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1. Wheelock chief backs bridge

2. No quick fix for property prices

3. Middle earners squeezed out

4. Architect proposes new housing approach

5. Survey shows SAR public confidence has reached an all-time low

6. Flexible' housing policy plan

7. Piling scam pair given 12 years

8. Plan for 4.8pc spending cut over 4 years

9. More groups back Zhuhai bridge plan

10. Wheelock supports bridge without state help

11. Cultural custodian considers cheaper Linux

1. Wheelock chief backs bridge
by Jonathan Tam, The Standard Sept 5, 2002

Wheelock, which owns Modern Terminals Limited (MTL) through subsidiary Wharf Holdings, voiced its support for the proposed Zhuhai-Hong Kong-Macau bridge, dismissing concerns that the local port business would be negatively affected.

Chairman Peter Woo said export growth in China would support Hong Kong's container business even with the bridge.

``I am very positive about the outlook. Mainland exports will increase, so Hong Kong and the Pearl River Delta will surely get a market share,'' Woo said after Wheelock's annual general meeting yesterday.

It was believed that container terminals would be built alongside the bridge, which would be located near the airport on Lantau Island, and therefore may hurt existing port operators in Kwai Chung and Tsing Yi.

But Woo, also chairman of Wharf, dismissed the concerns.

Wharf holds 55.3 per cent in MTL, a major operator in Kwai Chung Terminals with about one-third of market share. MTL accounts for about 30 per cent of Wharf's income.

``From the macro perspective, it is beneficial for Hong Kong in the long run,'' he said.
Woo's support is counter to the views of the Hong Kong Container Terminal Operators Association, of which MTL is a member.

The association published a full-page advertisement in newspapers last month, saying it opposed the bridge if it required government subsidies or led to new terminals.

Hutchison Port Holdings managing director John Meredith weighed into the argument yesterday by telling a radio programme: ``Any other container facilities ... is really a no-no, it's like maintaining the Kai Tak Airport when you open up Chek Lap Kok [airport].''

Meredith said a consultancy study by the Hong Kong Port and Maritime Board suggested Lantau was the least favourable location to build container terminals.

The cross-border bridge was proposed by Hopewell Holdings' chairman Gordon Wu, who is also the Hong Kong Port & Maritime Board chairman. He estimated the cost at HK$15 billion.

Wu said again yesterday he never thought the government should subsidise the cost in any form and the project wasn't related to port business.

``I was proposing that a new terminal be put on Lantau Island in my capacity as a chairman of the Port and Maritime Board,'' Wu said. ``Hopewell will not go into the container business.''

Wheelock's Woo also said the bridge shouldn't be subsidised by the government, and it was too early to say whether Wheelock or Wharf planned to be one of the bridge builders. On the property market, Woo said the government's recent property market policies were positive and he supported them.

``Over the past few months, sales at some property projects were very successful, so I think the trend is good,'' Woo said.

Wheelock set aside HK$1.25 billion for the year ended March as provisions for its properties.

Shares of Wheelock were unchanged at HK$5.35 yesterday while Wharf's shares gained 0.64 per cent to close at HK$15.75.

2. No quick fix for property prices
by Karen Chan, The Standard Sept 4, 2002

Market analysts believe there is no quick fix for property prices after the government spent five years pursuing a socialist housing policy.

With focus on suppressing prices and boosting home ownership, the government has substantially changed its vision of what is desirable for the housing market.

HSBC Securities analyst Derek Cheung stands by his forecast that effective residential prices will fall 5 to 10 per cent this year and remain flat to a 5 per cent drop in 2003. He noted that developers have become more willing to clear their housing stocks, which is a prerequisite for a cyclical recovery.

``A risk may be that the de-stocking rate is lower than our forecast.''

New housing completions are likely to be down by 2004. As developers continue to de-stock, equilibrium should be reached by the end of next year or early 2004, with a possible cyclical recovery thereafter.

To achieve this, Cheung said the average monthly take-up rate in the primary market will probably need to reach at least 2,500 units by the end of next year.

In the long run a structural recovery in the housing market would require an economic reinvention that resulted in international money being attracted to Hong Kong to engage in business or investment.

Cheung believes that the government will continue to reduce its direct negative intervention in the market.

``We believe the government needs to take concrete steps to stimulate the housing market, which would buy time for economic reinvention before social stability, the currency peg, the budget deficit and the patience of China's central government become real issues.

``A prosperous housing market can enable the government to subsidise the development of new economic drivers,'' he said. Secretary for Housing, Planning and Lands Michael Suen, said earlier that the government would undertake a review of the housing market before the end of the year.

This would include deciding whether the HOS will be abolished and, more importantly, how to deal with the 23,000 vacant units, if it is discontinued. Analysts say it looks highly likely that Chief Executive Tung Chee-hwa will scrap the scheme or substantially revise its terms, such as the qualifying income threshold, in his policy speech in January.

