of its physical and online Business-to-Consumer platforms to assist young business starters in promoting their original products and gauging the preference of consumers.

3848 LEGISLATIVE COUNCIL ― 24 February 2021

In light of the epidemic, we have expedited our work in taking forward e-Government by providing more electronic services to make it easier for enterprises and individuals to submit applications, make payments, obtain licences and use government services. By mid-2022, unless there are legal or operational constraints, all government forms and licence applications can be submitted electronically. Besides, e-payment options (including the Faster Payment System) will be available for making payments in respect of most government bills and licences starting from mid-2022.

The "iAM Smart", a one-stop personalized digital service platform, was launched at the end of last year. HKMA is currently working with the Office of the Government Chief Information Officer ("OGCIO") to develop the business version of the "iAM Smart" digital authentication platform. It can be used to authenticate the identity of enterprises through an electronic channel. With the wide adoption of "iAM Smart" in various electronic government services, members of the public can choose to obtain their data kept by individual government departments via electronic means, and submit such data electronically when applying for services from financial institutions. In addition, HKMA has earlier announced the development of "Commercial Data Interchange", which will allow commercial services operators to submit customers' data to financial institutions under the instruction and consent of their corporate customers so as to assist them in the application for services.

To promote the LawTech development, I set aside funding in the 2019-2020 Budget to support the development of an online dispute resolution and deal making platform by a non-governmental organization ("NGO"). With an allocation of $100 million to the project, starting from this year, the platform will roll out negotiation, arbitration, mediation and online training services progressively and develop other services such as e-translation and smart contract in phases. This year, the Government will actively explore the development of the Hong Kong Legal Cloud, in order to sharpen Hong Kong's edge and raise our status in the provision of professional legal services.

Issue Consumption Vouchers

In view of the current special situation, the Government should make good use of the fiscal reserves to energize the market, stimulate the economy, and facilitate the speedy recovery of the consumption market and other economic segments in a timely manner. After careful consideration, I will issue electronic consumption vouchers in instalments with a total value of $5,000 to each eligible LEGISLATIVE COUNCIL ― 24 February 2021 3849

Hong Kong permanent resident and new arrival aged 18 or above, so as to encourage and boost local consumption. This measure, which involves a financial commitment of about $36 billion, is expected to benefit around 7.2 million people. The Government will identify suitable stored value facilities operators to help roll out the scheme, and will announce the details of the scheme as soon as possible.

Explore Markets

I will inject $1.5 billion into the Dedicated Fund on Branding, Upgrading and Domestic Sales, and substantially extend in phases its geographical coverage from 20 to 37 economies to include all those with which Hong Kong has entered into Investment Promotion and Protection Agreements ("IPPAs"). The funding ceiling for each enterprise will be increased from $4 million to $6 million, so as to support enterprises in exploring more diversified markets by fully utilizing the better protection offered by IPPAs.

Support Tourism

The epidemic has dealt a heavy blow to the local tourism industry, bringing it to a standstill. Apart from the financial support of nearly $2.6 billion that has already been provided for the tourism industry, I will further earmark a total of $934 million to enhance tourism resources, of which $169 million will be used to continue to take forward local cultural, heritage and creative tourism projects, such as the Yim Tin Tsai Arts Festival and the City in Time. We will continue to improve the facilities along hiking trails to develop more green tourism resources. The purpose is to offer leisure and travel experience with rich historical and cultural elements to both locals and visitors.

I will also earmark $765 million to support the Hong Kong Tourism Board ("HKTB") in reviving our tourism industry. HKTB has launched promotional programmes such as "Holiday at Home" and "360 Hong Kong Moments" with a view to enhancing local ambience and consumption as well as maintaining the promotion and exposure of Hong Kong in visitor source markets. Upon gradual resumption of cross-boundary travel, HKTB will roll out promotional offers to attract visitors through the "Open House Hong Kong" platform. HKTB is also conducting a comprehensive review of the positioning of Hong Kong's tourism in the long run in response to the "new normal" after the epidemic with a view to formulating appropriate strategies to spur the recovery of the tourism industry.

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Provided that public health can be safeguarded, the Government will consider relaxing restrictions on group gatherings in relation to local group tours again to allow room for business operation for the tourism industry. The Government will discuss and work out arrangements regarding Air Travel Bubble with places that have close economic and trade relations with Hong Kong and where the epidemic situation is relatively stable.

Apart from the above initiatives, additional resources will also be allocated to enhance country parks, recreational facilities, harbourfront, etc. These enhancements will improve people's quality of life when the epidemic is over and may also appeal to our visitors. I will provide more details in the ensuing parts of my speech.

Promote Hong Kong

Once the pandemic further subsides, the Government will launch a large-scale publicity and promotional campaign at home and abroad, showcasing to the world the image of Hong Kong as a highly open international city in the Greater Bay Area from various perspectives such as finance, I&T, culture and creativity and tourism, as well as our unique advantages under "One Country, Two Systems". We hope to attract enterprises, investors and talent to Hong Kong. InvestHK and our overseas offices will step up their efforts in this area.

Stimulating the Economy

Positioning and Directions for Economic Development

Assessment of Situation

Hong Kong has been leveraging the support from the Mainland while engaging the world. Over the past many years, we have been utilizing our advantages in institutions, talents and external connections, and served as a bridge between our country and the rest of the world in different ways in response to our country's ever-changing needs. By doing so, Hong Kong has contributed to national development and at the same time promoted its own development and economic growth. Only by making good use of the advantages of "One Country, Two Systems" with the precondition of strengthening national security can we continue to play and even enhance our role on this front.

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Over the past two years, Hong Kong has been affected by the deterioration of the China-US relations, and experienced the blow from the social incidents and the ravages of the pandemic. However, we should not let these challenges weaken our confidence in the future. Instead, we should learn from the experience and make correct assessment of the major development trends.

First, the world is facing profound changes unseen in a century. The economic gravity is shifting from West to East, and the political setting has also seen subtle changes. Our country's composite national strength has enhanced significantly, while other developing countries in Asia have undergone robust development. However, with the rise of unilateralism in recent years and the misunderstandings of some western countries towards Hong Kong's developments, we are facing greater difficulties. The epidemic has increased various countries' concerns about development security, which might further escalate protectionism. Some nations encourage or even ask enterprises to move back to their home countries, impacting on the development and setting of global value chains.

Second, the world is facing drastic disruptions brought by technological revolution, which have far-reaching implications for our personal life, modes of production and operation, economic structures, development prospects and international landscape. The pandemic has also accelerated changes in the mode of business operation and people's living habits. Making good use of digital technology is not only essential to effective business operation, but also crucial for preventing and combating the pandemic and protecting public health and safety. Whether a place can attain a leading position in I&T will determine its success or failure.

Third, green development is a major global trend. Environmental pollution and climate change have become too serious to ignore. There is a general recognition in the international community that we should promote green and low-carbon development, which involves extensive new areas. The Government needs to have visions and determination; the people need to build awareness of environmental protection and corresponding habits; the business sector needs to develop and adopt novel technologies, and launch products of high efficiency. Other matching services such as financial support are also needed.

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Fourth, as for Hong Kong, we have experienced many changes at different points in our history, but the support of our country has remained unchanged. With the advantages under "One Country, Two Systems", Hong Kong has a unique and irreplaceable role in the national development.

Functions and Positioning

With its deep and extensive connections with the world, Hong Kong will continue to be an important platform for economic exchanges and trade between the Mainland and the international community. As mentioned in the Proposal for Formulating the National 14th Five-Year Plan, our country supports Hong Kong in consolidating and bolstering our competitive edges, building the city as an international I&T hub, fostering the development of the city as a B&R functional platform, and achieving diversified and sustainable development of the economy. With our country's support, we can further capitalize on our advantages and realize our potential. We must step up our efforts to explore international economic and trade opportunities and actively participate in national development through making use of our industries with competitive strengths.

Hong Kong has prominent functional roles in various aspects such as pooling international capital and talent, and providing a platform to align our country's standards with the international ones. In addition, Hong Kong serves as a testing ground and firewall in our country's promotion of financial sector reform and opening up (such as the internationalization of Renminbi ("RMB")). Under our country's dual circulation development strategy, Hong Kong will definitely achieve greater success in the future as long as we can give full play to our unique roles as a gateway, a springboard and an intermediary.

Leveraging our close proximity, Hong Kong can make use of the Greater Bay Area development as an entry point, participating actively in the development of our country's domestic circulation for capturing the enormous business opportunities. As an international metropolis that connects the world, Hong Kong can help the expansion of the country's external circulation, and in consequence further strengthen its status as an international centre for finance, commerce and trade, as well as a home for corporate headquarters.

In the face of rising unilateralism, it is all the more important for us to actively promote multilateralism, dismantle various barriers and strengthen Hong Kong's links with the international community. We should further expand Hong LEGISLATIVE COUNCIL ― 24 February 2021 3853

Kong's trade, investment and tax agreement networks. The Free Trade Agreement and the Investment Agreement between Hong Kong and the Association of Southeast Asian Nations have recently come into full effect. In November last year, our country signed the RCEP Agreement with 14 economies. We are actively seeking to be among the first batch of economies joining RCEP after it comes into effect, so as to help Hong Kong businesses and investors open up markets, thereby fostering the long-term economic development of Hong Kong.

The Way Forward for Industries

From the perspective of industries, Hong Kong has huge development potential in areas including financial services, I&T, green economy, air cargo, supply chain management and professional services. Financial services are an important support to the real economy. On top of being a leading asset and wealth management centre, Hong Kong is also an international fundraising platform, an insurance and risk management centre and an offshore RMB hub. Our financial services can assist Mainland enterprises in raising funds, and provide outlets and risk management for Mainland funds, as well as facilitating the Mainland's ongoing financial liberalization in a secure and orderly manner in support of the development of our country's real economy. We must continue to strengthen Hong Kong's leading position in the global financial market.

Hong Kong enjoys a number of advantages in I&T development, such as top-notch capabilities in basic scientific research, intellectual property rights protection, attractiveness to research talents from all over the world and first-class financial support services. In recent years, the Government has allocated substantial resources and implemented a number of preferential policies, and been blessed with our country's support. As long as we can leverage our advantages and achieve coordinated development with our brother cities that have leading I&T enterprises and advanced manufacturing industries in the Greater Bay Area, we can form an I&T upstream, midstream and downstream industrial chain and develop the Greater Bay Area into an international I&T centre, thus contributing to our country's technological self-reliance and at the same time identifying new areas of growth for Hong Kong's economy.

