Panel on Information Technology and Broadcasting (Minutes) 14 June 99

LC Paper No. CB(1)1952/98-99
(These minutes have been
seen by the Administration)

Ref : CB1/PL/ITB/1

Legislative Council
Panel on Information Technology and Broadcasting

Minutes of meeting
held on Monday, 14 June 1999, at 2:30 p.m.
in Conference Room A of the Legislative Council Building

Members present :

Hon SIN Chung-kai (Chairman)
Hon MA Fung-kwok (Deputy Chairman)
Hon Kenneth TING Woo-shou, JP
Hon David CHU Yu-lin
Ir Dr Hon Raymond HO Chung-tai, JP
Hon Eric LI Ka-cheung, JP
Hon James TO Kun-sun
Hon Howard YOUNG, JP
Hon YEUNG Yiu-chung
Hon Emily LAU Wai-hing, JP
Hon CHOY So-yuk
Hon Timothy FOK Tsun-ting, JP
Hon LAW Chi-kwong, JP

Members attending :

Hon Mrs Selina CHOW LIANG Shuk-yee, JP
Hon Christine LOH

Members absent :

Hon Fred LI Wah-ming
Prof Hon NG Ching-fai

Public officers attending :

For Items IV & V
Mrs Rita LAU: Secretary for Information Technology & Broadcasting (Acting)
For Item IV
Miss Joanna CHOI: Principal Assistant Secretary for Information Technology & Broadcasting (B)
Mr Eddy CHAN: Commissioner for Television and Entertainment Licensing
Mr Gary YEUNG: Assistant Commissioner for Television and Entertainment Licensing (Entertainment)
For Item V
Ms Eva CHENG: Deputy Secretary for Information Technology and Broadcasting (Special Duties)

Attendance by invitation :

For Item IV
Hong Kong Film Directors Guild
Mr CHEUNG Tung Joe: Executive Committee Member
Hong Kong, Kowloon & New Territories Motion Picture Industry Association Limited
Mr Albert LEE: Vice Chairman
Mr Peter LAM: Vice Chairman
Hong Kong Performing Artists Guild
Mr LUK Kim Ming: Committee Member
Mr WONG Hi Wan: Committee Member
Hong Kong Screen Writers' Guild
Mr CHEUNG Chi Shing: External Affairs Representative
Movie Producers and Distributors Association of Hong Kong Limited
Mr Joseph LAI: Vice Chairman
Mr Tony SHU: Committee/Executive Secretary
For Item V
Pacific Century Group
Mr Alex ARENA: Executive
Mr Joseph Spitzer: Executive

Clerk in attendance :

Miss Polly YEUNG: Chief Assistant Secretary (1)3

Staff in attendance :

Ms Sarah YUEN: Senior Assistant Secretary (1)4

I Confirmation of minutes of meeting and matters arising
(LC Paper Nos. CB(1)1394/98-99, 1426/98-99(01) and 1481/98-99(01))

The minutes of the Panel meeting held on 8 March 1999 were confirmed.

2. Members endorsed the draft report of the Panel to the Council. They also agreed to authorise the Panel Clerk, in consultation with the Chairman, to amend the report to incorporate, if necessary, further developments which took place after this meeting.

3. Members noted the list of follow-up actions arising from previous meetings.

II Information papers issued since last meeting
(LC Paper No. CB(1)1355/98-99)

4. Members noted the results of the opinion survey conducted by the Society for Truth and Lights on the "pollution index" of local Chinese newspapers circulated vide LC Paper No. CB(1)1355/98-99.

III Date and items for discussion for next meeting

5. Members agreed to discuss the following items at the next meeting to be held on Monday, 12 July 1999, at 2:30 p.m. -

Moratorium on the issue of further Fixed Telecommunications Network Services licences;
Use of unlicensed software in Government; and
Progress of the Cyberport project (to be examined under the agenda item on "confirmation of minutes and matters arising").

6. Members also agreed to examine the overall progress of the Year 2000 (Y2K) compliance exercise at the next meeting if the Administration was ready. Otherwise, a special meeting would be held in late July or early August 1999 instead. In addition, the Administration was required to provide some preliminary information on Y2K compliance after expiry of the deadline for rectification on 30 June 1999 to facilitate further monitoring by relevant Panels.

IV Measures to promote the development of the film industry and to enhance Hong Kong's position as a film production centre

Meeting with deputations

Hong Kong Film Directors Guild

7. While admitting there were problems in the local film industry which should be solved by the industry itself, Mr CHEUNG Tung Joe emphasised that some problems could not be solved without the assistance from the Government. He cited as an example the long-standing piracy problem which, if not properly tackled, would seriously threaten the survival of the industry. Referring to the anti-piracy initiatives proposed by the Trade and Industry Bureau in April 1999, he expressed dissatisfaction with the long time taken for legislating some of the initiatives and urged members to help expedite the legislative process. He also opined that the establishment of a Film Commission could help solve problems faced by the industry.

