Following is a question by the Hon Jimmy Ng and a written reply by the Secretary for Development, Mr Michael Wong, in the Legislative Council today (May 4):
 
Question:
 
     In March last year, the Development Bureau launched a pilot scheme for charging land premiums at standard rates for redevelopment of industrial buildings (IBs) (the pilot scheme) under which standard rates are set for the uses involved in lease modifications for IBs, and owners of IBs may compute the land premiums payable at the promulgated standard rates based on the uses and gross floor areas of their IBs before and after lease modifications. The pilot scheme runs for two years and is applicable to IBs constructed before 1987. In this connection, will the Government inform this Council:
 
(1) of the respective numbers of applications made under the pilot scheme which have been received, approved and rejected by the Government so far, and the number of applications under vetting; the average time taken for vetting and approving each application;
 
(2) among the approved applications mentioned in (1), of the respective numbers of those involving commercial/modern industrial use and residential use after lease modifications, as well as the following information of each application: (i) the district involved, (ii) whether there is an increase in the gross floor area after the lease modification (if so, of the details), and (iii) the amount of land premium involved; and
 
(3) whether it will consider extending the application deadline of the pilot scheme or regularising it, and at the same time expanding the scope of the pilot scheme to cover IBs constructed in or after 1987; if so, of the details; if not, the reasons for that?
 
Reply:
 
President,
 
     The Development Bureau and the Lands Department (LandsD) launched in mid-March 2021 the pilot scheme for charging land premiums at standard rates for redevelopment of industrial buildings (IBs) (the pilot scheme), for lease modifications involving the redevelopment of IBs constructed before 1987. The pilot scheme provides an option for charging land premiums at standard rates on these lease modifications, as an alternative to the conventional mechanism for premium assessment (i.e. individual premium assessment based on the circumstances of each case). Through promulgating in advance a set of standard rates on land premium, the pilot scheme aims to provide certainty on land premiums and expedite the completion of lease modification procedures involved in the redevelopment of aged IBs to facilitate the early transformation of the land into uses more compatible with the needs of society, and thus optimise the use of land.
 
     My reply to each part of the Hon Ng's question is as follows:
 
(1) As at mid-April 2022 (over the past one year and so), applicants of nine eligible lease modifications opted for standard rates under the pilot scheme. Out of them, seven cases have had land premium agreed with the LandsD (five of which have been executed and two are expected to be executed in three months), and the remaining two cases are under processing. For reference, in the three years prior to the launch of the pilot scheme, on average only about three to four lease modification cases of IB redevelopment had premium agreed per year.
 
     Under the pilot scheme, eligible applicants should exercise their option on whether to have land premium calculated at standard rates upon acceptance of provisional basic term offer (PBTO) of the lease modification (which is the last step before commencement of the premium assessment process). Generally speaking, after the eligible applicant has opted and accepted the PBTO, the LandsD will complete the ensuing processes, including premium calculation and title checking etc., and issue the binding basic term offer with premium offer within about five weeks from the acceptance of the PBTO.
 
     Thereafter, the applicant should accept the premium offer within one month.  Upon the applicant's acceptance (i.e. the two parties have agreed on the land premium amount), the lease modification document will be executed within three months. Under standard rates, as the applicant has made the option knowing the land premium amount in advance, there is no need for both parties to negotiate on the premium. Therefore, the time required from issuing the premium offer to reaching an agreement on the land premium (one month in general, as mentioned above) is much shortened from that required under conventional premium negotiation (around seven months on average in recent years).
 
(2) Under the pilot scheme, standard rates are set for the use before lease modification of IBs (i.e. "industrial/godown" use before redevelopment) and two common uses after lease modification (i.e. "commercial/modern industrial" and "residential" uses after redevelopment). The five executed lease modification cases above are all for commercial/modern industrial use after modification, with details at the Annex. The information of other cases can be searched at the Land Registry after the relevant lease modification documents are executed and the relevant documents are registered at the Land Registry. Key information will also be available on the LandsD's website.
 
(3) The pilot scheme targets pre-1987 IBs for revitalisation, because they were constructed before the Fire Services Department enhanced the fire safety requirements in 1987. These buildings have relatively less adequate fire service installations and could pose safety risks to IB users and the society. Therefore, the Government focused on promoting the redevelopment of these IBs in order to address the safety problems in a more fundamental manner. Given this particular policy objective, the Government will continue to focus on IBs constructed before 1987 for the time being.
 
     In order to give owners a push factor in taking forward redevelopment expeditiously, the pilot scheme is time-limited and set to run for two years originally. The Government announced in end-March this year to extend the Pilot Scheme for one year until March 31, 2024, during which the previously announced standard rates will remain unchanged, to allow more time for IB owners to plan for redevelopment and for the Government to gather more experience for a review to consider the way forward.
 
