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Following is a question by the Hon Andrew Leung and a reply by the Secretary for Financial Services and the Treasury, Professor K C Chan, in the Legislative Council today (November 14):
Question:
About enhancing the business licensing system, will the Government inform this Council:
(a) as it was reported that the report on doing business published recently by the World Bank indicated that to apply for a business license to start a business in Hong Kong, it would take 155 days and 23 procedures to complete the licensing process, whether the authorities will further shorten the relevant licensing process and time required; and
(b) given that to enhance the business licensing system, the Government has launched the "Be the Smart Regulator" Programme to improve the processing of food-related, club and hotel licences and has pledged to develop a model of best practices based on relevant experience that will be replicated across licences and departments, of the latest progress in implementing the Programme?
Reply:
Madam President,
(a) The annual World Bank's "Doing Business" report (the Report) used an ease of doing business index to measure the impact of regulation on business activity. In the recent Report which covered a total of 178 economies, Hong Kong ranked 4th globally, up from 5th position last year. The overall index has ten constituent business indicators. We are among the world's top ranked economies in the aspects of enforcing contracts (1st), getting credit (2nd), protecting investors (3rd), paying taxes (3rd) and trading across borders (3rd).
The major objective of the Report is to encourage reform in developing economies. The results should therefore be interpreted with care. Based on ten indicators on business regulations only, the Report's ranking does not reflect other areas that are important to business, such as proximity to large markets, macroeconomic policy, quality of infrastructure, currency volatility, investor perceptions, crime rates and security of property, transparency of government procurement, and underlying strength of institutions.
Amongst the ten indicators, Hong Kong did not fare too well in the indicator of dealing with licenses, which measures all procedures required for a business in the construction industry to build a two-storey warehouse. Hong Kong, with 23 procedures and 155 days, as cited in the Report, ranks 60th in the current Report. In adopting its methodology, the World Bank assumed the construction of a warehouse to be a representative business activity in an economy. Nevertheless, in Hong Kong the construction of a two-storey warehouse is extremely rare.
To complete its survey, the World Bank relied on third-party respondents to provide information. The results in the Report are quite different from the Administration's own account of the number of procedures and time required, which in practice are much smaller. We also noted that the changes in the number of procedures and time from last year's Report are results of refinement made by the World Bank on its methodology.
The Administration has asked relevant departments to actively study the Report's findings with a view to making improvements where possible. The Administration will continue its overall efforts to enhance the business licensing regime of Hong Kong.
(b) In early 2007, Government launched the "Be the Smart Regulator" Programme to further improve the business environment and competitiveness of Hong Kong. The Economic Analysis and Business Facilitation Unit (EABFU) issued a "Be the Smart Regulator" pamphlet to bureaux/departments, which explained the importance of "smart regulation" and included success stories for reference by bureaux/departments.
The EABFU and the Efficiency Unit (EU) have joined hands with departments concerned to take forward various measures under the Programme. The Programme aims at improving the efficiency, transparency and customer-friendliness of Hong Kong's licensing processes with a view to reducing compliance cost on business. The focus of work is currently on the premises-based licensing, covering the food-related licences of the Food and Environmental Hygiene Department (FEHD), as well as the hotel, guesthouse and club licences of the Home Affairs Department (HAD).
Good progress has been made and the measures implemented are well received by the trades. Details are set out below:
(i) Customer Service
Regarding improvement on customer service, the FEHD, the Buildings Department and the Fire Services Department have assigned designated officers to look after individual food-related licence applications. The HAD has also implemented similar measures for hotel, guesthouse and club licences.
(ii) Licensing Process
Regarding the licences under the FEHD and the HAD, we have implemented a number of measures to improve efficiency, enhance communication between the departments concerned, and streamline the processes.
(iii) Licensing Guides
The HAD and the FEHD have conducted reviews on their licensing guides with a view to providing clearer guidance on applications. This not only helps the trades to comply with the licensing requirements, but also facilitates the adoption of standardised methods and procedures by licensing staff.
(iv) Licence Application Tracking Facility
The FEHD and the HAD have developed their respective inter-departmental licence application tracking facilities to enhance communication between the departments concerned in their licensing work.
(v) Electronic Service
Relevant government departments are working with the Liquor Licensing Board to develop a computer system to provide electronic service for Liquor Licence applications. The proposed system will help streamline the licensing process and is expected to be operational in mid-2008.
(vi) Business Liaison Group (BLG)
The EABFU has set up eight BLGs for different trades. Representatives from the departments concerned attend the meetings to exchange views with the trades on licensing and regulatory issues so as to enhance communication with the business community.
The EABFU and the EU will share their experience in making licence-related improvements for the food business, hotels, guesthouses and clubs with other licensing departments for their reference and application in order to enhance the licensing efficiency of the Government.
Ends/Wednesday, November 14, 2007
Issued at HKT 12:10
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