Hong Kong, Kowloon & New Territories Motion Picture Industry Association Limited

8. Mr Peter LAM made the following points -

All measures to facilitate the development of the local film industry would prove futile in the absence of effective anti-piracy legislation;
the Government should assist the industry to enter into the Mainland market by removing all existing obstacles;
the Government should liaise with the financial sector for creating an environment conducive to financing of film production; and
efforts should be made to promote Hong Kong as a film production centre to help bring economic benefits to Hong Kong.

Hong Kong Performing Artists Guild

9. Mr LUK Kim Ming stated that although performing artists essentially played a less active role in film production, they were willing to do their best to help boost the local film industry.

Hong Kong Screen Writers' Guild (HKSWG)

(Submission tabled at the meeting and circulated thereafter vide LC Paper No. CB(1)1514/98-99(01))

10. Mr CHEUNG Chi Shing briefed members on HKSWG's submission. According to HKSWG, the present plight of the local film industry had resulted from the want of creativity. Mr CHEUNG looked forward to the Film Development Fund playing an important role in encouraging creativity in the industry.

Movie Producers and Distributors Association of Hong Kong Limited (MPDA)
(LC Paper No. CB(1)1426/98-99(02))

11. Mr Joseph LAI highlighted the following two points of MPDA's submission -

The Government should help introduce to the local film industry a completion bond system so as to facilitate its fund raising capability; and
the Government should help the industry tap the Asian and international markets.

General discussion

12. On measures to help local films enter the Mainland market, Mr Peter LAM considered that the Government should help in clarifying the eligibility of Hong Kong films under the Mainland's quality film import system. In addition, he would also like to seek the Administration's assistance in protecting Hong Kong films' copyrights and hence marketability in the Mainland. Mr CHEUNG Tung Joe further proposed that the Hong Kong Government should negotiate with Mainland authorities for priority consideration of Hong Kong films under the above film import system. Mr Tony SHU of MPDA, on the other hand, opined that with Hong Kong becoming a part of the Mainland after 1997, Hong Kong films should not be categorised as foreign films to compete with other foreign films for limited slots in the import system. Mr Timothy FOK agreed with the industry on the importance of the Mainland market and concurred that efforts should be made to render assistance in this regard.

13. On whether the recently established Film Services Office (FSO) could perform the role of a Film Commission as envisaged by the industry, Mr CHEUNG Tung Joe opined that despite its various efforts, FSO could do little to promote the development of the local film industry because unlike a Film Commission, it did not possess the necessary powers to ensure co-operation from relevant Government departments. As to whether a more powerful Film Commission might threaten the freedom of expression, Mr CHEUNG confirmed that a Film Commission would not necessarily play the role of a censor but would mainly facilitate location shooting by securing support from all departments concerned. Mr Peter LAM supplemented that in many places, the Film Commission was under the Mayor's Office and would actively engage in promoting the place as a film production centre by lining up shooting locations and even production houses and actors. He further pointed out that apart from providing local location scouting service, Hong Kong might also seize the business opportunity of providing service in arranging for location shooting in the Mainland. Their views were shared by Mrs Selina CHOW.

14. Expressing dissatisfaction about current restrictions on location shooting in Hong Kong, Mr CHEUNG Tung Joe urged the Government to make available public premises such as the airport for location shooting purposes. He further opined that to address concerns about possible damages to these premises, strict laws could be enacted to impose the liability for compensation on users of the premises. Mrs Selina CHOW concurred and pointed out that as the use of Hong Kong as a location shooting site would help promote Hong Kong's tourism, the user-pays principle should be applied with flexibility to the lease of public premises for location shooting.

15. All the deputations called for deterrent actions against piracy. In reply to Miss Emily LAU, Mr Peter LAM stressed the urgent need for more effective anti-piracy legislation as the local film industry had dwindled to only 70 to 80 film productions each year as compared to more than 300 in the prime years. In his opinion, if no effective action against piracy was taken in the next six months, the industry would collapse. Mr Tony SHU explained that the decline of the industry was the result of people's reluctance to invest in films in the absence of proper protection for copyright. Mr CHEUNG Tung Joe echoed his point and, to further highlight the importance of copyright protection to the survival of the industry, elaborated on its window system. Members noted that according to this system, films were released sequentially in different formats to maximise their earning potentials. As such, if the release schedule was disrupted by piracy so that theatrical release, the first and most important step to recoup investment, was overtaken by home video release and the illegal reproduction of the film on VCDs or laser discs, the sales opportunities of the investor would be seriously undermined. He therefore called upon the Administration to gear up actions against piracy as soon as practicable. Noting the urgency of the matter, members also supported the industry's call.