Nowadays, when everyone is striving to live a quality life, decarbonization, waste reduction, building of a green environment and a sustainable city, etc. have become a social consensus. The international community, including our country 3854 LEGISLATIVE COUNCIL ― 24 February 2021 and the European Union, has set achieving carbon neutrality as an important development goal. A significant synergy effect can be generated between green economy and other industries such as the I&T and financial sectors. Our robust green and sustainable financial services can contribute to the development of green economy in the Mainland and Hong Kong.

Hong Kong is a world-class logistics and supply chain management centre. With a well-established network of air routes, a highly efficient airport as well as simple and fast customs clearance procedures, Hong Kong's air cargo transport sector plays a leading role in the world. We will strive to enhance our intermodal transportation services in the future, with a view to increasing the global accessibility of the Greater Bay Area. This will facilitate not only the exports of goods from the Greater Bay Area to overseas markets, but also the imports of quality products from around the world to the Mainland, meeting the increasing consumer demands there. Technology is reshaping the interplay between the supply of goods and the demand of consumers, and the prospects for our high-end logistics and supply chain management services are bright.

As our country seeks to achieve high-quality development, the demand for various types of professional services such as legal, accounting, construction and project management services is on the rise. These areas are where our strengths lie. Hong Kong's professionals can provide services in a market full of opportunities, and also promote the alignment of industry standards in the Mainland with those of the international community.

Apart from the above industries, there is also a growing demand for inclusion of cultural and creative elements in the cyber world. I will allocate additional resources to promote the development of cultural and creative industries, so that young people can have more employment and business start-up opportunities for unleashing their potential and realizing their dreams.

Guangdong-Hong Kong-Macao Greater Bay Area

As mentioned earlier, the Greater Bay Area is the best entry point for Hong Kong to participate in the domestic circulation of our country's economy. Be it for the mutual market access for financial services and products, cooperation and collaboration in respect of innovation and technology, or people's stay and living across the boundary, continued innovation in institutional and policy arrangement is needed so as to ensure a smoother two-way flow of funds, people and factors of LEGISLATIVE COUNCIL ― 24 February 2021 3855 production. The Guangdong-Hong Kong-Macao Greater Bay Area Development Office has been set up to strengthen the planning, coordination and promotion of the various policies and measures relating to the Greater Bay Area development, and enhance the community's understanding of the Greater Bay Area development. The Government also helps Hong Kong's businesses and youths to grasp the opportunities arising from the Greater Bay Area development through various schemes.

Belt and Road

Our country has signed cooperation agreements with about 170 countries and international organizations regarding the B&R Initiative. The Government will continue to provide financing services to B&R infrastructure projects through leveraging Hong Kong's function as an international financial centre, encourage Hong Kong enterprises and professional services sectors to develop business in the overseas Economic and Trade Co-operation Zones set up by our country, and establish connections with Mainland enterprises and industry associations for jointly exploring new markets, thereby consolidating Hong Kong's role as a prime functional platform and key node for the B&R Initiative.

Financial Services

Comprehensive and superb financial services are crucial for an economy gearing for high-quality development. The value added of the financial services industry in Hong Kong accounted for 21% of GDP in 2019. Its share of the overall employment increased from 6.8% in 2018 to 7.1% in 2019. Hong Kong has always been an offshore financing centre for Mainland enterprises and an important conduit for international capital to enter the Mainland market. The capital markets of Hong Kong and the Mainland can complement and interact positively with each other.

Last year's total transaction value of the Southbound and Northbound Trading of Stock Connect programmes more than doubled that of the year before. The mutual market access programmes have been operating smoothly. Hong Kong can contribute more proactively to our country's dual circulation strategy. FSTB, together with HKMA, the Securities and Futures Commission ("SFC") and the Insurance Authority ("IA"), has set up a joint working group to explore how Hong Kong can complement the economic and financial development of our country and meet the needs of international investors, and examine how to further 3856 LEGISLATIVE COUNCIL ― 24 February 2021 enhance Hong Kong's competitiveness as an international financial centre on the basis of our existing capacities. It will set out the development blueprint and put forward concrete proposals and measures for engagement with the Central Authorities to secure their support.

Green and Sustainable Finance

Having regard to the goal of achieving carbon neutrality before 2050, we will continue to promote the development of green and sustainable finance, encourage institutions to conduct relevant investment, financing and certification activities and attract top-notch institutions and talent to Hong Kong to provide the relevant services. We will join hands with the financial sector and relevant stakeholders to take forward the strategic plan announced end last year by the Green and Sustainable Finance Cross-Agency Steering Group, thereby leveraging our role as an international financial centre to mobilize capital towards sustainable projects in the region and enhance Hong Kong's position as a green and sustainable finance hub in the region.

Last month, we successfully offered the second batch of government green bonds totalling US$2.5 billion, among which the 30-year tranche is the longest-tenor bond issued by the Government and the longest-tenor USD-denominated government bond in Asia to date. We plan to issue green bonds regularly and expand the scale of the Government Green Bond Programme. We propose to double the borrowing ceiling of the Programme to $200 billion to allow for further issuance of green bonds totalling $175.5 billion within the next five years, having regard to the market situation. This will also give us more room for piloting the issuance of green bonds that involves more types of currencies, project types and issuance channels, thereby further enriching the green finance ecosystem in Hong Kong. We also plan to issue retail green bonds for the participation of the general public.

The Pilot Bond Grant Scheme and the Green Bond Grant Scheme rolled out by the Government previously will expire by mid-2021. We will consolidate the two schemes into a Green and Sustainable Finance Grant Scheme to provide subsidy for eligible bond issuers and loan borrowers to cover their expenses on bond issuance and external review services. The Scheme will last for three years and HKMA will announce relevant details in due course.

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Bond Market

Through the active promotion of the Government, Hong Kong's bond market has seen sustained growth, now ranking third in Asia (excluding Japan) in terms of total amount of bond issuances. I will lead a steering group comprising members from FSTB, HKMA, SFC, IA and the Hong Kong Exchanges and Clearing Limited ("HKEX"), to formulate a roadmap for promoting the diversified development of Hong Kong's bond market and reinforcing its functions.

Consolidating Market Infrastructure

We will enhance the efficiency and capacity of our domestic Central Moneymarkets Unit ("CMU") and introduce new functions to cope with the increasing market demand for Northbound Trading of Bond Connect and support its future commissioning of Southbound Trading, with a view to providing a risk-controlled channel for Mainland investors to participate in local and overseas bond markets. We will develop CMU as a major central securities depository platform in Asia and in the world in the long run.

Bond Connect Development

We target to expand Bond Connect to cover both Southbound and Northbound Trading. The implementation of Southbound Trading will further facilitate Mainland investors to make diversified asset allocation and present enormous opportunities for Hong Kong's financial industry. HKMA and the People's Bank of China have set up a working group to drive the initiative of Southbound Trading of Bond Connect, with the target of launching it within this year.

Retail Bond Market

Given that the global low interest rate environment will persist for a considerably long time, and many people in the community, especially the elderly, prefer investment options with steady and reliable returns, we plan to continue to issue no less than $24 billion of Silver Bond and no less than $15 billion of iBond this year. We propose to raise the borrowing limit of the Government Bond Programme from $200 billion to $300 billion to allow 3858 LEGISLATIVE COUNCIL ― 24 February 2021 sufficient room for bond issuances, so as to achieve the objective of promoting the sustainable development of Hong Kong's bond market. The eligible age for subscribing Silver Bond will be lowered from 65 to 60.

Real Estate Investment Trusts

We are also committed to developing the real estate investment trust ("REIT") market in Hong Kong and reinforcing the city's role as a premier capital raising centre, while offering investors a wide range of investment options with relatively stable returns. Subsidies will be provided for qualifying REITs authorized by SFC and listed in Hong Kong in the coming three years to encourage the listing of more REITs in Hong Kong. The subsidy will cover 70% of the expenses paid to local professional service providers for the listing of REITs, subject to a cap of $8 million per REIT. SFC will announce relevant details in due course.

Securities Market

Undaunted by challenges from external factors, the Hong Kong stock market recorded an average daily turnover of $129.5 billion last year, representing an increase of 49% over the year before. A total of $397.5 billion was raised through initial public offerings ("IPO") during the same period, representing an increase of 27% over the year before, and among which, over 90% of the funds were raised by Mainland enterprises. Not only is Hong Kong a preferred international fundraising platform, it is also the world's second largest fundraising hub for biotechnology companies. There have been 43 companies listed under the new listing regime in Hong Kong since its introduction in 2018, raising a total of over $420 billion, which accounts for about 40% of total IPO funds raised in the period. These companies have a combined market capitalization of over $11 trillion, accounting for about a quarter of the current total market capitalization in Hong Kong. They include 10 China Concept Stock companies returning to Hong Kong for secondary listing and 31 pre-revenue or pre-profit biotechnology companies. Our earlier efforts in enhancing the listing regime are gradually delivering results.

HKEX will review the overall secondary listing regime, including whether Greater China companies with non-weighted voting rights structures have to be companies in the field of I&T in order to seek secondary listing in Hong Kong through the new concessionary route, as well as their corresponding market capitalization requirements. HKEX will consult the market in due course.

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Stock Connect expands the depth and breadth of the capital market in Hong Kong, and is in line with our country's financial development strategy. We will seek to expand its capacity continuously, including the progressive inclusion of ETF and other types of assets as well as expansion of the scope of eligible securities. With international investors' increased participation in the A-share market through Stock Connect, there is a growing demand for using A-shares index futures to hedge market risk. HKEX will accelerate the preparatory work for the launch of MSCI China A-Index Futures contract.

Insurance and International Risk Management Centre

We are currently undertaking a series of legislative work to provide for half-rate profits tax concessions to eligible insurance businesses including marine insurance and specialty insurance; facilitate the issuance of insurance-linked securities ("ILS") in Hong Kong; expand the scope of insurable risks of captive insurance companies; and enhance the group-wide supervision framework. We are also preparing for the implementation of a Risk-based Capital Regime for the insurance industry to replace the rule-based capital adequacy regime.

