Following is a question by the Hon Yiu Si-wing and a reply by the Secretary for Innovation and Technology, Mr Nicholas W Yang, in the Legislative Council today (June 7):
      
Question:
      
     The concept of sharing economy is to create economic value by sharing or leasing idle resources owned by individuals. In recent years, sharing economy platforms have been in the ascendant around the world, and the resources shared include residential units or rooms, vehicles, parking spaces, etc. The leasing of such resources is generally subject to regulation of local legislation, including the requirement that the operators concerned must obtain relevant licences. For instance, a person who operates in Hong Kong premises for short-term leases to provide sleeping accommodation with a tenancy term of less than 28 days shall obtain a licence under the Hotel and Guesthouse Accommodation Ordinance, and such premises are also subject to strict regulation in the areas of fire safety installations, building structure, etc. Some members of the hotel industry have relayed that some people operate, through sharing economy platforms, unlicensed guesthouses which have posed unfair competition to them, and visitors staying in unlicensed guesthouses are not afforded protection. Regarding the regulation of sharing economy platforms involving illegal commercial activities, will the Government inform this Council:

(1) whether the authorities have a grasp of the sharing economy platforms involving illegal commercial activities that are currently in operation in Hong Kong; if so, of the commercial activities involved, and the law enforcement efforts made by the authorities against such illegal commercial activities; if not, the reasons for that;

(2) whether the authorities have studied the experience of overseas countries or regions in regulating sharing economy platforms, including the legislation enacted for this purpose; if so, of the details; if not, the reasons for that; and 

(3) whether the authorities will adopt measures to regulate sharing economy platforms involving illegal commercial activities so as to protect the rights and interests of lawful operators and the interests of consumers; if so, of the details; if not, the reasons for that?

Reply:
      
President,
      
     Sharing economy is an emerging economic activity which refers to different people sharing idle resources or services through the exchange of information. The operation mode of sharing economy is to build a trusted platform to effectively connect those who provide and demand for the resources or services, thereby lowering the cost of transaction. Some advocates consider that sharing economy facilitates sharing among people and can reduce waste of resources. As communication technology, the Internet and mobile devices become increasingly common, and social media, cloud computing, big data, network payment and rating system become more mature, the development of sharing economy has accelerated. Technological development also helps lower the threshold and provides more business opportunities and room for development for innovators and small and medium enterprises.
      
     On the other hand, sharing economy disrupts the traditional business model, in particular bringing the greatest impact to sectors such as intermediaries, agents and manufacturers. Sharing economy also challenges the regulatory framework and business model of certain industries. At present, certain businesses can only be operated by designated professionals, such as hire cars, guesthouses, banks, leasing, etc., which are governed by regulatory authorities and relevant legislation. Sharing economy can trigger various problems, including quality assurance, consumer protection, difficulties in regulation, etc., and the operation of certain businesses may even violate the existing regulations.
      
     The Government is committed to promoting innovation and technology (I&T) to drive the transformation and diversified development of the economy, as well as improve the people's quality of life. However, we must emphasise that the rule of law is the core value of Hong Kong. The development of any industry, including the I&T industry, must be done in a lawful manner. Anyone operating illegal businesses in the name of "sharing economy" is unacceptable. The laws of Hong Kong have been thoroughly studied and extensively discussed by the society, and are ultimately enacted by the Legislative Council. This is the due process that we respect and cherish. If the view of the majority is that certain legislation has become obsolete, this should be studied in detail by the relevant authorities, and openly discussed by the society to explore whether there is any ground and need to introduce legislative amendments. Any law-breaking behaviours affecting the safety and interests of the general public is irresponsible and cannot be tolerated. The relevant law enforcement agents will continue to take enforcement actions against any illegal commercial activities in accordance with the law.
      
     The question raised by the Member mentions different sharing economy activities, including policy areas such as guesthouses and transportation. Having consulted the relevant bureaux and departments, our reply is as follows:
      
     According to the information provided by the Home Affairs Department, operation of hotels and guesthouses in Hong Kong is regulated by the Hotel and Guesthouse Accommodation Ordinance. The Ordinance aims to ensure that premises intended to be used as hotels or guesthouses meet the building structure and fire safety standards to safeguard the lodgers and the public. According to the Ordinance, "hotel" and "guesthouse" mean any premises whose occupier, proprietor or tenant holds out that, to the extent of his available accommodation, he will provide sleeping accommodation at a fee for any person presenting himself at the premises. In Hong Kong, operators of hotels and guesthouses must obtain relevant licences.
      
     The Office of Licensing Authority (OLA) under the Home Affairs Department has all along been adopting a multi-pronged approach to combat and raid unlicensed hotels and guesthouses. From 2014 to 2016, the OLA instituted 454 prosecutions against suspected unlicensed guesthouse operation. As regards the situation of unlicensed guesthouses letting out sleeping accommodation through the Internet or mobile applications, the OLA has strengthened its intelligence collection by forming a dedicated team to browse online or mobile platforms providing information on premises for lease, in a bid to search information on suspected unlicensed guesthouses and take necessary enforcement actions. The OLA has also stepped up publicity, including posting messages on the Internet, to appeal to tourists to patronise licensed guesthouses for safety.
      
     In addition, regarding shared hire car or online hailing services, the Transport and Housing Bureau indicates that the Government is open-minded in respect of the application of different types of technologies, including the use of Internet or mobile applications for calling hire cars. However, the hire car services adopting new technologies or platforms must be in compliance with the relevant law and regulations to protect the interest and safety of passengers. If passenger services are not regulated, they can be freely expanded. This may in effect encourage illegal passenger services. As a result, the planning of public transport system would be disrupted, thereby affecting the foundation of the public transport services used by over 90 per cent of the commuters as well as their efficient, reliable and long-term healthy development.
      
     Under section 52(3) of the Road Traffic Ordinance, no person shall drive or use a private car; or suffer or permit a private car to be driven or used, for the carriage of passengers for hire or reward unless a hire car permit is in force in respect of the vehicle. Otherwise, it is an offence. In addition, section 52(5) of the said Ordinance stipulates that no person shall solicit or attempt to solicit any person for hire or reward to travel in a private car. The Government has been keeping in view the use of private cars for illegal carriage of passengers for reward. The Police have been taking stern enforcement action against such offences. Between 2014 and 2016, the Police took enforcement action against 38 cases of use of private cars for illegal carriage of passengers for reward.
      
     President, I wish to stress that there are many successful I&T projects and industries in Hong Kong that are happening and operating in a lawful manner. We beg to differ with the advocate that “innovation can be law-breaking”. The operation of illegal guesthouses and passenger services in the name of sharing economy that I mentioned just now have sparked controversies worldwide, and regulatory authorities have yet to come up with a unified solution. The relevant policy bureaux will closely monitor the development worldwide for reference.
      
     Thank you, President.

Ends/Wednesday, June 7, 2017
Issued at HKT 12:40

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