     In fact, in view of the positive response from the industry towards the pilot scheme, the Chief Executive's 2021 Policy Address announced the extension of the standard rates approach for premium assessment to lease modifications in the new development areas, with details announced in end-March this year. The Government will continue to keep in view the implementation of standard rates, so as to consider the feasibility of extending the scope of applying standard rates.

     In the light of the gradual relaxation of social distancing measures and the increase in social activities, the Government today (May 4) appealed to elderly persons again to undergo frequent COVID-19 testing and to keep a close watch on their own health condition. Apart from undergoing free testing at community testing centres (CTCs) and mobile specimen collection stations, elderly persons can also collect COVID-19 rapid antigen test (RAT) kits at elderly service units.
 
     The Government started distributing free RAT kits to elderly persons aged 60 or above through various elderly service units since April 19 so as to encourage them to undergo voluntary RAT testing from time to time. As at May 2, a total of close to 2 million RAT kits were distributed by the Government through relevant channels.
 
     A spokesman for the Food and Health Bureau (FHB) said that elderly persons have higher COVID-19 infection risks. Making good use of RAT kits to conduct regular testing allows early identification of infection, so that appropriate treatment can be provided in a timely manner, thereby preventing development of serious illness or even death. The FHB suggested that elderly persons who have received at least two doses of COVID-19 vaccine to undergo an RAT at least once per week, and those who are not fully vaccinated should conduct an RAT at least three times per week. The Government will continue to distribute RAT kits through various elderly service units until the end of May.
 
     "The supply of RAT kits is sufficient. There is no need for elderly persons to stockpile RAT kits. To allow more elderly persons to benefit from the distribution, a total of five sets of RAT kits will be provided each time. Recipients should not collect them on behalf of other persons, nor collect the RAT kits repeatedly on the same day," the spokesman added.
 
     The following service units will continue to provide free RAT kits to all elderly persons aged 60 or above (including members and non-members). Elderly persons should collect the RAT kits in person and bring along any documents for proof of age, such as identification documents, Senior Citizen Card or JoyYou Card for verification purposes. The units are:
 

• Two District Health Centres (DHC) and 11 DHC Expresses under the Primary Healthcare Office of the FHB;
• 213 District Elderly Community Centres/Neighbourhood Elderly Centres/Social Centres for the Elderly subsidised by the Social Welfare Department (SWD);
• 14 Elderly Health Centres under the Department of Health; and
• 18 district-based Chinese Medicine Clinics cum Training and Research Centres (visiting patients as primary target recipients) operating on a tripartite collaboration model involving the Hospital Authority, non-government organisations and a local university.

     The above service units still have their regular services to offer to members of the public other than distributing RAT kits. To reduce the risk of infection, the spokesman reminded that elderly persons should avoid collecting RAT kits from service units during peak hours if not attending a medical consultation.

     The Day Care Centres/Units for the Elderly, Integrated Home Care Services Teams, Enhanced Home and Community Care Services Teams and Recognised Service Providers of the Pilot Scheme on Community Care Service Voucher for the Elderly subsidised by the SWD will continue to provide free RAT kits to their members and service users aged 60 or above.
 
     The Government is also providing free COVID-19 nucleic acid testing services to all elderly people aged 60 or above at CTCs and mobile specimen collection stations. No advance booking is needed for the elderly. For locations of the CTCs and mobile specimen collection stations, please browse www.communitytest.gov.hk.

     Hong Kong Customs seized about 10 kilograms of suspected ketamine with an estimated market value of about $4.3 million at Hong Kong International Airport on May 2.

     Customs officers on that day inspected an express air consignment, declared to be carrying digital watches, arriving in Hong Kong from Spain. The batch of suspected ketamine was found concealed inside six bags of dog food packed in two boxes of goods. 

     Upon follow-up investigation, Customs officers yesterday (May 3) arrested a 17-year-old man suspected to be connected with the case in Lai Chi Kok. 

     An investigation is ongoing.

     Customs reminds members of the public to stay alert and not to participate in drug trafficking activities for monetary return. They must not accept hiring or delegation from another party to carry controlled items into and out of Hong Kong. They are also reminded not to carry unknown items for other people, nor to release their personal data or home address to others for receiving parcels or goods.

     Under the Dangerous Drugs Ordinance, trafficking in a dangerous drug is a serious offence. The maximum penalty upon conviction is a fine of $5 million and life imprisonment.

     Young people should especially pay attention to the fact that drug trafficking is a serious criminal offence. Criminal conviction will result in grave repercussions for their future and they should not take risks in the hope that they may not be caught.

     Members of the public may report any suspected drug trafficking activities to Customs' 24-hour hotline 2545 6182 or its dedicated crime-reporting email account (crimereport@customs.gov.hk).