I propose launching a two-year Pilot Insurance-linked Securities Grant Scheme to attract insurance enterprises or organizations to issue ILS in Hong Kong. The amount of grant for each issuance will be capped at $12 million, depending on the maturity of ILS. IA will announce the details in due course.

Asset and Wealth Management

Since the establishment of the two new fund structures, namely the Open-ended Fund Company ("OFC") and the Limited Partnership Fund ("LPF"), the investment fund regime of Hong Kong has become more comprehensive. With 11 OFCs and over 100 LPFs already set up, Hong Kong's status as an international asset and wealth management centre has been consolidated. We plan to submit a legislative proposal in the second quarter of this year to allow foreign investment funds to re-domicile to Hong Kong for registration as OFCs or LPFs.

OFC suits various types of investment funds. We will provide subsidies to cover 70% of the expenses paid to local professional service providers for OFCs set up in or re-domiciled to Hong Kong in the coming three years, subject to a cap of $1 million per OFC. SFC will announce relevant details in due course.

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We have introduced an amendment bill to provide tax concessions for carried interest issued by private equity funds operating in Hong Kong. We strive to secure the Legislative Council's passage of the bill within the current session for the tax concession arrangements to apply starting from 2020-2021.

Family Office Business

To enhance our attractiveness as a hub for family offices, InvestHK and regulators will offer one-stop support services to family offices interested in establishing a presence in Hong Kong. We will also review the relevant tax arrangements.

Innovation and Technology

In the past three years, the Government allocated over $100 billion to support the development of I&T. We already have eight unicorns, making Hong Kong comparable to many larger economies. Despite the huge challenges imposed by the epidemic as well as the internal and external environments, I am convinced that the promotion of I&T is the right direction for the long-term development of Hong Kong.

Nurture and Pool Talent

In recent years, the number of research personnel and the number of staff members of start-ups in Hong Kong have increased substantially. To nurture I&T talent, the Education Bureau has implemented a number of measures to promote STEM education, including curriculum updating, providing professional training for teachers, subsidizing and organizing large-scale learning activities, such as the STEM Education Fair. The Standing Committee on STEM Education of the Curriculum Development Council steers and promotes the long-term development of STEM education in primary and secondary schools, as well as reviews continuously the relevant curriculum.

The IT Innovation Lab in Secondary Schools Programme has received positive response since its launch. I will set aside over $200 million to extend the programme to primary schools. Funding of up to $400,000 will be provided to each subsidized primary school in the coming three school years, thereby rolling out a "Knowing More About IT" Programme to enhance students' interests and knowledge in information technology and their applications through LEGISLATIVE COUNCIL ― 24 February 2021 3861 extra-curricular activities, so as to prepare them for integration into the knowledge-based economy and participation in the development of a digital society. OGCIO will set up a one-stop support centre to provide assistance for primary schools.

Last year, I earmarked $40 million to implement a pilot scheme, under which subsidies are provided for students who study science and technology in local universities to enrol in short-term I&T related internships. More than 1 600 students and over 1 000 enterprises participated in the scheme. Eighty percent of the interns indicated that they would consider pursuing a career in I&T after graduation. Given the overwhelming responses, I announce that the scheme would be regularized.

The Government will launch a Global STEM Professorship Scheme in the first half of this year to support universities in attracting world-renowned I&T scholars and their teams to Hong Kong to participate in STEM teaching and research. The scheme will involve an expenditure of about $2 billion, which will be borne by the Government, the universities and the Hong Kong Jockey Club Charities Trust.

Job opportunities and continuous training are also crucial for nurturing the I&T talent. In the past three years, the Research Talent Hub has funded over 3 700 R&D positions. Among those engaged, about 1 400 are postdoctoral talent. The Re-industrialisation and Technology Training Programme provided on-the-job training for over 3 500 employees of some 1 800 enterprises so as to enable them to have a better grasp of the development of the new economy and I&T. The Greater Bay Area Youth Employment Scheme launched early this year also provides around 700 I&T places to encourage enterprises to employ Hong Kong's university graduates so that the latter can undertake I&T-related work and receive on-the-job training in Hong Kong and another city in the Greater Bay Area.

Innovation and Technology Infrastructure

Over 80% of the areas in the two buildings under Stage 1 of the Science Park Expansion Programme have been occupied. As for the Data Technology Hub ("DT Hub") in the Tseung Kwan O Industrial Estate, since its commencement of operation in the fourth quarter of last year, 16 enterprises have already set up offices there or signed tenancy agreements. Besides, quite a number of enterprises have expressed interest in setting up offices in the DT Hub. 3862 LEGISLATIVE COUNCIL ― 24 February 2021

The InnoCell adjacent to the Science Park was completed at the end of last year, providing around 500 residential spaces with flexible design and facilities such as shared work spaces for the research personnel in the Science Park. Leasing activities will commence and a trial run will be held in the first half of this year.

The supply of R&D and working spaces in the Hong Kong Science Park and Cyberport falls short of demand. In the last two Budgets, resources were set aside for the Science Park expansion and Cyberport 5 development, which will respectively provide about 28 000 sq m and 63 000 sq m of floor area mainly for R&D or operation of I&T enterprises.

We are also pressing ahead with the development of the Hong Kong-Shenzhen Innovation and Technology Park ("the Park") in the Lok Ma Chau Loop. A provision of about $32.5 billion has been approved for the project. Works have already commenced. The first batch of facilities is expected to be completed in phases from 2024 to 2027, the economic contribution to Hong Kong of which is expected to reach $5.5 billion per annum, with about 4 800 jobs to be created. Upon full development, the Park will be the largest ever I&T platform in Hong Kong, providing a gross floor area of 1.2 million sq m, which is approximately three times that of the Science Park. Its economic contribution to Hong Kong is expected to reach $52 billion per annum, with about 52 000 jobs to be created.

On digital infrastructure, the coverage of 5G network in Hong Kong is now over 90%. The subsidy scheme for expanding fibre-based network to villages in remote areas will be completed in phases from this year onwards. The Government will continue to support the development of 5G networks and applications; release more 5G spectrum in different frequency bands; facilitate the setting up of radio base stations by operators at suitable government venues and public facilities; assist in the relocation of the Tai Po satellite earth stations; and provide land at Chung Hom Kok Teleport for the development of infrastructure to connect with external telecommunications facilities.

Promote Research and Development

Over the past few years, we have been dedicated to promoting R&D but it takes time to deliver results. These efforts are gradually bearing fruits with a rising gross domestic expenditure on R&D activities in recent years, boosting our confidence in promoting R&D.

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Amendments were made to the Inland Revenue Ordinance in late 2018 to provide for enhanced tax reduction for qualifying R&D expenditure so as to encourage enterprises to devote resources to local R&D. The total amount of R&D expenditure for which claims for tax deduction were made in the first year of assessment has more than doubled since the implementation of this measure. Seventy percent of this amount enjoyed enhanced tax deduction. The measure has delivered notable results.

Since permission was granted for the remittance of Mainland R&D funding to Hong Kong, the Ministry of Science and Technology, Guangdong Provincial Government and Shenzhen Municipal Government in the past two years have approved over RMB340 million for universities and research institutes in Hong Kong to conduct R&D or set up laboratories, thereby adding impetus for local R&D activities.

The "InnoHK Research Clusters" is our flagship project. It comprises Health@InnoHK on healthcare technologies and AIR@InnoHK on artificial intelligence and robotics technologies, and has attracted many top-notch universities and research institutions in the world. The first batch of about 20 R&D laboratories will commence operation progressively in the first quarter of this year. This will further consolidate Hong Kong's position as a global research collaboration hub.

Funding under the Innovation and Technology Fund ("ITF") increased by over seven times in the last seven years. I will inject $4,750 million per year to ITF two years in a row to sustain its 17 funding schemes as well as the work of over 50 R&D laboratories in the next three years.

Start-ups

Hong Kong's start-up ecosystem has become increasingly vibrant, with an increase in the number of start-ups from around 1 100 in 2014 to over 3 300 last year. Investment from venture capital funds in Hong Kong also increased from $1.24 billion in 2014 to $9.9 billion in 2019, representing an increase of over seven times. Over the past three years, I&T enterprises in the Science Park and Cyberport have attracted over $41 billion of investment. Besides, some 600 start-ups are being incubated by the Science Park and Cyberport on top of the nearly 1 300 start-ups already graduated from the programmes.

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The Innovation and Technology Venture Fund ("ITVF") has invested more than $100 million in 19 local start-ups over the past two years, attracting more than $500 million private investment. ITVF appointed three new co-investment partners late last year. We will continue to partner with venture capital funds to invest in local start-ups.

In the past three years, the Hong Kong Science and Technology Parks Corporation ("HKSTPC") has invested over $100 million in 13 technology enterprises through its Corporate Venture Fund, attracting about $1,350 million private investment. The Cyberport Macro Fund set up by Cyberport also invested more than $120 million in 16 companies, attracting over $860 million private investment. HKSTPC and Cyberport will inject $350 million and $200 million into the two Funds respectively and extend their scope to cover Series B and later stage investments.

The Technology Start-up Support Scheme for Universities has provided funding of about $120 million to 139 start-ups in the past three years. Among those start-ups which have benefited from the Scheme since inception, over half of them have launched their products in the market, more than 40% have earned revenue and about 60% have received capital injection from investors with a total amount of some $530 million.

Financial Technology

The epidemic has speeded up digital transformation of the Hong Kong financial market. On top of many Fintech start-ups, there are eight virtual banks, four virtual insurers, and a virtual asset trading platform having been authorized to operate in Hong Kong.

With a view to fostering the development of more novel financial products, HKSTPC and Cyberport will collaborate with HKMA to attract more financial, technology or research institutes to set up laboratories in Hong Kong, with a focus on such areas as regulatory technology and cyber security, where Hong Kong enjoys clearest advantages. In addition to the Fintech Proof-of-Concept Subsidy Scheme announced in January this year, HKMA is considering enhancing its Fintech Supervisory Sandbox by providing "through-train" vetting and funding arrangements for those promising Fintech solutions to reduce the time for the launch of innovative financial products in the market.

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Foster Re-industrialization

The Re-industrialisation Funding Scheme, which was launched in July last year, provides subsidies, on a matching basis, to manufacturers for setting up new smart production lines in Hong Kong. The scheme has received 12 applications so far.

