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Privatisation

30 November 1998

The Honourable Ms Denise Yue
Secretary for the Treasury
Finance Bureau
Government Secretariat
4^th Floor, Main and East Wings
5^th Floor, East Wing
Central Government Offices
Lower Albert Road
Central, Hong Kong

Dear Ms Yue,

We note that in response to a question by the Honourable Mr David Li you expressed the Government’s intention to consider the privatisation and sale or listing on the Stock Exchange of various Government enterprises. We write to express our strong support for this initiative.

The Foundation has long advocated that the enterprises and operations currently owned by the Hong Kong Government should pass into the private sector. Privatisation has been a worldwide trend for many years. Although comparatively some overseas governments have more to privatise than Hong Kong, the territory’s state-owned sector is still quite large, and in fact inconsistent with Hong Kong’s free market ethos. Based on overseas experience, transfer of these entities into the private sector will boost Hong Kong’s overall economic efficiency and hence its competitiveness. We are especially pleased at your announcement of this initiative at this time, as it gives a clear signal of commitment to free markets at a time when there has been ambiguity in the Government’s stance. Privatisation of state owned enterprises and operations is an essential step to prepare the Hong Kong economy for the 21st century.

We are aware that several of the political parties have expressed opposition to this initiative. We understand that concerns could arise where, for example, state-owned monopolies are privatised with their monopoly intact and without any commensurate check and balance. However, we believe that careful handling of the manner of privatisation, e.g. through break up of dominant enterprises and the introduction of competition, can address these concerns and enable the very substantial benefits of privatisation to be realised. There is ample overseas experience to refer to on these points, as I am sure you are aware.

We have developed a tentative list of entities, both enterprises and other Government-owned operations, that may possibly be considered suitable for privatisation. I attach this list for your immediate reference.

If we can be of further assistance on this matter, please do not hesitate to contact us. In the meantime we look forward to further details of your intentions.

Thank you for your attention.

Yours sincerely,

Alan LUNG Ka-lun
Chairman

Enclosure:

ENTITIES TO BE CONSIDERED FOR PRIVATISATION

1. Government-owned enterprises (equity investments)

Kowloon-Canton Railway Corporation
Mass Transit Railway Corporation
New Hong Kong Tunnel Company
Airport Authority
Hong Kong Industrial Technology Centre Corporation
Tradelink Electronic Commerce
Hong Kong Housing Authority

 

2. Other Government-controlled enterprises

Hospital Authority
Port Authority
Post Office
Trade Development Council

 

3. Other entities and operations

Auxiliary Medical Services
Government Land Transport Agency
Government Flying Service
Architectural Services Department
Electrical and Mechanical Services Department
Government Property Agency
Printing Department
Radio Television Hong Kong
Water Supplies Department
Information Technology Services Department