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LCQ8: Operations against parallel trading activities
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     Following is a question by the Hon Lam Cheuk-ting and a written reply by the Secretary for Security, Mr Lai Tung-kwok, in the Legislative Council today (March 1):

Question:    

     In replying to questions raised by Members of this Council in the past, the Government repeatedly indicated that it had implemented a number of measures to combat parallel trading activities.  However, some residents in the North District have pointed out that such activities are still rampant in the district at present, causing nuisance to their daily living.  In this connection, will the Government inform this Council:

(1) in each of the past three years, of the manpower deployed by (i) the Food and Environmental Hygiene Department (FEHD), (ii) the Police and (iii) other government departments to deliver street cleaning services and take law enforcement actions against parallel trading activities at parallel trading black spots;

(2) of the number of parallel trading black spots last year and their locations; the respective numbers of law enforcement actions taken and Fixed Penalty Notices (FPNs) issued, by the departments concerned at such black spots each month;

(3) of the respective numbers of FPNs issued by FEHD and the Police in each of the past three years to persons who had committed obstruction and cleanliness offences in public places owing to their involvement in parallel trading activities (broken down by residents of Hong Kong and the Mainland); regarding these two categories of residents, of the respective numbers of (i) persons defaulting on payment of fines and their respective percentages, (ii) overdue FPNs and their respective percentages in the total numbers of FPNs issued, and (iii) cases with overdue fines at present and the respective total amounts of fines involved;

(4) how the authorities serve summonses to and collect default payments from those Mainland residents who have left Hong Kong with overdue fines, and whether they will be arrested or refused entry when they enter the territory again; of the respective numbers of cases in each of the past three years in which summonses could and could not be served;

(5) regarding shops with repeated offences in relation to parallel trading activities (e.g. having been issued a number of FPNs within a month), whether the authorities took law enforcement actions last year which had a greater deterrent effect (e.g. instituting prosecutions by way of summons); if so, of the details;

(6) given that three industrial building units, which had breached the permitted uses in land leases as a result of their being converted into retail shops, were re-entered and vested in the Government by the Lands Department (LandsD) in 2015 in accordance with law, but it is learnt that the former owners concerned have been granted relief by the Government to get back their units, of the Government’s justifications for granting the relief, and whether it has assessed if such practices will undermine the deterrent effect of such type of law enforcement actions against parallel trading activities;

(7) in respect of the industrial building units which breached the permitted uses in land leases as a result of their being used for activities related to parallel trading, whether LandsD has commenced, since January last year, the procedure for the units to be re-entered and vested in the Government, or issued warning letters to the owners concerned; if so, of the details (including the number of industrial building units involved and dates on which the law enforcement actions were taken);

(8) of the details (including the numbers of cases and total amounts of fines imposed on the relevant parties) of the cases in which fire escapes were found, in each of the past three years during inspections of industrial buildings conducted by Fire Services Department personnel, to have been blocked by parallel trading-related activities;

(9) whether the authorities received complaints in the past three years about units other than those of industrial buildings (including residential buildings) being used for parallel trading-related activities, and whether they conducted inspections targeting such activities in those buildings; if they conducted such inspections, of the outcome;

(10) of (i) the number of Mainland residents who were put on the watch list of suspected parallel traders by the Immigration Department (ImmD), and (ii) the number of persons on the watch list who were refused entry by ImmD, in each month in each of the past three years; since the implementation of the arrangements for one-trip per-week Individual Visit Endorsements (IVS) in April 2015, (i) of the annual average number of Hong Kong-bound trips made by Shenzhen permanent residents with such endorsements (broken down by fewer than 10 trips, 11-20 trips, 21-30 trips, 31-40 trips, 41-50 trips and 51-52 trips), (ii) whether ImmD has found cases in which Shenzhen permanent residents engaging in parallel trading activities switched to use other travel documents for gaining entry into the territory (if so, of the number), and (iii) whether ImmD or the relevant Mainland departments have put Hong Kong people on the watch list of suspected parallel traders; if so, of the number of Hong Kong people involved and the weekly average number of cross-boundary trips made by such persons; and

(11) whether the authorities have assessed the effectiveness of the arrangements for one-trip per-week IVS; if so, of the details; whether the Government and the relevant departments of the Mainland have separately or jointly adopted new measures to combat parallel trading activities in recent years?
 
