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Luncheon organized by The Hong Kong Association of Southern California in Los Angeles, USA

26 September 2000

Ladies and Gentlemen,

Good afternoon. 

I am delighted to be here again in Los Angeles now that the air is clean and prosperity fills every breath I take. I am no stranger to LA, having been to Disneyland with my kids for at least a dozen times, but this is the first time for me to visit in the capacity of the Commissioner of Customs and Excise of the Hong Kong Special Administrative Region. 

I am actually on my way to Washington DC to speak in the Air Cargo Forum, and I thought it would be a good opportunity to share with some of the friends of Hong Kong here the latest developments in some of the issues falling under my portfolio. I am grateful to the colleagues of the Hong Kong Economic and Trade Office in San Francisco and friends of the Hong Kong Association of Southern California in organizing such a distinguished gathering. What I would like to do today is to talk briefly about the economic situation in Hong Kong, protection of intellectual property rights, enforcement against alien smuggling, and finally what we are doing on trade facilitation.

Hong Kong Economy

First, the economy.

There are encouraging signs of continued recovery three years after the outbreak of the Asian financial crisis, and the regional rebound is gathering momentum. I am pleased to note that, after a painful period of economic adjustment, the stage is set for Hong Kong to achieve stunning economic gains in the year 2000. In the first two quarters this year, Hong Kong registered spectacular GDP growth of 14.3% and 10.8%. According to the latest review, an overall growth rate of 8.5% has been projected for the full year, up from the 6% estimate made in May. Some economic forecasters have indicated that our projections rest heavily on the low side, and others have suggested that in view of the price hike in oil our projections are too optimistic. In any event, for an externally oriented economy like Hong Kong, I think it is a virtue to operate in a conservative and steady manner. 

The quick recovery of Hong Kong has much to do with the solid fundamentals of our economy. We have totally free trade in a textbook market setting, level playing field for all, a low and simple tax regime, and unfettered flow of information. We also have an accountable, clean and business-friendly civil service, buttressed by the rule of law and an independent judiciary.

The pains of the economic malady are now history. The Hong Kong business sector is busily diversifying into the "new economy" with a massive rush recently of dot-coms setting up in Hong Kong. There are many theories on the strengths and weaknesses of the new companies, and there is still no consensus on their state of health. However, it is certain that one of the most significant developments in reshaping our economy in this new century will be the power of innovation and technology, and high profile projects, such as the Cyberport and Science Park, will certainly add fuel to our future economic growth.

In building this new platform, we are seeking to encourage innovation and creativity in our community. An essential ingredient in fostering the construction of the technological architecture is assurance for investors that their intellectual property rights will be properly protected. In this connection, we have achieved highly encouraging results.

We are also expecting a boom of business opportunities with China's imminent accession to the World Trade Organization. The likely expansion of China's trade links and investment relations with the rest of the world would bring substantial economic gains to Hong Kong. All these recent developments suggest clearly that our economy is getting ready to take the next quantum jump.

Intellectual Property Rights Protection

Moving onto the next subject, intellectual property infringement has once attracted considerable international attention and it was a constant irritant with our major trading partners. This is perceived to be an important domestic issue as well. As the leading law enforcement agency in Hong Kong in intellectual property rights protection, it is our aim to eradicate such infringements as soon as possible, and to ensure that this is achieved, we have dedicated a large amount of resources to the fight against piracy.

I am pleased to tell you that the piracy situation in Hong Kong is now firmly under control. The extent of piracy in Hong Kong has reduced significantly since I assumed the position of Commissioner a year and a half ago. Over 90% of the 1,000 or so retail outlets selling pirated products have since closed, pushing the remaining few underground. We will continue to spare no effort in combating piracy in Hong Kong.

We have brought about this level of success with a two-pronged enforcement strategy - clamping down on both the supply side and the retail end simultaneously. Our record speaks for itself. Our effort has been recognized by prominent intellectual property organizations, such as the Motion Picture Association, the International Federation of Phonographic Industry and the Business Software Alliance.

Now that we have broken the back of the illicit business in the piracy of intellectual property in Hong Kong, we have even greater confidence in promoting technological innovation in our economy. Hong Kong has embarked upon a series of new strategic initiatives aimed at deepening and broadening our economic architecture. We are seeking to develop a more sophisticated technological base. We are working to be a leading centre for information technology in the form of the now well-known Cyberport. This facility, which has already had the support of leading international IT firms, will house a strategic cluster of major service companies specializing in the development and application of IT in electronic commerce and information service. It will also provide a huge boost to the businesses in the region. With the new technological infrastructure in sight, Hong Kong is now well placed to face the challenges of the new millennium. 

Smuggling of Illegal Immigrants

As we enter into the new millennium, we face also a new problem of smuggling of illegal immigrants, a problem which has featured in bold headlines a few months ago. This is a large international issue, and for our part, we have always taken vigorous actions to prevent Hong Kong from being used by human smugglers as a staging point for transit to other countries.

