APEC DEREGULATION REPORT 2000

Chapter 10 : Deregulation/ Regulatory Review

Objective

APEC Economies will facilitate free and open trade and investment in the Asia-Pacific Region by, inter alia:

(a) Improving the transparency of regulatory regimes; and

(b) Eliminating those distortions arising from domestic regulations that restrict trade or investment and are not necessary to achieve a legitimate objective.

Guidelines

Each APEC economy will:

(a) explore economy-wide processes for the transparent identification and review of those domestic regulations that may cause distortions that restrict trade or investment, ensuring that reviews consider whether identified distortions are necessary to achieve a legitimate objective; and

(b) consider the adoption of regulatory reform programs that seek to reduce the costs of regulation of particular industries or sectors whilst maintaining the achievement of legitimate objectives.

Collective Actions

APEC Economies have agreed to take collective actions to help achieve these goals. These actions are contained in Collective Action Plans (CAPs) which are updated annually. The current CAP relating to deregulation/regulatory review can be found in the Deregulation Collective Action Plan.

APEC Principles to Enhance Competition and Regulatory Reform

The APEC Leader’s Declaration of September 1999 endorsed the following Principles: Non Discrimination

(a) Application of competition and regulatory principles in a manner that does not discriminate between

or among economic entities in like circumstances, whether these entities are foreign or domestic.

Comprehensiveness

(b) Broad application of competition and regulatory principles to economic activity including goods and services, and private and public business activities.

(c) The recognition of the competition dimension of policy development and reform which affects the efficient functioning of markets.

(d) The protection of the competitive process and the creation and maintenance of an environment for free and fair competition.

(e) The recognition that competitive markets require a good overall legal framework, clear property rights, and non discriminatory, efficient and effective enforcement.

Transparency

(f) Transparency in policies and rules, and their implementatio n.

(g) Clear responsibility within domestic administrations for the implementation of the competition and efficiency dimension in the development of policies and rules, and their administration.

Hong Kong, China believes in market forces and adopts a minimum intervention approach to economic management. Our regulatory regimes are established to provide prudential supervision

(e.g. financial services), to ensure safety, to protect consumer interests, and to encourage investment (e.g. by limiting competition where delivery of the service concerned requires very substantial capital investment). Our regulatory regimes are also highly transparent.

The Business and Services Promotion Unit of the Commerce and Industry Bureau is responsible for implementing a Helping Business Programme whose focus is to make Hong Kong a genuinely

friendly place for both local and overseas businesses. The aim of the Programme is, inter alia, to eliminate and simplify regulations which hinder our ability to innovate and grow, while maintaining the necessary standards and disciplines.

Restaurant industry has all along been a key service industry in the Hong Kong economy. For many years passing food and beverage operators would apply for relevant licences and commence full business operation prior to licensing. Economic reality, rental costs and the slow licensing process involved permitted no other course. Breach of laws regarding food sale was met by sporadic prosecution following which operators would accept fines as part of the cost of establishing the business. Fines involved balanced against the rental cost of un-used premises pending issue of licences made un-licensed operation not only viable but profitable in any event. In 1998, the

average time taken for a full licence to be issued was more than 300 working days.

Against this background, the Business and Services Promotion Unit sponsored a consultancy study on restaurant licensing with a view to streamlining and expediting the licensing process without compromising the hygiene and safety standards, hence to creating and maintaining an open and business-friendly environment for the trade to operate in.

The study was completed in late 1999 with a number of recommendations for improvement. Work is

in hand to implement the improvement measures which include simplifying the licensing requirement, strengthening the coordination of different stakeholders both within and outside

government agencies and enhancing the transparency of the working process. We are also working

towards the issue of provisional licences on the same day of licence application on production of the required certification.

The improvement has received very favourable response from the business community.

*Hong Kong, China's Approach to Deregulation/Regulatory Review in 2000*
*Section*	*Improvements Implemented* *Since Last IAP*	*Current Regulatory Review Policies / Arrangements*	*Further Improvements Planned*
*General Policy* *Position*	We have completed 6 more studies/projects on deregulation and regulatory impact assessment, with more than 60 recommendations implemented or being implemented. Please refer to the webpage http://www.info.gov.hk/bspu/busine ss/progress.htm for the work progress under the Helping Business Programme.	Hong Kong, China believes in market forces and adopts a minimum intervention approach to economic management. Our regulatory regimes are established to provide prudential supervision, to ensure safety, to protect consumer interests, and to encourage investment. Our regulatory regimes are also highly transparent. The Business and Services Promotion Unit of the Commerce and Industry Bureau is responsible for implementing a Helping Business Programme. The aim of the Programme is, inter alia, to eliminate and simplify regulations which hinder Hong Kong, China’s ability to innovate and grow, while maintaining the necessary standards and disciplines. The Secretary for Commerce and Industry is a member of the Competition Policy Advisory Group (please refer to the Group’s webpage at http://www.info.gov.hk/esb/relate/cpage.htm) which is a dedicated forum to review competition-related policy issues and examine the extent to which the public sector should seek to introduce more competition to enhance economic efficiency and free flow of trade, thereby also benefiting consumer welfare.	Short/Medium Term (2001 - 2005) Continue to undertake the Helping Business Programme to cut red tape and deregulate. Continue to cultivate a helping business culture in the civil service (see webpage at http://www.info.gov.hk/bspu/business/pro gress.htm#progress ) by, inter alia, organizing Helping Business Awards Schemes, conducting Helping Business Symposia and publishing guidebooks on cutting red tape. Short/Medium/Long Term (2001 - 2010) To implement reform and deregulatory measures where appropriate, as set out in the relevant Chapters in this Individual Action Plan.