16. Responding to Mrs Selina CHOW's comment that the lack of creativity in local films might be the result of mismatch between training and actual needs, Mr CHEUNG Chi Shing pointed out that the root of the problem was the market-oriented operation of the local film industry with its over-emphasis on casting at the expense of creativity in contents and approach. As a result, Hong Kong films tended to be stereotyped rather than varied as compared to Hollywood films. Where training was concerned, Mr CHEUNG said the gap between training and actual needs might be bridged by involving practitioners in the training programme. Members agreed that film production training in tertiary institutions should be looked into to encourage creativity so as to maintain the competitiveness of Hong Kong films.

17. In reply to Miss CHOY So-yuk about the proposed completion bond system, Mr Joseph LAI pointed out that it was a kind of insurance system well practised in the United States to ensure the completion of a film so as to provide a secure basis for financing. In his view, such a system would be useful to Hong Kong in attracting foreign investment in local film production. On whether the Film Development Fund could be put to such use, Mr CHEUNG Tung Joe confirmed that the film industry would hope so but there was a lack of support from the Administration.

Meeting with the Administration
(LC Paper No. CB(1)1481/98-99(02))

18. At the Chairman's invitation, the Secretary for Information Technology and Broadcasting (Acting) (S/ITB (Atg)) highlighted the following developments in response to the comments by the deputations -

Where the combat of piracy was concerned, the Trade and Industry Bureau had already worked out a comprehensive package of measures with the co-operation of the industry.
Regarding location shooting, as a result of FSO's efforts, the Transport Bureau and the Police had already agreed to implement occasional traffic control in non-major streets for the purpose of location shooting without causing inconvenience to the general public. The Airport Authority was also preparing a set of guidelines on leasing the airport premises for location shooting. The Administration would follow up with the Authority on the fee charging aspect. On lease of public premises, it would help if the film industry could self-regulate by adopting a code of practice thus giving reassurance to the management of public premises that the leased premises would be in good hands.
The Administration had had discussions with the film industry and the banking sector on issues relating to the financing of film production (including a completion bond system). Appropriate follow-up action was in hand.
As for opening up overseas markets, funding had recently been granted through the Film Development Fund to finance a forum on co-production. The annual Hong Kong Film Festival also played an increasingly important role in the promotion of Hong Kong films overseas.

19. In conclusion, S/ITB(Atg) assured members of the Administration's efforts to promote the local film industry and urged the industry to allow time for such efforts to bear fruit. She also emphasised that what the FSO had done thus far was comparable to what could have been achieved by a Film Commission. However with regard to the lease of premises for location shooting, the FSO had to respect the decision of the organisations concerned and could only persuade them to entertain such requests. She further advised that in consideration of the "one country, two systems" principle and the fact that Hong Kong was a separate contracting party in the World Trade Organisation, there was difficulty for the Hong Kong Special Administrative Region (HKSAR) Government to request the Mainland to accord priority treatment for entry of HKSAR films into the Mainland market.

20. In response to some members' query about the possible use of the Film Development Fund to help salvage the industry, S/ITB (Atg) reiterated the importance of adhering to the Fund's funding criteria to ensure the proper use of public money. She further reaffirmed the Administration's policy stance against the use of the Fund to finance individual film production. She however indicated that the Fund could finance projects which encouraged creativity.

21. Commenting on the industry's claim that the absence of timely action against piracy would soon lead to its demise, S/ITB(Atg) assured members of the Administration's determination to combat piracy and undertook to liaise closely with the Trade and Industry Bureau with a view to addressing members' and the industry's grave concern about the need for more stringent legislation to combat copyright piracy. She added that more should be done to educate the community on the importance of intellectual property protection.

22. In reply to Mrs Selina CHOW's concern about the failure of training programes of tertiary institutions to meet the operational needs of the film industry, S/ITB (Atg) undertook to relay members' concerns to the Education and Manpower Bureau for further consideration.

V The Cyberport project
(Information package tabled at the meeting on 29 April 1999 and circulated thereafter by general despatch, and power-point presentation material tabled at this meeting and circulated thereafter vide LC Paper No. CB(1)1514/98-99(02))

23. The Deputy Secretary for Information Technology and Broadcasting (DS/ITB) briefed members on the progress of the Cyberport project (the Project). Members noted that the major tasks ahead would be negotiation of the agreement with Pacific Century Group (PCG) and consultation with potential tenants on the design and specifications of the Cyberport.