As it is a major policy objective to stabilise residential prices, DBS Vickers Securities analyst Sylvia Wong said the government was eager to find different means to support the frail residential market.

She said the poor response to the latest batch of HOS sales showed there was still an overlap between the private and public sectors and this called for a re-evaluation of the system. The developers have recently also been putting pressure on the government to introduce new measures to support the market.

Cheung said Tung was under severe pressure to revive the economy within his second five-year term as the chief.

He said buying a flat was an important financial decision. No matter how difficult their existing living conditions were, many people would be reluctant to buy homes if they remained concerned about the long-term economic outlook, their jobs and further declines in property values, according to Cheung.

3. Middle earners squeezed out
by Matthew Lee and Eli Lau, The Standard Sept 4, 2002

Middle-income home buyers will be forced to look for mortgages and flats in the private sector as the Housing Authority is to scrap its two subsidy schemes.

The authority is expected to propose a new housing loan scheme this week to replace the Home Starter Loan Scheme and Home Purchase Loan Scheme, a source close to the Housing Authority said yesterday.

Under the proposed new Home Assistance Loan Scheme, applicants' maximum monthly income and asset value are lowered to HK$23,000 and HK$480,000 respectively for families, and HK$11,500 and HK$240,000 for individuals.

Housing Authority member Wong Kwun said the authority was apparently trying to boost private property with the new scheme.

Moreover, he said: ``If the HK$1.6 billion [spent on interest for the new scheme] could be used to build more public housing, the waiting list would be shortened.''

An authority source admitted that the new scheme would make some middle-income earners ineligible for loans. ``But it will be more cost-efficient, as demand for HOS flats is half of that for loans,'' the source said.

The source said the authority believed families earning more than HK$23,000 a month should be able to buy a house on their own.

``The proposed salary cap was based on the income requirement of the Home Ownership Scheme, which was around HK$20,000,'' he said.

The new scheme would cost HK$6.66 billion - HK$5.03 billion for interest-free loans and HK$1.63 billion for loss in interest income.

``The new scheme will reduce confusion and overlapping caused by the co-existence of the two schemes,'' the source said. ``Housing resources will be better used and the scheme will be fairer to all.''

Under the Home Purchase Loan Scheme, the maximum loan a green form applicant could borrow was HK$660,000, while a white form applicant could borrow HK$410,000.

Under the Home Starter Loan Scheme, the maximum loan amount was HK$600,000.
But under the new scheme, both green and white form applicants will get at most HK$530,000 for a 13-year loan.

And the quota for the scheme would be set at 10,000, pending half-year reviews in March and September 2003 which could increase the quota to more than 15,000, the source said.

``An estimated 80,200 families would be eligible to apply for the new loan but we don't know how many families would be made ineligible for the new loan,'' the source said.

``The government can only spend limited resources on the most needy. People with a HK$50,000 monthly income and HK$1 million asset do not need government help to buy a flat.''

He said the Home Starter Loan Scheme was developed in 1998 to help homebuyers when property prices were sky-high.

Authority member Michael Choi believed the lowered salary cap under the new scheme was reasonable.

``Homebuyers earning HK$25,000 to HK$50,000 a month can borrow from the banks around 2.6 per cent. It's better than borrowing from the government,'' Choi said.

Given legislative requirements, the new scheme, if approved, will not be implemented till November at the earliest.

4. Architect proposes new housing approach
by Paris Lord, The Standard Sept 4, 2002

Hong Kong can become a people-friendly city if a ``holistic approach'' to housing is adopted, according to a leading architect.

Aedas LPT managing director Keith Griffiths said scrapping a key element of a 1989 planning law that maximises the density of people and jobs close to rail systems would nurture economic growth and improve quality of life.

Griffiths, also chairman of Aedas Group, said the government had to change its urban development ``mindset'' to one that encouraged civic spaces and fostered a sense of
community.

Griffiths' plan involves family-friendly, low-rise housing in the New Territories, the sale of public housing and rehabilitating inner-city housing in industrial districts like Kwai Chung.

Only 5 per cent of the territory's land was used for residential development, Griffiths said, but 20 per cent could be supported without developing country parks.

Encouraging more people to move to the New Territories would require fewer roads, not more, because passenger and freight rail infrastructure would be increased. This could be achieved by linking the East Rail and West Rail lines. New towns could be built along the route.

Griffiths also said tenants living in public housing should be allowed to buy and resell their units to other tenants after a year or two, enabling younger people to acquire cheaper housing and the sellers to use the profit as a ladder to the private market.

When this approach had been adopted in Britain in the 1980s, it had helped stimulate the property market, he told The Standard.

Revitalising industrial estates required rezoning such areas residential, which would encourage the conversion of warehouses and other sites, creating cultural centres and marinas, Griffiths said.

