Speech at Panel on Commerce and Industry

Progress of the development of Trade Single Window

Expediting the implementation of Trade Single Window

Mr CHAN Chun-ying said that Hong Kong’s edge in export and re-export trade had for years been challenged in the face of keen competition from ports of neighboring Mainland cities such as Yantian of Shenzhen. In addition, there were profound changes in the external economic environment since the Administration’s announcement of the establishment of TSW in February 2016, bringing a decline in total export value since November 2018 and a year-on-year decrease of 5.1% in the first ten months of 2019, thereby affecting Hong Kong’s status as a trading and logistics hub. In this connection, Mr CHAN enquired whether the Administration would review the development plan of TSW and expedite the implementation timetable so as to maintain competitiveness of the re-export and logistics sectors, in particular, the air freight logistics sector, which he considered should still be highly competitive in the region.

USCED advised that the development of TSW aimed to enhance customs clearance efficiency across all transport modes (i.e. air, sea and land). Whilst the trade welcomed having the electronic option provided under Phase 1 of TSW, some users in the trade preferred keeping the flexibility for resorting to the conventional means of application through service counters. Accordingly, the Administration proposed to implement Phase 2, as with Phase 1, as a voluntary electronic option. As for Phase 3, the Administration had refined the original proposal of replacing the existing post-shipment Import and Export Declarations (“TDEC”) by pre-shipment TDEC, and put forward in April 2017 a revised proposal (along the framework under paragraph 20 of the Administration’s paper). However, there remained concerns that the proposed new pre-shipment documentation requirements under the revised proposal would still bring about additional compliance cost to the trade. In view of the prevailing economic conditions and the trade’s concerns over the additional compliance cost arising from such pre-shipment requirements, the Administration was actively exploring ways to encourage the trade to submit pre-shipment cargo information for air exports through TSW by way of voluntary arrangements instead. So far, the trade was generally supportive of the latest proposed approaches. The Administration would continue to engage the trade through meeting major stakeholders and the six User Consultation Groups (“UCGs”) (which were specifically set up to tap industry views for the TSW project) to map out the implementation plan for Phase 3.

Deputy Secretary for Commerce and Economic Development (Commerce and Industry)2 (“DS(C&I)2”) added that the Administration was mindful of the need to implement all three phases of TSW as early as possible with a view to further enhancing Hong Kong’s customs clearance efficiency. The Administration also attached great importance to the trade’s feedback when formulating the implementation plan of TSW as reflected by, for example, the switch to voluntary arrangements for Phase 2. The Administration’s target was to secure funding approval for Phase 2 in the first half of 2020 with a view to rolling it out in 2023 by batches. The Administration would continue to take into account the feedback from the trade in mapping out the implementation plan for Phase 3. DS(C&I)2 also said that Hong Kong continued to be renowned in customs clearance efficiency. Over the years, the Administration had also put in place measures such as the Single E-Lock Scheme and the Hong Kong Authorized Economic Operator Programme to enhance customs clearance efficiency. These measures were welcomed by the trade.

Connections with other Trade Single Windows

Mr CHAN Chun-ying noted that the Agreement on Trade in Goods signed between the Mainland and Hong Kong on 14 December 2018 included a dedicated Chapter on “Trade Facilitation Measures in the Guangdong-Hong Kong-Macao Greater Bay Area”, stipulating that the nine Pearl River Delta municipalities and Hong Kong would explore the inter-connectivity of TSWs and study the mechanism for control point information exchange. He enquired about the progress in this respect and the need to provide such inter-connectivity under Phase 1 and Phase 2.

USCED advised that the Hong Kong Special Administrative Region Government (“HKSARG”) would adopt an open attitude in exploring inter-connectivity of TSWs. USCED said that an expert group with the Guangdong authorities was already in place to explore the feasibility of TSW inter-connectivity. HKSARG would continue to monitor the latest development regarding inter-connectivity of TSWs among economies.