*Hong Kong, China's Approach to Deregulation/Regulatory Review in 2000*
*Section*	*Improvements Implemented* *Since Last IAP*	*Current Regulatory Review Policies / Arrangements*	*Further Improvements Planned*
		More information can be found at the webpage on Helping Business Programme at http://www.info.gov.hk/bspu/business . The contact point for further information is : Business and Services Promotion Unit Commerce and Industry Bureau Tel : (852) 2918 7571; Fax : (852) 2537 7725 E-mail : bspuenq@cib.gov.hk
*Identification and Review of Proposed Regulations*	We have been conducting regulatory impact assessments (RIAs) on proposed regulatory measures. Recent RIAs conducted include the ones on the proposals to regulate inbound travel agents and the management and storage of dangerous goods.	To provide an appropriate regulatory regime in areas such as public safety, health, fair and orderly markets, Hong Kong, China strives to ensure that it does not create unnecessary red tape in achieving legitimate policy objectives and regulators are conscious of the full cost implications of their practices. The Business and Services Promotion Unit has been taking forward the Helping Business Programme with the advice from the Business Advisory Group (see its terms of reference and membership at http://www.info.gov.hk/bspu/business/terms.ht m) which comprises a mix of prominent local businessmen and senior Government officials. Under the Programme, regulatory impact	Short/Medium/Long Term (2001 - 2010) Continue with the work on RIAs on proposed regulatory activities.

*Hong Kong, China's Approach to Deregulation/Regulatory Review in 2000*
*Section*	*Improvements Implemented* *Since Last IAP*	*Current Regulatory Review Policies / Arrangements*	*Further Improvements Planned*
		assessments (RIAs), which include the assessments of the cost of enforcement to the Government and the cost of compliance to the business sector and consumers, as well as the analyses of the risk of not doing something, the risk of a particular course of action and the measures necessary to control risk, are conducted in the development of regulatory proposals. Separately, in determining whether regulations will achieve legitimate objectives, all government entities are required to adhere to a Statement on Competition Policy promulgated in May 1998 (content of the statement at http://www.info.gov.hk/esb/respone/16.htm), to review critically policies and regulations and to propose initiatives to enhance competition. More information can be found at http://www.info.gov.hk/bspu/business The contact point for further information is : Business and Services Promotion Unit Commerce and Industry Bureau Tel : (852) 2918 7571; Fax : (852) 2537 7725 E-mail : bspuenq@cib.gov.hk

*Hong Kong, China's Approach to Deregulation/Regulatory Review in 2000*
*Section*	*Improvements Implemented* *Since Last IAP*	*Current Regulatory Review Policies / Arrangements*	*Further Improvements Planned*
*Identification and Review of Existing Regulations*	We have completed the review of the existing regulations administered by Transport Department, and are going to implement the improvement measures.	To provide an appropriate regulatory regime in areas such as public safety, health, fair and orderly markets, Hong Kong, China strives to ensure that it does not create unnecessary red tape in achieving legitimate policy objectives and regulators are conscious of the full cost implications of their practices. The Business and Services Promotion Unit has a computerized database setting out all business-related regulatory activities undertaken by the Government with a record of date introduced and last revised, original objective etc. BSPU is working systematically through the record to identify areas for potential future study, in addition to relying on suggestions from the business community. This database is also open to all Government departments to facilitate them to review their business- related regulations. Separately, in determining whether regulations will achieve legitimate objectives, all government entities are required to adhere to a Statement on Competition Policy promulgated in May 1998 (content of the statement at http://www.info.gov.hk/esb/respone/16.htm), to review critically policies and regulations to enhance competition.	Short/Medium/Long Term (2001 - 2010) Continue to review the business-related activities in batches at regular intervals with the aid of the database to identify opportunities for deregulation.