The Advanced Manufacturing Centre in the Tseung Kwan O Industrial Estate and the Microelectronics Centre in the Yuen Long Industrial Estate, being developed by HKSTPC, will be completed in the coming years. The two centres will provide a total gross floor area of over 140 000 sq m for smart production and high-end manufacturing industries. Quite a number of enterprises have expressed interest in setting up establishments in the two centres.

Air Cargo Sector

The Hong Kong International Airport ("HKIA") is a "double gateway" connecting the world and the Greater Bay Area. With further growth in external trade in the Greater Bay Area, particularly the booming of e-commerce and the personalization of consumer demand, orders received by manufacturers are becoming small in amount with a narrow delivery window. It can be envisaged that that there will be an increasingly keen regional demand for air cargo services. Last year, HKIA handled 4.5 million tonnes cargoes and air mail, down by only 7% from the pre-epidemic level.

The Airport Authority ("AA") has active plans for developing intermodal cargo handling facilities, so that there will be seamless transportation of Mainland exports to the rest of the world through HKIA, and vice versa. With the expansion of the existing express air cargo terminal, and the commissioning of a new premium logistics centre as well as the Three Runway System, HKIA's annual cargo handling capacity is expected to increase from 7.4 million tonnes to some 9 million tonnes in 2024. When the airside intermodal cargo handling facility becomes operational as well, Hong Kong's position as the air cargo centre of the Greater Bay Area will be further reinforced.

HKIA's capability in handling high-value temperature-controlled air cargo is internationally recognized. In addition, the Government will work with AA to actively explore measures to facilitate trans-shipment through Hong Kong, with a 3866 LEGISLATIVE COUNCIL ― 24 February 2021 view to maintaining our competitive edge as an international air cargo hub. We are confident that HKIA will become the busiest cargo airport in the world again when the pandemic is over.

We will submit a funding application to the Legislative Council within this year to redevelop the Air Mail Centre at HKIA, with a view to bringing the centre into operation by end 2027 the earliest. We will continue to work with AA and other postal authorities on maximizing the use of the centre's transit handling capacity, in order to support the long-term development of the postal industry in the Greater Bay Area.

Cultural and Creative Industries

I will inject an additional $1 billion into the CreateSmart Initiative in 2021-2022 to continuously drive the development of the creative industries.

The Government has continued to allocate more resources to the development of arts and culture in recent years. In 2021-2022, the total expenditure will exceed $5.7 billion. The West Kowloon Cultural District ("WKCD") is a new landmark and attraction in Hong Kong. With the opening of M+ and the Hong Kong Palace Museum in WKCD in this and next year respectively, and the expected completion of the Lyric Theatre Complex in 2024, diversified development opportunities will be brought to the local arts and cultural sector.

We plan to seek funding approval in the current legislative session for taking forward the renovation of Tsuen Wan Public Library, the facility upgrading of Tai Po Civic Centre as well as the renovation and improvement of Sai Wan Ho Civic Centre. The above works cost a total of about $900 million, creating a total of some 210 employment opportunities.

The Government provided multiple rounds of assistance amounting to over $200 million to the arts and culture sector under AEF, benefitting over 930 arts groups and over 6 800 arts practitioners. As many arts and culture activities were not able to be staged, the industry has made use of technology to perform through various means, promoting the integration of arts and I&T as a new trend of development. The Home Affairs Bureau has established an inter-bureau task force with $100 million reserved to promote the integration of arts and technology, and support arts groups and I&T savvy.

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Infrastructure Investment and Construction Industry

The Government will continue to invest in infrastructure. The annual capital works expenditure will exceed $100 billion in coming years. The annual total construction output will increase to around $300 billion, creating over 300 000 employment opportunities.

Train Talent

The Government and the Construction Industry Council have been providing professional and comprehensive training programmes for construction workers. The Hong Kong Institute of Construction also has a well-established training system offering a clear career progression path for its trainees. Measures to enhance training for skilled workers, subsidize the operation of small-and-medium-sized contractors and registered subcontractors, and offer allowances to registered construction workers who are underemployed or temporarily unemployed for attending training courses have been implemented since January this year.

The Development Bureau ("DEVB") established the Centre of Excellence for Major Project Leaders, which is the first institution in Asia specializing in nurturing leaders for works projects. To enhance the professional skills of mid-tier managers in the Government and uplift the project delivery capability, I have earmarked $6 million for provision of systematic training to them in the next three years, with a view to ensuring more effective use of public resources.

Manage Cost

Cost management is an important part of the sustainable development of the construction industry. The Project Strategy and Governance Office of DEVB, apart from implementing strategic measures to raise cost-effectiveness within the Government, will also promote cost management culture to the industry.

Enhance Effectiveness

The Government actively promotes the Modular Integrated Construction ("MiC") method. Intake for the first batch of pilot projects, including the InnoCell of the Hong Kong Science Park and the Disciplined Services Quarters 3868 LEGISLATIVE COUNCIL ― 24 February 2021 for the Fire Services Department at Pak Shing Kok, is expected to commence early this year. Up to now, the Construction Innovation and Technology Fund has granted over $75 million to the industry for supporting their adoption of this method and BD has approved 31 pre-accepted MiC systems to facilitate their adoption by the private building developers.

Digitalization of Public Works

With $100 million allocated for the development of the integrated digital platform in the last Budget, the platform will be implemented in phases from this year onwards for driving digitalization of public works through data integration and analysis to monitor project performance continuously and enhance the management of capital works projects.

Building a Liveable City

Optimize Land Use

Land Supply

The 2021-2022 Land Sale Programme comprises a total of 15 residential sites and three commercial sites, capable of providing about 6 000 residential units and about 480 000 sq m of commercial floor area respectively. With the residential sites under the Land Sale Programme, together with railway property development projects, private development and redevelopment projects and the Urban Renewal Authority's projects, the potential land supply for the whole year is expected to have a capacity of providing about 16 500 units. The Secretary for Development will later announce the details of the Land Sale Programme for the next financial year.

The construction of Kwu Tung North/Fanling North new development areas ("NDAs") is making good progress. The intake for the first batch of public housing in Kwu Tung North is expected to take place in 2026, one year earlier than originally planned. Private residential sites in the area will be tendered gradually. The 12 hectares of private land involved in the first phase of the works for Hung Shui Kiu/Ha Tsuen NDA has been resumed as scheduled. Site formation and infrastructure works are underway. As for the Yuen Long South development, we are going through the statutory planning process. The first LEGISLATIVE COUNCIL ― 24 February 2021 3869 batch of public housing units will be completed in 2028. We will seek funding approval from the Legislative Council for studies related to the New Territories North NDA within this legislative session. The studies will commence shortly afterwards.

The first two parcels of housing land under the Tung Chung East reclamation works were handed over to the Hong Kong Housing Authority ("HKHA") for public housing development last year. The first intake for about 10 000 public housing units will take place in 2024.

We estimate that in the NDA projects and other government and private development projects under planning, there is a total of over 860 hectares of brownfield sites in the New Territories which can gradually be redeveloped for housing and other land uses.

Over the past few years, we have identified 210 sites with potential for housing development. Rezoning has been completed or commenced for 70% of them. It is estimated that about 40% of the public housing units to be completed in the next 10 years will come from the rezoned sites.

We are examining the feasibility of rezoning five commercial sites in Kowloon East for residential use taking into account the latest economic situation and market response. If confirmed feasible, we plan to initiate the relevant statutory town planning procedure this year. A total of about 5 800 private housing units can be provided according to our preliminary estimation.

The Mass Transit Railway Corporation Limited and government departments are pressing ahead with the development of the Siu Ho Wan Depot Site. Our target is to have the first batch of about 6 000 public and private housing units gradually ready for intake in around 2030. Upon completion of the whole project, about 20 000 units will be provided, about half of which will be public housing units.

We plan to conduct later this year district consultations on two "single site, multiple use" projects, namely the redevelopment of Tuen Mun Clinic and the joint-user building for community facilities at Shan Mei Street in Sha Tin. Besides, we will apply funding from the Legislative Council as soon as possible for three other projects, namely one at the former Anderson Road Quarry site, one 3870 LEGISLATIVE COUNCIL ― 24 February 2021 in Tseung Kwan O town centre and the other one near Sheung Wan Fire Station. In addition, we are reviewing about 40 "Government, Institution or Community" sites with joint use potential. We hope to put forward concrete proposals for these sites this year, including developing multi-purpose public facility buildings.

DEVB has set up the Development Projects Facilitation Office to facilitate the processing of planning, lease modification and building plan applications, etc. for private residential development projects with a yield of 500 flats or more by enhancing coordination among the departments involved.

DEVB and LandsD will introduce a pilot scheme for charging land premium at "standard rates" in this quarter to encourage redevelopment of industrial buildings.

Housing Supply

We have identified land for the provision of 316 000 public housing units in the coming 10 years. With the redevelopment of HKHA's factory estates, the number of public housing units may see further increase. It is estimated that the total public housing production in the five-year period from 2020-2021 is about 101 400 units, comprising over 70 000 public rental housing and Green Form Subsidised Home Ownership Scheme units and over 30 000 other subsidized sale units. On private housing, it is estimated that the completion of private residential units will average over 18 000 units annually in the five years from 2021, representing an increase of about 5% over the annual average of the past five years.

The Government has already identified land for the provision of about 14 000 transitional housing units by end 2023. Intake of residents for over 1 100 units has taken place. Projects involving about 9 800 units have been launched. The $5 billion Funding Scheme to Support Transitional Housing Projects has approved projects involving over $2.6 billion, and the Government will inject another $3.3 billion this year. The Government is also seeking funding from the Community Care Fund to subsidize NGOs, as a pilot scheme, to rent suitable rooms in hotels and guesthouses with relatively low occupancy rates for use as transitional housing.

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Green City

The Government strives to achieve carbon neutrality before 2050, and will update Hong Kong's Climate Action Plan in the middle of this year to set out more proactive strategies and measures to reduce carbon emissions. We are setting an example by implementing the Green Energy Target to boost the overall energy performance of the Government by 6% by 2024-2025. Concurrently, the Government will continue to promote new energy transportation so as to further reduce roadside air pollution.