Reply:

President,

     The Government of the Hong Kong Special Administrative Region (HKSAR Government) is very concerned about the nuisance of parallel trading activities caused to the daily lives of residents.  Since September 2012, the law enforcement agencies (LEAs) have implemented a series of measures to improve order at railway stations and boundary control points, so as to uphold the daily lives of our residents.  They also refine their enforcement strategies in response to the mode of operation of parallel traders.  Upon consultation with relevant policy bureaux and departments, the consolidated reply to the question is as follows:

(1) From 2014 to 2016, the Hong Kong Police Force (Police), the Customs and Excise Department (C&ED), the Immigration Department (ImmD), the Fire Services Department (FSD), the Food and Environmental Hygiene Department (FEHD) and the Lands Department (LandsD) deployed manpower from the existing establishment to join the operations against parallel trading activities on a need basis in the light of the actual circumstances.

     All along, FEHD is concerned about the environmental hygiene problems caused by parallel trading activities in the North District.  To further improve the environmental hygiene, FEHD has provided 16 additional contractual cleansing workmen during day and night shifts, re-deployed the existing manpower and adjusted the street sweeping frequency to enhance the street cleansing and waste removal services in parallel trading hotspots in the North District since October 2015.  FEHD officers have also stepped up inspections of these hotspots to monitor the performance of the street cleansing contractor for the upkeep of environmental hygiene.
     
(2) and (8) In 2016, parallel trading hotspots in the North District included Sheung Shui MTR Station, Shek Wu Hui, Sheung Shui industrial area, Lok Ma Chau Road and the Lok Ma Chau Spur Line Control Point.

     In 2016, the Police issued 282 summonses for obstruction caused by parallel traders placing goods in public places under the Summary Offences Ordinance, and 18 557 Fixed Penalty Notices (FPNs) for road obstruction caused by illegal parking and loading or unloading of goods under the Fixed Penalty (Traffic Contraventions) Ordinance and the Fixed Penalty (Criminal Proceedings) Ordinance.  The figures by month are set out at Annex 1.
     
     In order to maintain environmental hygiene and tidiness in the North District, FEHD has been stepping up street cleansing services and enforcement actions at parallel trading black spots in the district, including removing discarded items more frequently, and issuing FPNs to persons who have committed public cleanliness offences.  To combat obstruction problems caused by parallel trading activities, FEHD has also been taking part in inter-departmental enforcement actions against shops which violate the laws.  In 2016, FEHD conducted 252 raids targeting parallel trading hotspots in the district, and issued 4 049 summonses and FPNs to offenders.  The figures by month are set out at Annex 2.
     
     In 2016, ImmD and the Police conducted 123 joint operations against Mainland visitors contravening conditions of stay by being involved in parallel trading activities and their local employers; LandsD conducted 32 inspections, pinpointing units in target industrial buildings suspected of being involved in parallel trading activities in the three districts of Tuen Mun, Yuen Long and North District in the New Territories.  The numbers of operations by month is set out in Annex 3.

     From 2014 to 2016, FSD detected 184 cases of obstruction to means of escape caused by parallel trading activities in target buildings/sites suspected of being involved in parallel trading activities, and initiated 76 prosecutions.  It also issued 108 Fire Hazard Abatement Notices.  As at the end of December 2016, 31 of those prosecutions were successful, and the penalty totalled $205,500, while the prosecution proceedings concerning another 35 cases were still underway.

(3) and (4) Regarding summonses and FPNs issued to combat parallel trading activities, the Police and FEHD do not maintain statistical breakdown by residents of Hong Kong and the Mainland.  Nor do they keep such statistical breakdown on default payments of those FPNs.

     If an offender is a non-Hong Kong resident, the law enforcement officer will ask him to provide a valid travel document and his contact address when issuing a FPN.  If the offender leaves Hong Kong after receiving the FPN without paying the penalty, the LEA may contact him by the address he has provided to demand payment of the unpaid penalty in accordance with the established procedures.

(5) The Fixed Penalty (Public Cleanliness and Obstruction) Ordinance, effective since September 24, 2016, has introduced an additional law enforcement tool to deal with the problem of shop front extensions.  The Ordinance empowers law enforcement officers to issue FPNs for shop front extensions so that the problem can be tackled more efficiently and effectively.  To achieve greater deterrent effect, law enforcement officers will take appropriate actions against offenders depending on the actual circumstances when enforcing the law.  In the event of repeated offences, law enforcement officers may step up the issue of FNPs, seize articles in accordance with the law or initiate prosecutions with summonses for the court to impose penalties according to the severity of individual cases (including previous prosecution records).