Government planners also needed to change the way density was measured. Now, developers measured a property's gross floor area, including staircases, hallways and lift lobbies. Limiting that measurement to floor areas inside apartments would lead to different apartment designs and lower densities.

Hong Kong could then start to join ``sophisticated housing markets'' that valued properties on factors including the direction a property faced. Balconies could be used as gardens, which in turn would insulate apartments, reducing the need for air-conditioning.

Reforming the roles of the government's development departments - Land, Planning and Buildings - was vital to enable the three to work towards ``maximising land potential in terms of social benefits'', he said.

5. Survey shows SAR public confidence has reached an all-time low
by Cannix Yau, The Standard Sept 4, 2002

Public confidence in the future of Hong Kong has hit rock-bottom, according to the latest Hong Kong University opinion survey.

The university's Public Opinion Programme survey of about 1,000 people between August 14 and 19, showed the number of respondents who were not confident in Hong Kong's future hit an all-time high, reaching 48 per cent, up 5 percentage points from 43.3 per cent between June 17 and 19.

This is also the first time the number of people who are gloomy about the future has overtaken those who are upbeat about Hong Kong's future, accounting for 40.7 per cent, down six percentage points from the previous 46.7 per cent.

The figure has dropped in three consecutive surveys since April.

However, more people - 74.8 per cent - expressed confidence in the future of the mainland, up from 73.9 per cent between June 26 to 28.

About 31 per cent did not have confidence in the implementation of ``one country, two systems'' concept, while 55.7 per cent were confident, a slight fall from 56.2 per cent last time.

Lingnan University politics and sociology department associate professor Li Pang-kwong believed the record low confidence in Hong Kong's future was triggered by the SAR's apparent inability to escape the economic slump and the depressing cost-cutting measures by the government.

``The public can't see any signs of economic revival,'' Li said.

``In the meantime, the new accountability system has not produced any exciting policies, leading to an impression that the principal officials are not very active in improving the economy.

``Now the government is advocating cutting costs in the public expenditure which will greatly affect people's livelihood, it is natural for people to lose confidence in Hong Kong.''

Meanwhile, the Federation of Trade Unions, Confederation of Trade Unions and Association for Democracy and People's Livelihood were the top three most well-known political groups with support ratings of 57.8, 56.9 and 54.8 points respectively.

Democratic Party and Democratic Alliance for the Betterment of Hong Kong ranked fourth and the fifth.

6. Flexible' housing policy plan
by Staff reporter, The Standard Sept 4, 2002

The government is considering adopting a ``flexible approach'' towards building public flats in future, in a bid to further stabilise the property market, according to sources.

The Housing Bureau, which is reviewing the overall housing policy, including the government's role in public housing and government-subsidised Home Ownership Scheme (HOS) flats, is inclined to carry out a year-on-year review of the market demand in future rather than setting a fixed target as it had in the past.

This will give the government more room to adjust the supply of public flats to avoid any oversupply which was a significant cause of the property slump in the past few years.

The flexible approach will also apply to the disposal of land, according to the sources. Through this approach, the government will be able to act faster to changes in the property market.

``In case of a property revival, the shortage can be alleviated by disposing more land to private developers and the Housing Authority to build flats,'' one source said.

This change in approach will put an end to any fixed housing target set before, which includes the policy to ensure 70 per cent of the population own their own homes by 2027.

The target was set by the Chief Executive Tung Chee-hwa when he took office in 1997. Since then, the Asian financial crisis hit and property prices began to plunge.

Hong Kong is still suffering from a supply overhang resulting from the 85,000 flats per year target, also set down by Tung. Housing officials have reiterated that there is no magic wand to lift the prices, but it's the government's aim that Hong Kong should have a stable property market.

Secretary for Housing Michael Suen is heading a taskforce reviewing the overall housing policy, which he intends to complete by the end of the year.

The review will cover the rent levels of public housing flats, the future role of the HOS and whether public housing should continue to be built in view of the overlap in prices with private flats.

Any change in housing policy is expected to be announced by Tung in his policy address in January.

7. Piling scam pair given 12 years
by Julie Chu, The Standard Sept 4, 2002

Two construction company directors involved in a short-piling scam at a Housing Authority residential project in Sha Tin were jailed for 12 years each in the Court of First Instance yesterday.

Chan Kwong-yee, 48, and Tom Yiu Yiu-nam, 46, who both denied one count of conspiracy to defraud, were found guilty by a jury.

In sentencing the pair yesterday, Deputy Judge Anthony To Kwai-fung said short-piling works posed serious risks to public safety and it was necessary that the whole construction industry was deterred from this kind of malpractice.

He found the pair were both experienced engineers who resorted to irresponsible conduct.

Judge To also sentenced the project's site agent, Li Wai-hang, 46, who had pleaded guilty to the same count before the trial, to 3 years in prison.