As regards the need to provide connectivity between Hong Kong’s TSW and those of other jurisdictions, DS(C&I)2 said that such need might be limited under Phases 1 and 2 of Hong Kong’s TSW as these two phases mainly involved trade licences/permits of specific controlled products for meeting local regulatory requirements. As for Phase 3, the Administration had been monitoring the latest developments of TSWs of other jurisdictions, and would continue to do so. It remained the Administration’s target that Hong Kong’s TSW, when fully implemented, would have the technical capability to connect with TSW of other jurisdictions. Any actual connections would have to be subject to, among others, relevant legal considerations and conclusion of bilateral agreements. The Administration would continue to explore the inter-connectivity of TSWs and keep in view the latest developments in other economies.


Progress of the implementation of the Professional Services Advancement Support Scheme

Effectiveness of the Professional Services Advancement Support Scheme

Mr YIU Si-wing and Mr CHAN Chun-ying noted that since the launch of PASS in November 2016, only 56 projects were funded with PASS grant totally HK$42 million, which was equivalent to 21% of the approved financial commitment of HK$200 million. Having regard to the success rate of applications for PASS, Mr YIU asked whether the number of PASS applications received and effectiveness of PASS were within the Administration’s expectations and, if not, the reasons for that. Mr CHAN raised reservations about the effectiveness of the Administration’s proposed enhancement measures to attract more organizations to submit applications. He enquired whether the Administration would review the effectiveness of the enhancement measures in increasing the number of funded projects and total PASS funding approved.

USCED replied that a considerable number of projects had been funded in the past two years (i.e. 56), and a significant amount of PASS funding had been approved for these projects (i.e. HK$42 million). The funded projects covered a wide range of sectors and featured a diverse variety of deliverables (such as forums, workshops and visits) contributing to PASS’ stated objectives. In view of the above, the Administration considered that PASS had been taken forward in line with its intent. As regards the other 58 applications which were not funded after consideration by the Vetting Committee (“VC”), they were not funded for various reasons and, among them, 14 might be further processed subject to the applicants’ provision of supplementary information or clarifications.

USCED added that the launch of the HK$200 million PASS in 2016 had reflected the Administration’s commitment to support the continuous development of Hong Kong’s professional services sector. PASS’ high funding ratio of 90% (government): 10% (grantees) was welcomed by non-profit-distributing organizations. Such ratio was on par with the Trade and Industrial Organisation Support Fund, which also aimed at providing financial support for non-profit-distributing organizations. The Administration would keep in view the effectiveness of the enhancement measures for PASS, and continue to take into account workable suggestions from grantees to fine-tune PASS’ modus operandi and internal working arrangements with a view to enhancing PASS’ operation and user-friendliness. The Administration would also continue to promote PASS and encourage applications from interested organizations through various channels.

Noting that over 90% of the respondents to the questionnaire survey conducted by the Administration in September and October 2019 agreed that PASS was effective in contributing to the advancement of the professional services sector, Mr CHAN Chun-ying suggested that the Administration should evaluate the effectiveness and outcome of projects funded by PASS by a set of quantitative indicators. Regarding the remaining 10% respondents who might have different views on PASS’ effectiveness, Mr CHAN asked whether the Administration had further studied their concerns and whether they would be fully addressed by the proposed enhancement measures.

USCED noted Mr CHAN Chun-ying’s suggestions and said that it might not be appropriate to assess PASS projects’ effectiveness by a rigid set of quantitative indicators, in light of the wide range of sectors covered by these projects and the diverse nature of deliverables involved. VC had in place a mechanism to monitor the effectiveness of all approved projects upon their completion.

List of eligible professional services sectors

Mr CHAN Chun-ying was concerned that among the 56 funded projects, only a few were relevant to financial services and ICT services. Given that financial services was one of the pillar industries in Hong Kong, he asked whether the Administration would step up efforts to encourage organizations of the financial technology (“fintech”)-related professional services sector to apply for PASS, say for instance, by classifying fintech as a standalone sector under the list of eligible professional services, instead of including it under ICT services so that the interested organizations of the relevant sector could easily be aware of their eligibility for PASS applications.

DS(C&I)2 said that a total of 56 projects had been funded under PASS in the past two years and they covered a wide range of sectors. The full list of funded projects (and information on the sectors involved) was available on the PASS website, which hopefully would provide useful reference for other organizations interested in applying for PASS in respect of projects for the respective sectors in the future. USCED added that in response to members’ enquiries at the Panel meeting on 21 June 2016, the Administration had assured members that fintech and information security services sectors were included in ICT services and were supported by PASS.