Promote New Energy Transportation

The Government has all along been promoting the replacement of conventional fuel-propelled private cars ("PCs") with electric vehicles ("EVs"). Last year, one out of eight new PCs is EV. In the past 10 years, the number of EVs increased from 184 to over 18 500, with the total number of electric private cars ("e-PCs") accounting for 2.7% of the total number of PCs in Hong Kong. The "One-for-One Replacement" Scheme provides a higher first registration tax ("FRT") concession for owners who buy a new e-PC and scrap their eligible old PC, subject to a cap of $250,000. Since its launch, 90% of the owners of first registered e-PCs have benefited from the Scheme. The FRT concession for general e-PCs is $97,500.

The Government launched the $2 billion EV-charging at Home Subsidy Scheme in October last year. It is expected that about 60 000 parking spaces in existing private residential buildings will be provided with EV charging-enabling infrastructure under the scheme in three years. Since the introduction of the scheme, applications involving more than 50 000 parking spaces have been received.

Last year, the Government allocated an additional funding of $800 million to the New Energy Transport Fund and expanded its funding scope to cover additional types of electric commercial vehicles. As at end 2020, the amount of subsidy granted under the Fund was $154 million, covering nearly 200 projects on electric and hybrid commercial vehicles as well as conventional buses and ferries. Moreover, the Government earmarked $80 million for green public light bus ("PLB") operators to embark on a pilot scheme on electric PLBs from 2023. Meanwhile, the Government also earmarked $350 million to provide subsidies for ferry operators to conduct trials on electric ferries serving in-harbour routes of the Victoria Harbour from 2023.

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The Environment Bureau will announce next month Hong Kong's first roadmap on the popularization of EVs, setting out long-term policy objectives and plans on the use of EVs and their associated supporting facilities. The key measures include ceasing the new registration of fuel-propelled PCs in 2035 or earlier, expanding the EV charging network and promoting its marketization, training of EV technical and maintenance practitioners, and formulating a Producer Responsibility Scheme for retired EV batteries. The Government will also take the lead to use more EVs.

Improve Air Quality

To further improve air quality, the Government has implemented an ex-gratia payment scheme of $7.1 billion to phase out about 40 000 Euro IV diesel commercial vehicles by end 2027. The Government will finish updating the Clean Air Plan for Hong Kong by the middle of this year to set out long-term goals and devise measures to further improve air quality.

Relieve Traffic Congestion

The number of PCs has been on the rise. Traffic congestion has been aggravating. FRT and the vehicle licence fee for PCs have not been adjusted since 2011 and 1991 respectively. I propose increasing the rate of each tax band for FRT for PCs (including e-PCs) by 15% and the vehicle licence fee by 30%. The above-mentioned adjustments have been gazetted for taking effect today. Other types of vehicles are not affected. The maximum FRT concession for e-PCs under the "One-for-One Replacement" Scheme will be raised correspondingly to $287,500, while the FRT concession cap for general e-PCs will remain unchanged. The Transport Department will also continue the studies on "Congestion Charging" and the Electronic Road Pricing Pilot Scheme in Central with the aim of optimizing the use of road space and relieving traffic congestion.

Decarbonize and Reduce Waste

In addition to the resources earmarked in previous Budgets, I will set aside an extra $1 billion for more than 80 projects to install additional small-scale renewable energy systems at government buildings and infrastructure. I will also set aside $150 million to conduct energy audits and install energy-saving appliances, free of charge, for NGOs subvented by the Social Welfare LEGISLATIVE COUNCIL ― 24 February 2021 3873

Department. In addition, the Green Tech Fund, set up with an allocation of $200 million by the Government, has just closed the first round of applications. The result is expected to be announced in the middle of this year. All these measures can help Hong Kong advance towards its carbon neutrality target, and will also create jobs.

The Government will inject an additional funding of $1 billion to the Recycling Fund and extend the application period to 2027 so as to render continuous support to the trade, particularly SMEs, in enhancing its operational capabilities and efficiency as well as coping with the latest needs of both the local and non-local markets. It is expected that more than 1 000 businesses will benefit from the measure.

Quality Living

Apart from large-scale infrastructure projects, I also care about developing a quality city for our citizens, including enhancing the facilities in our highly popular country parks, hiking trails, recreational facilities and harbourfront facilities. I will allocate more resources to the relevant projects.

Improve Country Parks

I will set aside $500 million to carry out enhancement works on facilities in some country parks, such as providing recreational elements like additional lookout points, treetop adventure and glamping sites, improving toilet facilities and barbeque and picnic sites, and revitalizing some wartime relics by converting them into open museums so as to enrich visitors' experience and enjoyment at the countryside. The new facilities will adopt low-carbon and green design that integrates with its natural surroundings. The needs of all age groups and people with or without physical disabilities will be catered for. The new facilities will be rolled out gradually in the coming two to three years for public enjoyment. Meanwhile, I have also earmarked $55 million for the Tourism Commission to work with the Agriculture, Fisheries and Conservation Department to take forward the second phase of the enhancement programme for 10 popular hiking trails in country parks that have potential for tourism in the coming five years, with a view to enriching leisure experience of the public and visitors.

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Upgrade Recreational Facilities

The Government has launched a five-year plan to modify more than 170 public play spaces managed by the Leisure and Cultural Services Department ("LCSD") across the territory since 2019 with a view to providing children's play equipment which incorporate more elements of fun, creativity and challenge. To cater for people's diverse needs for fitness equipment, LCSD will install some novel outdoor fitness equipment as appropriate when constructing new parks or renovating existing ones, such as the Yat Ming Road Park in North District which is near completion and the Butterfly Beach Park in Tuen Mun.

Football has long been one of the most popular sports. The Kai Tak Sports Park, scheduled for completion in 2023, will provide, among others, two main stadiums for hosting both international and local football matches. The Five-year Plan for Sports and Recreational Facilities also includes the construction or reconstruction of 12 football pitches, including the redevelopment of Yuen Long Stadium.

I will earmark $318 million to implement a five-year plan for upgrading over 70 football pitches under the management of LCSD, including substantially increasing the number of 5-a-side football pitches meeting international standards, exploring the possibility of expanding the existing football pitches into standard 11-a-side turf pitches and expediting the replacement of artificial turf on football pitches. Relevant national sports associations and their affiliates, district football groups, schools and other organizations will have more up-to-standard football pitches to organize football training programmes and football matches in the future. The general public, in particular young people, will have more opportunities to play football regularly and develop their potential, thereby contributing to the long-term development of football in Hong Kong.

Enhance Harbourfront

I have earlier earmarked a total of $6.5 billion for harbourfront enhancement. We have completed 6 km of harbourfront promenades over the past three years or so for public enjoyment. The 20 km-plus Victoria Harbourfront promenades have now become popular leisure spots. This year, we will seek funding from the Legislative Council for commencing the LEGISLATIVE COUNCIL ― 24 February 2021 3875 construction works of two major projects, namely the Boardwalk underneath the Island Eastern Corridor and the harbourfront park at Eastern Street North in Sai Ying Pun. An incremental approach will continue to be adopted so that the harbourfront sites can be opened as early as possible for public enjoyment.

Strengthen Healthcare System

Healthcare Facilities and Manpower

HA will press ahead with the implementation of the first 10-year Hospital Development Plan ("HDP") and the planning of the second 10-year HDP. HA will review the design of hospital projects under the two 10-year HDPs taking into account the experience in combating COVID-19 and incorporate required provisions for two to three general wards in each selected hospital, so that they can be readily converted into Tier-2 isolation wards when the need arises.

To strengthen professional healthcare training, around $1.9 billion has been allocated to the University of Hong Kong, The Chinese University of Hong Kong and The Hong Kong Polytechnic University in the past two financial years for carrying out short-term renovation works and facility enhancement as well as studies and medium- and long-term works projects to increase their teaching facilities. The Government will continue to work with the universities to upgrade and increase healthcare-related teaching facilities.

Healthcare workers play a pivotal role in our fight against the epidemic. The last Budget earmarked funding to support HA in providing sufficient manpower for the public healthcare system and easing the pressure on healthcare workers. The measures are being taken forward.

Primary Healthcare

Following the commencement of service of the first District Health Centre ("DHC") in Kwai Tsing District, I earmarked $650 million recurrent expenditure for setting up DHCs in six other districts last year. Two of them in Sham Shui Po and Wong Tai Sin target to commence operation within the coming two years. Last year, I also allocated about $600 million for setting up "DHC Expresses" in the remaining 11 districts which are expected to commence service progressively within this year.

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Development of Chinese Medicine

The Government will award the service deed for the Chinese Medicine Hospital in Tseung Kwan O in the middle of this year, and construction works are expected to be completed in 2025. Since last year, the Government has also allocated more resources to the 18 Chinese Medicine Clinics cum Training and Research Centres, with a view to continuously enhancing the remuneration package of and training for Chinese medicine practitioners. Moreover, the Government promotes the development of Chinese medicine in Hong Kong through a dedicated fund of $500 million.

Mental Health Services

The Government will provide additional recurrent funding of around $147 million to enhance child and adolescent psychiatric, community psychiatric and psychogeriatric services of HA, and support the enhanced service of Kwai Chung Hospital upon its redevelopment. It was earlier announced that a sum of $300 million will be used for strengthening support for people in need in the community as well as enhancing public awareness of the importance of mental health.

Caring and Inclusion

The Government will provide an extra 1 500 subsidized elderly home care service places this year, involving an annual expenditure of about $150 million. The Government is also taking forward 66 new projects, providing about 8 800 residential care places and about 2 800 subsidized day care service places for the elderly in the coming few years.

The Government has substantially increased the resources allocated to rehabilitation services in recent years. The number of places for on-site pre-school rehabilitation services has been increased by 1 000 to 8 000 in the current school year and is expected to further increase to 10 000 in 2022-2023 school year.

The Labour Department launched the Racial Diversity Employment Programme last year to enable NGOs to provide one-stop employment services for ethnic minority job seekers through a case management approach. Over 500 ethnic minority job seekers are expected to participate in the first two years of the programme.

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The revenue for the Lotteries Fund has dropped substantially due to the epidemic. I will make an injection of $1.1 billion to ensure that development projects in respect of much-needed social welfare services premises (particularly major facilities for elderly and rehabilitation services) can proceed as scheduled and that the feasibility studies and detailed design work for such projects will not be affected.