24. Mr Alex ARENA of PCG then briefed members on the overall concept of the Project with the aid of power-point presentation.

Tenancy matters

25. In response to Miss Emily LAU on the progress made in securing the tenancy of large companies at the Cyberport, Mr ARENA reported that PCG had already exceeded its obligation by securing eight anchor tenants at the time when the Cyberport Letter of Intent was signed. Given PCG's connection with companies in the Silicon Valley and in the information technology (IT) industry, he was confident that upon launch of the formal marketing plan, PCG would be able to secure the correct mix of IT-related companies to the Cyberport. Moreover, should PCG fail to fulfil its tenancy undertaking, it would take up as committed up to 50% of the total office space of the Cyberport. However, he confirmed that there was no plan to attract tenants to set up their operation in Hong Kong before the commissioning of the Cyberport by way of subsidising their rental expenses so incurred. He nevertheless reported that a number of major IT companies had plans to set up their headquarters or offices in Hong Kong beforehand in recognition of Hong Kong's enhanced position on the global IT map.

26. DS/ITB supplemented that at present, ten leading IT companies had already signed letters of intent to be anchor tenants while 50 smaller companies had also indicated interest. Pending finalisation of the Project's design and specifications, more active tenancy negotiation and promotion effort would be undertaken, with the Cyberport Division also actively involved. On Miss Emily LAU's concern about periodic progress in tenancy agreements, DS/ITB undertook to include the relevant information in the context of the regular progress report to the Panel.

27. Addressing members' concern that the future tenants would genuinely bring to the Cyberport new and leading-edge IT applications instead of just relocating their offices to take advantage of the competitive rents offered, DS/ITB assured members that the admission criteria, which would be administered very strictly, would provide sufficient safeguard. Interested companies would need to demonstrate in their applications that they would comply with the admission criteria, in order to compete for space in the Cyberport. Consultation would also be conducted with all prospective tenants on the draft design and specifications to ensure that the Cyberport would cater for their needs. Prospective tenants, in return would have to submit details on their business activities to confirm compliance with the admission requirements.

Progress status of the Project

28. On the extent to which the Project agreement had been finalised, DS/ITB reported that the Administration had already signed the Letter of Intent with PCG and the parties were making good progress in the negotiation of the detailed agreement. The Administration expected to sign the Project agreement in the latter half of 1999.

29. As regards the value of the ancillary residential land which would form the basis of Government's capital contribution to the Project, DS/ITB advised that the land value would be fixed at the time of the grant of the development right to PCG, which was expected to be in the second quarter of 2000. Addressing Miss Christine LOH's concern about possible dispute over the land value, DS/ITB pointed out that in the event of a dispute, the matter would be referred to an independent surveyor mutually agreed upon for valuation.

30. Noting that the Project agreement had yet to be signed and that possible dispute over the land value might impede the Project, Miss Christine LOH questioned the appropriateness of marketing the Cyberport at this stage. In response, DS/ITB explained that in view of the scale and nature of the Project, it was necessary to proceed with certain major activities concurrently in order to meet the target of commissioning the Cyberport by the end of 2001.

Other concerns

31. Responding to Mr MA Fung-kwok's concern about the impact of the Cox Report on the Cyberport project, Mr ARENA said that he would not expect any adverse impact.

32. Regarding Mr YEUNG Yiu-chung's enquiry about the number of jobs created by the Project for local people, DS/ITB advised that about 4,000 jobs in the construction industry would be created during the construction stage. Upon completion of the Project, around 12 000 IT jobs would be created. She further pointed out that as these jobs would be in the field of multimedia content creation, in particular bilingual content, most of these jobs would likely be filled by local people who were conversant with both English and Chinese.

33. In reply to Miss Emily LAU's enquiry about the environmental impact of the Project, DS/ITB confirmed that pursuant to the Town Planning Ordinance, the deadline for lodging objections to the Cyberport development on planning and environmental grounds was the end of June 1999.

34. At the Chairman's request, S/ITB (Atg.) agreed to highlight milestones or key developments of the Project in the form of a chart or by means of other user-friendly presentation to facilitate easy reference and effective monitoring by the Panel. As agreed, the information would be made available for members' consideration at the next meeting on 12 July 1999.

35. The meeting ended at 4:45 p.m.

Legislative Council Secretariat
23 September 1999

Legislative Council Panel on Information Technology and Broadcasting

Minutes of meeting held on Monday, 14 June 1999, at 2:30 p.m. in Conference Room A of the Legislative Council Building

Legislative Council
Panel on Information Technology and Broadcasting

Minutes of meeting
held on Monday, 14 June 1999, at 2:30 p.m.
in Conference Room A of the Legislative Council Building