*Hong Kong, China's Approach to Deregulation/Regulatory Review in 2000*
*Section*	*Improvements Implemented* *Since Last IAP*	*Current Regulatory Review Policies / Arrangements*	*Further Improvements Planned*
		More information can be found at http://www.info.gov.hk/bspu/business The contact point for further information is : Business and Services Promotion Unit Commerce and Industry Bureau Tel : (852) 2918 7571; Fax : (852)2537 7725 E-mail : bspuenq@cib.gov.hk
*Reform of Industry/Sector Specific Regulation*	For the education service sector, we have conducted a review on the licensing requirements and procedures for tutorial schools and kindergartens; and have identified measures for improvement. We have also completed a study on the re-definition of light refreshment restaurants to remove the unnecessary hindrance in running the business. For the tourism industry, an regulatory impact assessment has been conducted to assess the regulatory impact arising from the proposal to regulate	The Business and Services Promotion Unit maintains close contact with the business community to gauge their views concerning the impact of regulatory activities on businesses. We also keep a close watch on Government departments’ regulatory activities with a view to eliminating over regulation. More information can be found at http://www.info.gov.hk/bspu/business The contact point for further information is : Business and Services Promotion Unit Commerce and Industry Bureau Tel : (852) 2918 7571; Fax : (852) 2537 7725 E-mail : bspuenq@cib.gov.hk	Short/Medium Term (2001 - 2005) To conduct an industry/sector specific review on the food industry (other than restaurants). Short/Medium/Long Term (2001 - 2010) To keep close contact with the business sector to identify the need for regulatory reform.

*Improvements in Hong Kong, China’s Approach to Deregulation/Regulatory Review since 1996*
*Section*	*Position at Base Year (1996)*	*Cumulative Improvements Implemented to Date*
*General Policy* *Position*	Hong Kong’s regulatory regimes were established to provide prudential supervision, to ensure safety, to protect consumer interests, and to encourage investment. The Helping Business Programme commenced in 1996 to eliminate and simplify regulations which hinder Hong Kong’s ability to innovate and grow, and to provide a more open and fair environment to achieve growth, while maintaining the necessary standards and disciplines.	Set up the Business and Services Promotion Unit, a dedicated organization, to assume responsibility for implementing the Helping Business Programme. (1997 IAP) Established a Competition Policy Advisory Group in 1997. Also promulgated a Statement on Competition Policy in 1998 requiring all government entities to, among others, review periodically policies and regulations as well as proposing initiatives with a view to enhancing competition. (1998 & 1999 IAPs) Established a Business Advisory Group to advise the Financial Secretary on the development and implementation of the Helping Business Programme and make recommendations on improvement or solutions. Organized a Helping Business Awards Scheme for all civil servants. (1999 IAP) Conducted a series of Helping Business Symposia for senior government officials. Conducted over 60 studies/projects and implemented more than 270 recommendations under the Helping Business Programme since 1996 with a view to, among others, eliminating and simplifying regulations.

*Improvements in Hong Kong, China’s Approach to Deregulation/Regulatory Review since 1996*
*Section*	*Position at Base Year (1996)*	*Cumulative Improvements Implemented to Date*
*Identification and Review of* *Proposed Regulations*	The Business and Services Promotion Unit was set up to take forward the Helping Business Programme with the advice from a Business Advisory Group which comprised a mix of prominent local businessmen and senior Government officials.	With the promulgation of the Statement on Competition Policy in 1998, all government entities are required to review periodically policies and regulations as well as proposing initiatives with a view to enhancing competition. (1998-2000 IAPs) Developed in 1998 a framework for regulatory impact assessment (RIA) for use in the development of regulatory proposals, which comprised detailed cost-benefit analysis and risk analysis. 3 RIAs have been completed since then.
*Identification and Review of* *Existing Regulations*	Subsequent to the commencement of the Helping Business Programme in 1996, government-wide and individual governmental departments based studies on the regulatory requirements were conducted to review the regulations.	Completed a Government-wide stock taking exercise of business-related regulatory activities and established a computerized central database which provided a central reference for the review of monitoring of business-related regulatory activities. (1997 IAP) As an ongoing commitment to deregulate and cut red tape, we have commissioned studies and taken forward recommended improvement measures arising from the completed studies. (1997-2000 IAPs) With the promulgation of the Statement on Competition Policy in 1998, all government entities are required to review periodically policies and regulations as well as proposing initiatives with a view to enhancing competition. (1998-2000 IAPs)

*Improvements in Hong Kong, China’s Approach to Deregulation/Regulatory Review since 1996*
*Section*	*Position at Base Year (1996)*	*Cumulative Improvements Implemented to Date*
*Reform of Industry/Sector* *Specific Regulation*	Subsequent to the commencement of the Helping Business Programme in 1996, government-wide and individual department-based studies on regulatory requirements were conducted to review the regulations, some of which were industry/sector specific ones.	Salient regulatory reforms introduced since 1997 include : Hotel and Guesthouse Industry - Reviewed the licensing of hotels and guesthouses; and implemented the improvement measures. Food and Restaurant Industry - Introduced the provisional licensing system to enable applicants to start operating their restaurants earlier (10 working days as against 6- 10 months for full licenses) on a provisional basis following certification of compliance of essential requirements, pending the issue of full licences. This system was subsequently extended to cover all food premises.

APEC Agreements and Declarations

APEC DEREGULATION REPORT 2000 - HONG KONG