Public Finance

Deficit Budget

As an open economy with a relatively narrow tax base, Hong Kong's government revenue is susceptible to changes in the economic environment. The ageing population also poses pressure on public expenditure. Though I have great confidence in Hong Kong's fundamental strengths and long-term prospects, we must, in the face of an economic downturn and the aforesaid challenges, exercise extra prudence in managing public finance.

Our fiscal reserves are the fruits of the economic development of Hong Kong and the hard work of our people over the years. They enable us to adopt a deficit budget amid the prevailing economic downturn and launch counter-cyclical measures to support the economy and relieve people's burden. In the past year, we have increased government expenditure substantially to combat the epidemic and roll out relief measures, which resulted in our fiscal reserves dropping sharply in two years from the equivalent of 23 months of government expenditure to 13 months.

Although I forecast an improvement in revenue for the next financial year, I expect that the fiscal deficit will be $101.6 billion, accounting for 3.6% of GDP, due to the counter-cyclical fiscal measures and the continued increase in recurrent expenditure. In other words, Hong Kong will record a deficit for a number of years after achieving a surplus for 15 years. As shown in the Medium Range Forecast ("MRF"), the Operating Account is projected to be in deficit for five consecutive years. The operating deficit for 2021-2022 will be more than $140 billion mainly due to the counter-cyclical measures while the operating deficit for the remaining four years will range from $22.4 billion to $40.7 billion. The Consolidated Account is also expected to record a deficit for four consecutive years. The above forecast has not yet taken into account any tax rebate or relief measure that the Government may implement in the future.

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The deficits are mainly caused by the fact that the rise in government expenditure is outpacing the increase in government revenue, especially in terms of recurrent expenditure. Recurrent expenditure of the Government increased from about $150 billion in 1997-1998 to about $470 billion in 2020-2021, representing a more than three-fold increase. The significant rise in government expenditure in recent years is for enhancing services or investing for the future. However, as emphasized in my last Budget, government expenditure should enter a consolidation period, and the long-term financial commitments should also be commensurate with the increase in revenue.

As a number of measures announced in this year's Budget will have a bearing on the new financial year and the MRF, I would like to offer some explanations to Honourable Members and fellow citizens here.

To optimize the use of fiscal reserves for seeking a better return to meet future needs, the Government set up the Future Fund in 2016 to make longer-term investments for a period of 10 years. The investment return of the Fund forms an integral part of public financial resources, and has accumulated a return amounting to nearly $100 billion. While the Government has all along been disclosing the rate of return of the Future Fund, the investment return yet to be brought back has not been reflected under the cash-based government accounts. Starting from 2021-2022, I will reflect the cumulative investment return of the Fund in the Operating Account on a progressive basis, with $25 billion brought back in the first year.

The 2021-2022 Budget has also included $23 billion brought back from the Housing Reserve and the annual proceeds of about $35 billion from the expansion of the Government Green Bond Programme as mentioned earlier. The sums raised under the Government Green Bond Programme will provide funding for green projects under the Capital Works Reserve Fund but will not be used to finance operating expenditure, and hence will not undermine public finance discipline. The issuance of bonds cannot bolster our real financial strength as it ultimately requires the repayment of principal and interest. Nonetheless, the issuance of additional green bonds for financing eligible projects can definitely relieve the Government's fiscal pressure arising from the need to use existing resources to meet capital expenditure. This is a reasonable and appropriate approach in the light of the current low interest rate environment, and is also conducive to the development of Hong Kong's bond market.

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The above measures of bringing back the Future Fund's investment return and the Housing Reserve and issuing additional green bonds will ensure that our fiscal reserves can be maintained at a relatively robust level despite deficit budgets in the next few years. They would enhance confidence in Hong Kong's fiscal strength and are conducive to maintaining our financial stability. However, in the long run, the key to maintaining healthy public finances is to follow the principle of keeping expenditure within the limits of revenue and ensure that the growth of expenditure is commensurate with economic growth. In the face of the challenges of fiscal deficits, we should not only reduce expenditure but also increase revenue.

Reduce Expenditure

This year's Budget will continue to roll out a series of measures for supporting individuals and businesses. Last year, Hong Kong's economy was battered by the epidemic, and all sectors of the community were generally affected in varying degrees, particularly the grass roots. Despite the fiscal deficit, I have decided not to reduce our spending in areas related to people's livelihood, especially resources allocated to the three policy areas of education, social welfare and healthcare, in order to safeguard people's livelihood and maintain public confidence. In 2021-2022, the recurrent funding for these three policy areas amounts to $302.3 billion in total, accounting for 58% of the Government's total estimated recurrent expenditure and representing an increase of 45% over the provision of $208.2 billion in 2017-2018.

The Government will set an example by cutting expenditure so as to strengthen fiscal discipline. In 2021-2022, we will have zero growth in the civil service establishment. Besides, the Government will implement an expenditure reduction programme by requiring all Policy Bureaux and departments to reduce expenditure without affecting livelihood-related spending. The objective is to trim recurrent expenditure by 1% in 2022-2023. The estimated savings will be about $3.9 billion. While it seems not too difficult to achieve the 1% cut in recurrent expenditure, there is limited room for curbing expenses related to personal emoluments which account for about 60% of recurrent expenditure of government departments. We can only achieve the target mainly through savings from the remaining 40% of recurrent expenditure, including major items such as general expenses and subventions. All departments have to undertake critical review, adjust priorities and enhance efficiency in order to achieve the 3880 LEGISLATIVE COUNCIL ― 24 February 2021 savings target without affecting day-to-day operation and the public services they provide. Many a little makes a mickle.

Increase Revenue

As I have pointed out in my last Budget, Hong Kong needs to maintain the development and vibrancy of our economy and identify new areas of growth, with a view to increasing our revenue. I have just elaborated on the long-term positioning of Hong Kong's economy and the strategies for the development of our major sectors, which will help increase government revenue in the long run.

Besides, I mentioned last year that we need to consider seeking new revenue sources or revising tax rates, and reducing one-off relief measures progressively. Though raising tax rates can increase revenue in the short run, the choice must be made carefully.

Having duly considered the impact on the securities market and our international competitiveness, we have decided to introduce a bill to raise the rate of Stamp Duty on Stock Transfers, from the current 0.1% to 0.13% of the consideration or value of each transaction payable by buyers and sellers respectively. The Government will continue to spare no efforts in introducing measures to facilitate the development of the securities market, so as to take our financial services sector to the next level.

As businesses and individuals are generally under considerable financial pressure amid the prevailing economic environment and the epidemic, I consider that it is not the appropriate time to revise the rates of profits tax and salaries tax, which are our major sources of revenue. Nevertheless, we will keep in view the situation and make adjustments at the appropriate time.

During Budget consultations, I received many proposals to introduce new taxes. If we do so, we have to carefully examine the proposals, take all factors into consideration, and earnestly listen to views of various sectors of the community. Fighting the epidemic and reviving the economy are our current priorities. This is not the time to introduce new taxes. Nevertheless, we will carry out related research and make preparation to facilitate in-depth discussions at a suitable time, and forge consensus before we introduce new taxes to increase revenue.

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International Tax Cooperation

The Organisation for Economic Co-operation and Development ("OECD") is drawing up new proposals to address base erosion and profit shifting ("BEPS 2.0"), which include the introduction of a global minimum tax rate and a digital tax. In mid-2020, the Advisory Panel on BEPS 2.0 commenced work on assessing the impact of the proposals on Hong Kong. At the same time, the Government has been collecting views from stakeholders in the business sector. Taking into account the preliminary views of the Advisory Panel, I would like to outline the direction of the Government's response measures so that the business sector can have a better grasp of the issue and make early preparation. First, as an international financial and business centre, Hong Kong will actively implement the BEPS 2.0 proposals according to international consensus. Second, as most of the rules under BEPS 2.0 are only applicable to large multinational corporations, we will minimize the impact on local SMEs where possible when drawing up the response measures and strive to maintain the simplicity, certainty and fairness of our tax regime, which are our key advantages. Third, while safeguarding Hong Kong's taxing rights, we will at the same time minimize the compliance burden on affected corporations. Fourth, we will keep up our efforts in improving Hong Kong's business environment and enhancing our competitiveness, with a view to attracting multinational corporations to invest and operate in Hong Kong. Once OECD has finalized the proposal, the Advisory Panel will put forth its recommendations on the specific response measures in its report to me.

Rating System

The rating system in Hong Kong has not undergone any major change since 1995. To ensure that our rating system could keep pace with the times, I have requested FSTB and the Rating and Valuation Department to review whether there is any room for improvement in respect of the rating system. We will review the case for introducing a progressive element to the rating system and that for providing rates concession to owner-occupied properties on a regular basis. Furthermore, we will consider shifting the primary liability for rates payment from the occupier to the owner of a property to reflect that the ultimate responsibility with regard to a property should rest with its owner. The Government will consult the relevant Legislative Council Panel on whether and how to revise the rating system.

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Revised Estimates for 2020-2021

The 2020-2021 revised estimates on government revenue is $543.5 billion, lower than the original estimate by 5.1% or $29 billion. This is mainly due to the lower-than-expected revenue from land premium.

Revenue from land premium is $87 billion, substantially lower than the original estimate by $31 billion, mainly due to the deferment of the disposal timetable of a high-value commercial site in the year. Revenue from profits tax is $131 billion, comparable to the original estimate. Meanwhile, revenue from salaries tax is $72 billion, which is $12.1 billion higher than the original estimate. This is mainly because some tax revenue that should be received in the previous year could only be collected in this year as a result of the deferred tax assessment cycle. Stamp duty revenue is $79 billion, which is $4 billion higher than the original estimate. This is mainly due to the hectic trading in the stock market.

As for government expenditure, the revised estimate is $820.4 billion, 12.2% (or $89.3 billion) higher than the original estimate. This is mainly because of the need to make injections into AEF and meet expenditure on other helping measures. At the same time, expenditure on public works projects was $7.1 billion lower than the original estimate.

All in all, I forecast a deficit of $257.6 billion for 2020-2021. Fiscal reserves are expected to be $902.7 billion by 31 March 2021.

The civil service establishment increased by 6 082 posts in this financial year, representing a growth of 3.2%. The increase in the establishment is mainly due to the implementation of new policies and measures by the Government and the need to cope with additional workload.

