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Following is the transcript (English portion) of the media session by the Chief Secretary for Administration, Mr Donald Tsang, at the Conference Hall of the Central Government Offices New Annexe today (June 5):

Reporter: ...flats to be sold...

Chief Secretary for Administration: We believe that on the resumption of sale we have to be very careful. We believe that the present market conditions remain fragile although the number of transactions has been very stable since the moratorium in September last year. And I do believe that this amount should be able to meet the immediate needs of those HOS applicants and at the same time would not upset the market. And we are doing in two tranches. As you know it is not only one tranche, there will be a second tranche early next year where we have about the same amount as well. This is a matter we have to monitor closely. It very much depends on market reaction. And we believe it is at appropriate level.

Reporter: Could you explain what the advantages of the changes you outlined for the community?

Chief Secretary for Administration: There will be quite a lot of advantages. We indicate quite clearly that in a longer term, loan financing is much preferable to building HOS ourselves because it is more cost effective. It gives people greater flexibility. In fact the wider choice for those who want to own his own home but cannot afford flats in the open market. And in future, they have a choice, a choice moving into the HOS or getting the same loan to buy a flat on his own choosing. That is definitely more cost effective. It would not cause any overlap in a supply situation, unnecessary competition between the public sector and the private sector. And it will be going to meet the needs of a large number of people. And at the same time, I think our process is more market friendly, and would enable us to get away from further intervention in the property market.

Reporter: .... Mr Tsang, you mentioned that more cost-effective in a long term, so why are you still using... implementing HOS Scheme and not considering abolishing it altogether?

Chief Secretary for Administration: It still means the odd eventuality when the market is someway distorted when demand grows to outstrip supply, and the amount of loans is prepared to give ... would not be able to let those beneficiaries to buy flats in the open market. In those rare rare circumstances, I'm sure that we need a buffer of self-built HOS. That's what we proposed to do. But I do not think the amount is to be excessively large. Two thousand is, I think, a right level.

Reporter: Why do you think two thousand is the right amount?

Chief Secretary for Administration: It roughly relates to one HOS estate. It may be depending on the design of the estates, it may be two or three blocks but it is quite a integral amount which people realise it is a suitable level, particularly, in construction term, that is an appropriate level.

Reporter: Any idea how many HOS flats will be changed to public rental housing? What's the proportion of that?

Chief Secretary for Administration: Under construction, there are about 30 000 flats. For some of them, we can change the usage. I think there will be roughly about 12 000 of them that can be changed. Within the 12 000, some may be converted for use of rental housing and some for other purposes like schools and so on, which will be equally beneficial to the community as a whole.

(Please also refer to the Chinese portion of the transcript)

End/Wednesday, June 5, 2002

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