  

     The Government yesterday (May 3) exercised the power under the Prevention and Control of Disease (Compulsory Testing for Certain Persons) Regulation (Cap. 599J) to make a "restriction-testing declaration" effective from 4pm yesterday, under which people (hereafter referred to as "persons subject to compulsory testing") within the specified "restricted area" in Tseung Kwan O (i.e. Ming Toa House, Ming Tak Estate, Tseung Kwan O, excluding Ming Tak Estate Property Service Management Office and social service unit thereat) were required to stay in their premises and undergo compulsory testing. Persons subject to compulsory testing were required to stay in their premises until all such persons identified in the "restricted area" had undergone testing and the test results were mostly ascertained.
 
     In addition, the Government issued a compulsory testing notice yesterday, requiring persons who had been present at the above building for more than two hours from April 27 to May 3, 2022, even if they were not present in the "restricted area" at the time when the declaration took effect, to undergo compulsory testing on or before May 5, 2022.
 
     The Government finished the compulsory testing exercise at around 9am today (May 4) and carried out enforcement action in the "restricted area" afterwards to verify that all people in the "restricted area" had undergone compulsory testing in accordance with the requirements of the relevant declaration and compulsory testing notice. The Government announced that the enforcement operation ended at around 12noon today.
 
     The Government delivered food pack to persons subject to compulsory testing to facilitate their meal arrangements. Anti-epidemic proprietary Chinese medicines supplied by the Central Government and rapid test kits were also provided to persons subject to compulsory testing to help them fight against the virus. The Electrical and Mechanical Services Department set up a hotline for people restricted by the declaration to make enquiries and seek assistance.
 
     The Government thanks persons subject to compulsory testing for their support and understanding. With everyone's co-operation and efforts, coupled with the tireless efforts of the testing contractors, residents have been informed about their testing results by SMS notification. After finishing the compulsory testing exercise at around 9am today, the Government took enforcement action in the "restricted area" immediately to verify that all people in the "restricted area" had undergone testing according to the requirements of the declaration and the compulsory testing notice. Persons who could present an SMS notification containing a negative testing result or wore a wristband as proof of having undergone the compulsory testing could leave the "restricted area" through the designated exit after providing personal information to a prescribed officer. The enforcement operation was completed at around 12noon. Test records of 617 persons subject to compulsory testing were checked. Two persons were found not having undergone compulsory testing and compulsory testing orders were issued to them. Taking into account the above situation, the Secretary for Food and Health revoked the "restriction-testing declaration" in accordance with Cap. 599J (see attachment).
 
     The Government reminds the 118 households who have not answered the door to contact the Government for arrangement of testing as soon as possible after reading the notices put up by the Government, in the hope of eliminating the possible risk of further spread of the virus in the community.

　　The Government thanks all participating government staff and the testing agencies for their hard work. The Government is also grateful to those subject to compulsory testing for their support and understanding, and their full co-operation during this period in undergoing testing and waiting for the results at home.

　　The Government will seriously follow up on the compliance situation of the compulsory testing notices and the "restriction-testing declaration" by persons subject to compulsory testing. Any person who fails to comply with the compulsory testing notices commits an offence and may be liable to a fixed penalty of $10,000. The person will also be issued with a compulsory testing order, requiring him or her to undergo testing within a specified time frame. Failure to comply with the order or the "restriction-testing declaration" is an offence and the offender may be liable to a fine of level 5 ($50,000) and imprisonment for six months. 

     Following is a question by the Hon Nelson Lam and a written reply by the Secretary for Financial Services and the Treasury, Mr Christopher Hui, in the Legislative Council today (May 4):
 
Question:
 
     It is learnt that as the Growth Enterprise Market Listing Rules, upon amendment by the Hong Kong Exchanges and Clearing Limited (HKEX) in 2018, have significantly raised the admission thresholds of the Growth Enterprise Market (GEM) and decreased the attractiveness of GEM, the number of new listings plummeted from 75 in 2018 to one in 2021, whilst the ranking of the funds raised through initial public offerings in Hong Kong fell out of the world's top three in 2021. On the other hand, the Financial Stability and Development Committee under the State Council pointed out at a thematic meeting in March this year that, the regulators on the Mainland and in Hong Kong should enhance communication and collaboration with regard to the stability of the financial market in Hong Kong, and stressed that the relevant authorities should earnestly shoulder their responsibilities by proactively introducing market-friendly policies as well as prudently rolling out policies with contractionary effects. In this connection, will the Government inform this Council:
 
(1) as the HKEX has indicated earlier on that it will conduct a review and consult the market on the positioning and functions of GEM, whether the Government knows the progress and timetable of such work;
 
(2) whether it knows if the HKEX has plans to merge the Main Board with GEM; if the HKEX does, of the details and timetable; if the HKEX does not, the reasons for that;
 
(3) whether it has studied the possibility of the HKEX forming an alliance with the Shenzhen Stock Exchange (SZSE) or the Beijing Stock Exchange (BSE) by, for example, introducing into the HKEX's GEM for secondary listing (i) those enterprises listed on SZSE upon the merger of SZSE's Main Board and Small and Medium Enterprise (SME) Board, or (ii) the innovative SMEs listed on BSE; if so, of the details; if not, the reasons for that; and
 
(4) whether it has plans to expand the daily quotas under the Shanghai-Hong Kong Stock Connect and the Shenzhen-Hong Kong Stock Connect; if so, of the details and timetable; if not, the reasons for that?