(6) Under the Government Rights (Re-entry and Vesting Remedies) Ordinance, a former owner may, within six months after his property having been re-entered by or vested in the Government, petition to the Chief Executive (CE) to grant him relief or apply to the Court of First Instance for relief against re-entry or vesting of property.  By "grant of relief" under the Ordinance, it means that the former owner can recover his property.  According to the Ordinance, before considering cancellation of a memorial of re-entry or vesting notice, the CE or the Court of First Instance will require the former owner, in the first place, to rectify lease breaches and settle all the relevant costs, expenses and penalties and/or any other terms imposed otherwise.  In general, regardless of whether the decision is made by the executive authority or the court, costs and expenses include LandsD's administrative costs and fees payable to the Land Registry whereas penalties take into account waiver fees set at market rental for the period from identification to rectification of such breaches.  During that period, the former owner also has to bear consequences from the loss of estate or interest (such as being unable to obtain income by selling or renting) prior to approval for cancellation of re-entry or vesting.  Regarding the three cases in 2015 in which industrial building units were re-entered, the former owners concerned lodged applications according to the Ordinance and recovered their properties vested in the Government.

     Among lease enforcement actions taken by LandsD, re-entry or vesting of property in the Government is the most severe means which aims at urging owners to rectify breaches and making them take the responsibilities for breaching leases.  After all, it is merely a means.  The law still allows the opportunity for owners willing to make rectification to recover their property.  As regards whether such means is effective in urging rectification by owners, preliminary results of the recent risk-based enforcements actions taken by LandsD on industrial buildings indicate that the relevant measure is effective in curbing lease breaches that has to be dealt with stringently.

(7) From January 2016 to the end of January 2017, LandsD found no case with warning letter issued or procedures of vesting of the premises in the Government commenced due to parallel trading activities in breach of lease conditions in the industrial buildings in the major districts of parallel trading activities (including Tuen Mun, Yuen Long and North District). 

(9) Besides industrial buildings, LandsD, from 2014 to 2016, received three complaints concerning other units (residential units) being used for "parallel trading goods warehouse" in the major districts of parallel trading activities (including Tuen Mun, Yuen Long and North District) and conducted three inspections.  No parallel trading activities were found.

(10) ImmD has established a "watch list of suspected parallel traders" to examine suspected parallel traders.  If their purposes of visits to Hong Kong are in doubt, they will be refused to land and repatriated immediately.  As at the end of 2016, ImmD has put the information of over 22 990 persons who were suspected to be carrying out parallel trading activities on the watch list.  From 2014 to 2016, 50 590 entries were refused due to suspected involvement in parallel trading activities.  A breakdown by month is tabulated at Annex 4.

     ImmD does not maintain statistical breakdown on the yearly average visits made by Shenzhen permanent residents issued with "one trip per week" Individual Visit Endorsements and the Shenzhen permanent residents suspected of involvement in parallel trading activities.

     ImmD has not put the information of Hong Kong residents on the "watch list of suspected parallel traders".

(11) Since the implementation of the "one trip per week" measure with effect from April 2015, Mainland arrivals, in particular the number of same-day visitors, have shown a downward trend.  The HKSAR Government believes that the implementation of the "one trip per week" measure helps specifically combat the activities of professional parallel traders from the Mainland who come to Hong Kong multiple times within one week or even one day.

     The HKSAR Government has always maintained close contact with the Mainland authorities to join efforts to combat parallel trading activities.  In addition to conducting regular joint operations, the two sides also mount dedicated operations to combat parallel trading activities as needs arise, with a view to stepping up efforts in enforcement against parallel trading activities.  In 2016, the Shenzhen Customs, based on notifications from the Hong Kong, detected a total of 8 980 smuggling cases by parallel traders at the boundary control points, involving 8 981 outbound persons and goods with a total value of $73.31 million.  During the same period, C&ED detected a total of 3 908 cases of illegal export of powdered formula at boundary control points, involving the arrest of 3 912 persons and the seizure of around 31 000 kilograms of powdered formula.
     
     All relevant departments will continue to closely monitor the situation, carry on with various existing measures to combat parallel trading activities, as well as continue to join hands with the Mainland authorities to combat such activities.
 
Ends/Wednesday, March 1, 2017
Issued at HKT 19:05
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