Estimates for 2021-2022

The major policy initiatives announced in the 2020 Policy Address involve an operating expenditure of about $18.3 billion and a capital expenditure of $2.1 billion. I will ensure that adequate resources are provided to fully support the launch of these initiatives.

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Total government revenue for 2021-2022 is estimated to be $591.1 billion. Earnings and profits tax is estimated to be $200.7 billion, decreasing by 6.1% compared with the revised estimate for 2020-2021. Having regard to the Land Sale Programme and the land supply target of the coming year, revenue from land premium is estimated to be $97.6 billion, increasing by 12.1% compared with the revised estimate for 2020-2021. Revenue from stamp duties is estimated to be $92 billion, increasing by 16.5% compared with the revised estimate for 2020-2021.

The current-term Government has launched a series of measures to improve people's livelihood. Recurrent expenditure for 2020-2021 increased by 7.6% compared with the last financial year, while total government expenditure also increased by 35%. Recurrent expenditure for the new financial year will further increase by 9.6%, demonstrating the Government's determination to stimulate the economy and ease people's burden. Public expenditure will account for about 25% of GDP on average during the five-year period up to 2025-2026 in the MRF.

In 2021-2022, the estimated recurrent expenditure on education, social welfare and healthcare accounts for 58% of government recurrent expenditure or $302.3 billion. Recurrent expenditure in these three areas recorded a cumulative increase of 53% over the past five years.

Our target is to have zero growth in the civil service establishment in 2021-2022. The has encouraged departments to enhance effectiveness through re-prioritization, internal redeployment and streamlining of work processes, so as to cope with the workload.

Medium Range Forecast

The MRF projects, mainly from a macro perspective, the revenue and expenditure as well as financial position of the Government. From 2022-2023 to 2025-2026, a real economic growth rate of 3.3% is adopted for the MRF.

During the above period, the average annual capital works expenditure will exceed $100 billion, while the growth of recurrent government expenditure ranges between 3.5% and 4.7% per annum.

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Regarding revenue from land premium, the forecast from 2022-2023 onwards is based on the average proportion of revenue from land premium to GDP over the past 15 years, which is 3.6% of GDP. I also assume that the growth rate of revenue from profits tax and other taxes will correspond to the economic growth rate in the next few years.

In addition, the MRF reflects the bringing back of the Housing Reserve and the investment return of the Future Fund, and the proceeds of the Government Green Bond Programme.

Based on the above assumptions and arrangements, I forecast an annual deficit in the Operating Account in each of the coming five financial years, as well as a deficit in the Capital Account from 2022-2023 to 2024-2025. The estimated deficit in the Operating Account in 2021-2022 is mainly due to the expenditure arising from the one-off relief measures announced in this Budget and some of the relief measures announced last year. The forecast deficit in the Operating Account in the following four years is attributed to the fact that recurrent expenditure will be higher than revenue receipts. The above forecast has not taken into account any tax rebate or relief measure that the Government may implement over these four years.

Fiscal reserves are estimated at $775.8 billion by the end of March 2026, representing 22% of GDP, or equivalent to 12 months of government expenditure.

Concluding Remarks

President, Honourable Members, over the past two years, Hong Kong has suffered successive setbacks. And now we have to fight the epidemic and ride out the economic difficulties. Life has not been easy for us all.

I often chat with people, especially during the preparation for the Budget. I know how difficult it is to earn a living during the economic downturn. I can feel their pain. This is why, despite a record high fiscal deficit in 2020-2021, I once again propose a Budget involving a deficit of over a hundred billion dollars. I do so after careful consideration, as the counter-cyclical measures are necessary for stabilizing the economy and alleviating people's burden. At the same time, I am mindful of the need to expand government revenue and create fiscal space in a prudent manner.

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In spite of the pressure we now face, looking back, we have walked all the way through thick and thin. However harsh life may have been, Hong Kong remains the home that we treasure.

Home is not where we find perfection. It is where we stay together as a family, sharing mutual care, acceptance and support.

This unprecedented pandemic reminds us that we are all in the same boat. Deep-seated conflicts cannot be resolved instantly, nor can wounds be healed overnight. Given time, even the tightest knot can be untied.

The economy may move in a cycle, but there is always a way to prosperity. We have overcome many challenges and always come out stronger. Let us be steadfast and ride out the storm. Together we will build a better Hong Kong.

Thank you, President. Thank you, Honourable Members.

(Some Members clapped their hands and thumped the desk in their seats)

(The Supplement and Appendices to the 2021-2022 Budget are in the Annex)

PRESIDENT (in Cantonese): I now propose the question to you and that is: That the Appropriation Bill 2021 be read the Second time.

In accordance with the Rules of Procedure, the Second Reading debate is adjourned and the Estimates are referred to the Finance Committee for examination before the debate on the Bill resumes.

ARBITRATION (AMENDMENT) BILL 2021

SECRETARY FOR JUSTICE (in Cantonese): President, I move the Second Reading of the Arbitration (Amendment) Bill 2021 ("the Bill"). The main object of the Bill is to amend the Arbitration Ordinance (Cap. 609) ("AO") to fully implement the Supplemental Arrangement Concerning Mutual Enforcement of Arbitral Awards between the Mainland and the Hong Kong Special Administrative Region ("the Supplemental Arrangement"), signed between the 3886 LEGISLATIVE COUNCIL ― 24 February 2021

Government of the Hong Kong Special Administrative Region ("HKSAR") and the Supreme People's Court of the People's Republic of China ("PRC") on 27 November 2020.

The purpose of signing the Supplemental Arrangement is to amend the Arrangement Concerning Mutual Enforcement of Arbitral Awards between the Mainland and the Hong Kong Special Administration Region ("the Arrangement"), which came into effect on 1 February 2000, and bring it more fully in line with the current practice of international arbitration. In doing so, reference has been drawn from years of implementation experience and comments from the arbitration sector. The amendments contained in the Supplemental Arrangement were made in alignment with the spirit of the New York Convention ("the Convention") and do not constitute any major change of policy.

The amendments made to the Arrangement by the Supplemental Arrangement include redefining the scope of application of the Arrangement by way of following the seat of arbitration approach, and removal of the previous restriction of the Arrangement, allowing parties to make simultaneous applications to both the courts of the Mainland and HKSAR for enforcement of an arbitral award, so as to align with the current practice of international arbitration under the Convention.

Implementation of the aforesaid amendments requires amendments to AO.

Both the Mainland and HKSAR will announce a date on which the relevant provisions in the Supplemental Arrangement shall come into effect after completion of the relevant internal procedures.

The Department of Justice ("DoJ") has consulted the Advisory Committee on Promotion of Arbitration on the signing of the Supplemental Arrangement and the related proposal to amend AO, for which the Advisory Committee has expressed unanimous support. The signing of the Supplemental Arrangement is also generally welcomed by legal practitioners and the arbitration community in Hong Kong.

DoJ briefed the Legislative Council Panel on Administration of Justice and Legal Services ("the AJLS Panel") at its meeting on 27 January 2021 on the signing of the Supplemental Arrangement and the proposal to amend AO to LEGISLATIVE COUNCIL ― 24 February 2021 3887 implement the Supplemental Arrangement. The AJLS Panel raised no objection to the proposal, and the Hong Kong Bar Association also expressed support for the proposal at the meeting. In addition, The Law Society of Hong Kong has written to DoJ to express support for the aforesaid legislative amendment proposal. It also hopes that the Government can expedite the relevant legislative procedures so as to fully implement the Supplemental Arrangement.

The Bill amends the definition of "Mainland award" and repeals the definition of "recognized Mainland arbitral authority" in section 2 of AO, and repeals section 97 of AO. The effect is that as long as an arbitral award is made in accordance with the Arbitration Law of PRC, it may be enforced under AO regardless of whether it is made by an arbitral authority specified in a list published under section 97 of AO. The need to publish such a list is accordingly dispensed with.

The Bill also repeals section 93 of AO to remove the restriction under that section on the enforcement of Mainland awards. The effect is that concurrent applications may be made in the Mainland and Hong Kong for enforcement of a Mainland award.

Apart from the amendments mentioned just now, the Bill also makes minor textual amendments concerning the definition of the Mainland in section 2 of AO, and updates the Schedule to the Arbitration (Parties to New York Convention) Order (Cap. 609 sub. leg. A) by adding four new parties to the Convention.

President, DoJ reviews the dispute resolution regime in Hong Kong from time to time. Moreover, in response to the needs of society, it has proactively sought to improve judicial cooperation between Hong Kong and the Mainland in terms of legal services in civil and commercial matters. We believe that the passage of the Bill can benefit the sector and further consolidate Hong Kong's status as a leading international legal and dispute resolution services centre in the Asia-Pacific region.

With these remarks, I implore Members to support the Bill.

Thank you, President.

3888 LEGISLATIVE COUNCIL ― 24 February 2021

PRESIDENT (in Cantonese): I now propose the question to you and that is: That the Arbitration (Amendment) Bill 2021 be read the Second time.

In accordance with the Rules of Procedure, the Second Reading debate is adjourned and the Bill is referred to the House Committee.

EMPLOYEES' COMPENSATION (AMENDMENT) BILL 2021

SECRETARY FOR LABOUR AND WELFARE (in Cantonese): President, I move the Second Reading of the Employees' Compensation (Amendment) Bill 2021 ("the Bill"). The Bill seeks to extend the coverage of the Employees' Compensation Ordinance ("ECO") to the situation where an employee sustains an injury or dies as a result of an accident when commuting to or from work during the period of "extreme conditions".

Following the experience with Super Typhoon Mangkhut in September 2018, the Government conducted an inter-departmental review of the handling mechanism to improve Hong Kong's preparedness, emergency response and recovery efforts for future super typhoons or other natural disasters of a substantial scale. One of the outcomes is that measures have been formulated on the work arrangements under "extreme conditions". In the event of "extreme conditions" caused by super typhoon, the Government will review the situation and may, depending on the circumstances, make a territory-wide "extreme conditions" announcement before the replaces Typhoon Warning Signal No. 8 ("T8") with Typhoon Warning Signal No. 3. During the period within which "extreme conditions" exist as specified in the announcement, the public, apart from the essential staff who have an agreement with their employers to be on duty when the "extreme conditions" exist, are advised to stay in the places they are currently in or safe places for two hours after cancellation of T8, instead of immediately heading for work or going out. During the first two-hour period when "extreme conditions" are in force, the Government will continue to review the situation and further make an announcement as to whether the period of "extreme conditions" will be extended. Apart from the situation of super typhoon, the "extreme conditions" announcement may also be made depending on the actual circumstances of other natural disasters of a substantial scale.