Reply:
 
President,
 
     Hong Kong is a major global listing platform for companies from different jurisdictions. In 2021, Hong Kong raised over $300 billion for almost 100 enterprises through initial public offerings. The Government, the Hong Kong Exchanges and Clearing Limited (HKEX) and the Securities and Futures Commission (SFC) will continue to strengthen the breadth and depth of the Hong Kong fundraising platform and safeguard investors' interests.
 
     In consultation with the HKEX and the SFC, my reply to the four parts of the question is as follows:
 
(1) to (3) As far as the Growth Enterprise Market (which is called GEM at present) is concerned, previously there were market views that the requirements of GEM back then were abused by market participants, causing possible disruption to the market order of some securities and thereby affecting the overall market quality. In response, after consulting the market in 2017, the HKEX repositioned GEM in 2018 as a stand-alone board; cancelled the streamlined process for transfer to the Main Board; raised the minimum market capitalisation requirement at the time of listing of GEM applicants, while at the same time correspondingly raised the minimum market capitalisation at the time of listing of Main Board applicants. The measures aimed to allow applicants who intend to list in Hong Kong but could not meet the Main Board listing requirements, including small and medium-sized enterprises (SMEs) with relatively low market capitalisation and profit, to choose GEM as a more targeted fundraising platform and improve the overall standard and quality of companies listed on GEM.
 
     The HKEX is cognizant of the recent market conditions, including new listings and progress of listing applications. The HKEX is also aware that some market participants consider that further study should be conducted on enhancing the positioning and functions of GEM as a specific board for listing of SMEs and innovative companies. To this end, the HKEX commenced a review on the functions and positioning of GEM last year, and established a dedicated panel under the Listing Committee to handle the work concerned. The review will be conducted with a view to further strengthening the competitiveness of Hong Kong as a global premier listing hub and enhancing the overall quality of the Hong Kong capital market. Alongside facilitating different types of enterprises to list in Hong Kong, the HKEX will take into consideration market attractiveness and liquidity, and safeguard the interests of the investing public.
 
     The HKEX is approaching different parties and will make reference to the experiences of similar markets in other places, including the development of SME fundraising platforms in the Mainland in recent years. Relevant views such as integration with the Main Board, re-introduction of streamlined transfer mechanism, mutual access with relevant Mainland markets, allowing enterprises from other places for secondary listing, etc, will be carefully considered as a whole. Upon adequately understanding market demand and considering relevant risks, the HKEX will propose concrete measures and further consult the market publicly.
 
(4) The Government has all along strived to leverage on the unique advantages of the financial system in Hong Kong under the "one country, two systems" principle, deepen mutual access between the capital markets of Hong Kong and the Mainland, and reinforce Hong Kong's position in connecting the financial markets in the Mainland and the rest of the world, while contributing to the high quality opening-up of the capital market of our country.
 
     Shanghai-Hong Kong Stock Connect and Shenzhen-Hong Kong Stock Connect were launched in 2014 and 2016 respectively. The concerned quota is designed to monitor cross-boundary fund flows with a view to maintaining an orderly and controllable market, and is calculated on a net buy basis. It ensures effective and smooth cross-boundary fund flow, exchange and clearing activities under the mutual market access mechanism. The quota itself is not an indicator for assessing the overall market condition of Stock Connect. To address the market demand for fund flows, the regulatory authorities of the Mainland and Hong Kong expanded the daily quota under the schemes with effect from May 1, 2018, under which the Northbound daily quota for each of the Shanghai-Hong Kong Stock Connect and Shenzhen-Hong Kong Stock Connect was increased from Renminbi (RMB) 13 billion to RMB 52 billion respectively, while the Southbound daily quota for each of them was increased from RMB 10.5 billion to RMB 42 billion respectively. According to the data over the past six months (i.e. from October 2021 to March 2022), the average daily trading volume has not reached the limit, indicating that the existing quota is able to satisfy market demand.
 
     The Government and the regulators will continue to monitor market development and maintain close communication with the Mainland authorities. If demand arises, the Government will explore measures with the Mainland authorities and introduce suitable enhancements, while ensuring orderly and smooth operation of the capital markets in the two places.