Given the geographical location and heavy marine traffic in the Hong Kong waters, vigilant enforcement action to combat the smuggling of illegal immigrants has always been a priority for us. We have adopted an inter-departmental approach to deal with the problem. Hong Kong Customs exercises a sound mechanism in checking cargoes to prevent smuggling. We use a risk assessment approach in selecting cargoes for examination, and the system has proved to be effective. Together with the Marine Police, we patrol the Hong Kong waters to intercept vessels suspected to be involved in smuggling operations. The Hong Kong Police also has a special team to collect intelligence and investigate suspected organizers of human smuggling. In addition, our Immigration Department maintains a Ship Search Unit to conduct searches on ships inside the Hong Kong harbour.

Apart from these enforcement actions, the Hong Kong law enforcement departments enjoy excellent cooperation with our overseas counterparts. We regularly exchange intelligence on these activities through designated local liaison officers and established channels. In fact, amongst the 11 cases of human smuggling detected in the US and Canada this year, six were the result of tip-offs from the Hong Kong Customs.

In order to curb the use of containers for the smuggling of human cargo, we have also sought enhanced cooperation from our trade, including major shipping companies and agents, container terminal operators and the major trade associations. As a result, a battery of measures has been adopted by the trade which include reporting to Customs prior to export intended shipments of soft-top and refrigerated containers; strengthening security measures to detect illegal immigrants hiding in containers; reporting to Customs through a special hotline any suspicious outbound shipments; checking new clients' particulars before accepting business; and more.

On our part, we have enhanced our examination of outgoing soft-top and refrigerated containers, and we are using carbon dioxide detectors to assist in our container examination. So far, the results are encouraging. We have not received any further report of human smuggling on vessels departing from Hong Kong since April. In the first eight months of this year, we arrested 110 would-be-illegal immigrants in our routine searches and foiled possibly many more in our enhanced enforcement. We will keep up our efforts by maintaining close cooperation with relevant local and overseas law enforcement authorities as well as the trade to ensure that Hong Kong will not be used as a transit base for human smuggling. I am confident that our contribution will help eradicate this obnoxious and immoral business worldwide.

Trade Facilitation

Under the heading of Trade Facilitation, I would like to share with you three examples of how we are getting ready in taking the quantum jump in economic development to make Hong Kong an attractive place for overseas investments and to take Hong Kong into a new era of prosperity.

Container Terminal No.9

First of all, we have begun the construction of Container Terminal No. 9. When completed in 2004, the new container terminal, which costs about HK$10 billion to build, will provide six additional berths with a design capacity of 2.6 million TEUs, bringing our total capacity to well over 20 million TEUs. This would help to meet forecast demand and maintain Hong Kong as the world's busiest container port for some time to come.

The first berth will come into operation in May 2002 and we in Customs will be ready to assist in the facilitation of the movement of the additional containers. We are streamlining our procedures with the use of technology while seeking to speed up cross boundary movement of container trucks as well as enhancing our water links with the Mainland to enable more cost effective transport of cargoes.

Pre-clearance at the Land Boundary

At the land boundary checkpoints, we have about 30,000 goods vehicles going to and from Hong Kong and the Mainland everyday. Traffic jams are usually seen as a sign of prosperity, but to the truck drivers it is a nuisance and to the businessmen it is a loss of opportunity. We have attempted different measures to remedy this problem. We have sought to build more clearance kiosks, but due to the limitation of land, we have reached the limit for this option. We have implemented a special "empty container" scheme and this has helped to some extent to alleviate some of the congestion but the limit will also be reached in a couple of years. We are now attempting to establish a scheme of clearance under which transport companies would let us have information of their cargoes ahead of time, and we would provide them in return with the necessary clearance prior to their arrival. This should help facilitate movement of cargoes at the very busy boundary between Hong Kong and the Mainland. We are still at a preliminary stage and we see this as a medium term solution to a big problem.

As a forerunner of our effort to facilitate transshipment cargo as a whole, we have worked out recently with individual cargo operators streamlined clearance procedures for air cargo to be transshipped to the Mainland by land transportation through our boundary checkpoints or by taking the sea route. Under the new procedures, the transshipment cargo needs only subject to customs clearance once at our airport under normal circumstances, saving the trouble for a second clearance at the land border or at sea during the outbound trip. We are able to do that because of the cooperative arrangements we have obtained from the operators in ensuring that full cargo data are provided to customs in advance for pre-clearance and the cargo is transported during transshipment under proper security safeguards. These arrangements have opened up new business potentials for the industry and may serve as a pilot for further extension of customs facilitation to all forms of intermodal transshipment cargo.

Air Cargo Hub

Separately, we are working to establish the Hong Kong International Airport as the air cargo transshipment hub in the region. To make that possible, we have amended our laws to simplify formalities and procedures in order to minimize bureaucracy. We are now able to facilitate the movement of goods without sacrificing our enforcement role. In fact, our role has been enhanced as a result. We have been able to achieve this with the help of advanced technology. Supported by the powerful customs air cargo clearance computer system which cost about HK$175 million, we have been able to clear cargoes prior to their arrival in Hong Kong and move cargoes according to the new standards required in the "new economy" setting.


This is only the start. Our ultimate aim is to develop a one-stop customs cargo clearance for all transport modes - air, land and sea. We are working hard on this, and we are aiming to meet the needs of our business partners before long. And I do hope you will come join us on this platform of opportunity in creating a new prosperity in Hong Kong.

Thank you.

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