At present, ECO accords protection to employees who sustain an injury or die as a result of an accident arising out of and in the course of their employment, and employees suffering from an occupational disease prescribed by ECO owing LEGISLATIVE COUNCIL ― 24 February 2021 3889 to the nature of their work. It enables them to receive compensation in an expeditious manner under the "no-fault" principle. Meanwhile, ECO also provides for employees' compensation protection to employees travelling to or from their places of work in specified situations. For instance, an accident to an employee resulting in injury or death is deemed to arise out of and in the course of his employment if it happens to the employee whilst T8 or above or the Red or Black Rainstorm Warning is in force and the employee travels from his place of residence to his place of work by a direct route within a period of four hours before the time of commencement of his working hours for that day, or from his place of work to his place of residence within a period of four hours after the time of cessation of his working hours for that day.

Having considered that employees commuting to or from work during "extreme conditions" can be subject to more dangerous circumstances, similar to those under T8 or above or the Red or Black Rainstorm Warning, we consider it necessary and justified to accord adequate employees' compensation protection to them. Therefore, the Bill proposes to extend the protection of ECO to employees travelling to or from their places of work under "extreme conditions". This will provide employees' compensation protection to the relevant employees on par with that under T8 or above or when the Red or Black Rainstorm Warning is in force.

We have consulted the Labour Advisory Board and the Legislative Council Panel on Manpower when drawing up the legislative proposal. They have expressed support for the proposal.

I implore Members to pass the Bill as soon as possible for the proposal to take effect before the approaching typhoon season, so as to provide greater protection for injured employees and family members of employees who die of work injuries under the aforesaid situations.

Thank you, President.

PRESIDENT (in Cantonese): I now propose the question to you and that is: That the Employees' Compensation (Amendment) Bill 2021 be read the Second time.

In accordance with the Rules of Procedure, the Second Reading debate is adjourned and the Bill is referred to the House Committee.

3890 LEGISLATIVE COUNCIL ― 24 February 2021

ROAD TRAFFIC (AMENDMENT) BILL 2021

SECRETARY FOR FOOD AND HEALTH (in Cantonese): President, I move the Second Reading of the Road Traffic (Amendment) Bill 2021 ("the Bill").

The Bill seeks to include "cat" and "dog" in the definition of specified "animal" under section 56 of Part 7 "Accidents" of the Road Traffic Ordinance (Cap. 374) ("the Ordinance").

Section 56(1) of the Ordinance provides that the driver of a vehicle shall stop if an accident involving that vehicle occurs whereby damage is caused to a specified "animal" other than one in or on that vehicle or a trailer drawn by it. Pursuant to section 56(2) and section 56(2A), drivers are also required to provide particulars, including a name and address, to any police officer or any person having reasonable grounds for requiring them, otherwise the driver must report the accident to the Police as soon as possible and in any case not later than 24 hours after the accident. The existing definition of specified "animal" covers such seven types of animals as horse, cattle, ass, mule, sheep, pig and goat. This provision was introduced years ago to enable livestock owners to seek compensation from the drivers concerned for the loss incurred. A driver failing to stop after a relevant accident is liable to a fine of $10,000 and imprisonment for 12 months, whereas a driver failing to provide particulars and report to the Police as soon as possible and within 24 hours is liable to a fine of $15,000 and imprisonment for six months.

The number of cats and dogs kept by the public has been increasing in recent years. Concomitant with the increase, the risk of these animals going astray and getting injured in traffic accidents has gone up. Accidents involving injuries or deaths of these animals after being hit by vehicles occur from time to time. The Government proposes to amend the scope of specified "animal" under section 56 of the Ordinance by adding "cat" and "dog", so that the aforementioned requirements and penalties will likewise be applicable to traffic accidents in which cats or dogs have been hit.

Upon receiving a report on an animal injured in a traffic accident, the Police will notify departments or organizations such as the Agriculture, Fisheries and Conservation Department, the Food and Environmental Hygiene Department and the Society for the Prevention of Cruelty to Animals (Hong Kong) as necessary, so that they can assist in the treatment of the animal. We anticipate LEGISLATIVE COUNCIL ― 24 February 2021 3891 that following the legislative amendment exercise, cats and dogs injured in traffic accidents can receive timely treatment, drivers can be more alert and pay more attention to animals on the road, so as to reduce the occurrence of such accidents.

I hope that Members will support the Bill as an important step forward in enhancing the protection of animal welfare.

President, I so submit.

PRESIDENT (in Cantonese): I now propose the question to you and that is: That the Road Traffic (Amendment) Bill 2021 be read the Second time.

In accordance with the Rules of Procedure, the Second Reading debate is adjourned and the Bill is referred to the House Committee.

MEMBER'S MOTION ON SUBSIDIARY LEGISLATION

PRESIDENT (in Cantonese): Member's motion on subsidiary legislation.

Proposed resolution under the Interpretation and General Clauses Ordinance to extend the period for amending the Insurance (Amendment) Ordinance 2020 (Commencement) Notice and the Insurance (Special Purpose Business) Rules, which were laid on the Table of this Council on 27 January 2021.

I now call upon Mr WONG Ting-kwong to speak and move the motion.

PROPOSED RESOLUTION TO EXTEND THE PERIOD FOR AMENDING SUBSIDIARY LEGISLATION (L.N. 7 AND L.N. 8 OF 2021)

MR WONG TING-KWONG (in Cantonese): President, I move that the motion under my name, as printed on the Agenda, be passed.

At the House Committee meeting on 29 January 2021, Members decided to establish a Subcommittee to study the Insurance (Amendment) Ordinance 2020 (Commencement) Notice and the Insurance (Special Purpose Business) Rules.

3892 LEGISLATIVE COUNCIL ― 24 February 2021

To allow sufficient time for the Subcommittee to report to the House Committee, I urge Members to support the motion to extend the scrutiny period of this item of subsidiary legislation to the Council meeting of 17 March 2021.

Thank you, President.

Mr WONG Ting-kwong moved the following motion:

"RESOLVED that in relation to the―

(a) Insurance (Amendment) Ordinance 2020 (Commencement) Notice, published in the Gazette as Legal Notice No. 7 of 2021; and

(b) Insurance (Special Purpose Business) Rules, published in the Gazette as Legal Notice No. 8 of 2021,

and laid on the table of the Legislative Council on 27 January 2021, the period for amending subsidiary legislation referred to in section 34(2) of the Interpretation and General Clauses Ordinance (Cap. 1) be extended under section 34(4) of that Ordinance to the meeting of 17 March 2021."

PRESIDENT (in Cantonese): I now propose the question to you and that is: That the motion moved by Mr WONG Ting-kwong be passed.

Does any Member wish to speak?

(No Member indicated a wish to speak)

PRESIDENT (in Cantonese): I now put the question to you and that is: That the motion moved by Mr WONG Ting-kwong be passed. Will those in favour please raise their hands?

(Members raised their hands)

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PRESIDENT (in Cantonese): Those against please raise their hands.

(No hands raised)

PRESIDENT (in Cantonese): I think the question is agreed by a majority of each of the two groups of Members present, that is, those returned by functional constituencies and those returned by geographical constituencies through direct elections.

I declare the motion passed.

NEXT MEETING

PRESIDENT (in Cantonese): I now adjourn the Council until 11:00 am on Wednesday, 17 March 2021.

Adjourned accordingly at 1:07 pm.

3894 LEGISLATIVE COUNCIL ― 24 February 2021

Annex

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Contents

Pages

Rates 3896

One-off Reduction of Tax 3897

First Registration Tax on Private Cars 3898

Vehicle Licence Fee for Private Cars 3899

Economic Performance in 2020 3900-3903

Economic Prospects for 2021 3904

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APPENDICES

Page

3907 A. MEDIUM RANGE FORECAST Forecast of government expenditure and revenue for the period up to 2025-26

3917 B. ANALYSIS OF EXPENDITURE AND REVENUE Allocation of resources among policy area groups and analysis of revenue

C. GLOSSARY OF TERMS 3935

Note: Expenditure figures for 2020-21 and before have been adjusted to align with the definitions and policy area group classifications adopted in the 2021-22 estimate.

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Appendix A

CONTENTS Page

SECTION I FORECASTING ASSUMPTIONS AND 3909 BUDGETARY CRITERIA

SECTION II MEDIUM RANGE FORECAST 3910

SECTION III RELATIONSHIP BETWEEN GOVERNMENT 3914 EXPENDITURE/PUBLIC EXPENDITURE AND GDP IN THE MEDIUM RANGE FORECAST

SECTION IV CONTINGENT AND MAJOR UNFUNDED 3916 LIABILITIES

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Appendix B

CONTENTS Page

SECTION I THE ESTIMATES IN THE CONTEXT OF THE ECONOMY

Relationship between Government Expenditure, Public Expenditure 3919 and GDP

SECTION II RECURRENT PUBLIC/GOVERNMENT EXPENDITURE BY POLICY AREA GROUP

Recurrent Public Expenditure: Year-on-Year Change 3923

Recurrent Government Expenditure: Year-on-Year Change 3924

Percentage Share of Expenditure by Policy Area Group 3925

Recurrent Public Expenditure Recurrent Government Expenditure

SECTION III TOTAL PUBLIC/GOVERNMENT EXPENDITURE BY POLICY AREA GROUP

Total Public Expenditure: Year-on-Year Change 3926

Total Government Expenditure: Year-on-Year Change 3927

Percentage Share of Expenditure by Policy Area Group 3928

Total Public Expenditure Total Government Expenditure

SECTION IV MAJOR CAPITAL PROJECTS PLANNED FOR 3929 COMMENCEMENT IN 2021-22

SECTION V TRENDS IN PUBLIC EXPENDITURE: 2016-17 3931 TO 2021-22

SECTION VI ANALYSIS OF GOVERNMENT REVENUE 3933

SECTION VII CLASSIFICATION OF POLICY AREA GROUP 3934

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