As Li has already is serving a three years and three months jail term for a similar offence, Judge To allowed him to serve part of his sentence consecutively and ordered Li to serve a total of five years in both cases.

The substandard piling was found at two Home Ownership Scheme housing blocks in Yuen Chau Kok, Sha Tin.

The total cost of the piling contract was HK$63 million.

Hui Hon Construction, where Chan and Yiu were directors, was subcontracted for the foundation works of two blocks involving 36 piles in a contract worth HK$17 million.

The court heard that, if the company failed to finish the work on time, it would be penalised HK$170,000 per day. The work was completed in December 1998.

Hui Hon submitted a false report to the Housing Authority claiming that the piles were made according to the project's layout plan.

The Housing Authority conducted a test on the foundations and found that only four piles complied with the plan.

Twenty-one piles were found to have been shortened by between two and 15 metres, while the remaining 15 rested on soft mud instead of bedrock as prescribed.

The Housing Authority had to spend HK$542 million to demolish the structures.

8. Plan for 4.8pc spending cut over 4 years
by Staff reporter, The Standard Sept 4, 2002

The government wants to cut expenditure by a total of 4.8 per cent over the next four years to balance the books by 2006-07.

According to sources, the government will cut expenditure by 1.8 per cent for the next fiscal year and 1 per cent each in the following three years.

Spending on education, which received HK$49.3 billion this year or 22 per cent of total expenditure, will not suffer any cuts.

However, subsidies for primary and secondary schools, subsidies for sub-degree courses, the school improvement programme and the whole-day primary school projects may be hit under a reprioritisation of resources.

The HK$10 billion final phase of the school improvement programme which aims to upgrade 343 schools, and the conversion of all primary schools into whole-day schools by 2007 will be postponed.

About 120 new schools will have to be built to achieve the target.

The estimated construction and furniture and equipment cost per school is about HK$100 million.

The total cost in building 120 schools will be about HK$12 billion, with an additional recurrent cost rising to HK$2.3 billion per year.

Meanwhile, social welfare which received HK$16.1 billion this year, excluding Comprehensive Social Security Assistance, will remain unchanged and funding for labour may be further increased. Council of Social Service director Christine Fang said there was not much room for the social service sector to cut costs after it had already saved 10 per cent for the Enhanced Productivity Programme.

Meanwhile, Financial Secretary Antony Leung pledged yesterday that public expenditure for necessary public services concerning people's livelihood would not be subject to any cutbacks.

However, he refused to say whether the government will cut expenditure by an average of 1.8 per cent for the next fiscal year, saying it had to wait until policy bureau chiefs submitted their expenditure proposals ahead of Chief Executive Tung Chee-hwa's policy address.

The government aims to achieve a balanced budget by 2006-07, and to bring public expenditure to below 20 per cent of Hong Kong's gross domestic product, which will require savings of about HK$12 billion in four years.

The deficit for this financial year is forecast to be HK$45 billion.

9. More groups back Zhuhai bridge plan
by Keith Wallis, The Standard Sept 4, 2002

A group of 22 associations representing small and medium-sized businesses, together with the Hong Kong Shippers' Council (HKSC), have become the latest groups to back Sir Gordon Wu's plans for the HK$15 billion Hong Kong-Macau-Zhuhai bridge.

In a full-page advertisement in the Apple Daily yesterday, the 22 business groups said the bridge would help reduce the cost of transporting products through Hong Kong port.

Among the organisations signing the notice were those representing jewellery manufacturers, plastic products, toy and cardboard manufacturers and the logistics federation.

``The Pearl River delta is one of the most rapidly developing economic trade zones in the world and its development is closely related to Hong Kong's economic development. So, we must enhance the cultural and economic connections between the two sides,'' they said.

Responding to comments made last week by Financial Secretary Antony Leung, who said completion of the bridge would help improve logistics services and reduce transportation costs, they hoped the bridge would help secure business and employment opportunities.

In a swipe at the container shipping lines and Kwai Chung terminal operators, they said Hong Kong's port charges were among the highest in the world. Despite protests and petitions both by lorry drivers and small and medium sized-companies, ``there is still no effective solution''.

The Shippers Council, which represents importers and exporters, yesterday gave its cautious support for the bridge.

HKSC executive director Sunny Ho said one of the recommendations of a recent report on Hong Kong's logistics development said the SAR needed more links with the Pearl River delta.

He said: ``On that basis we see no disadvantage of having the bridge. But we also wouldn't like to see another white elephant like the country park section of Route 3 or the Western Harbour Crossing.''

10. Wheelock supports bridge without state help
SOPHIA WONG, SCMP Sep 5, 2002

Wheelock chairman Peter Woo Kwong-ching says that while a bridge connecting Hong Kong, Zhuhai and Macau would be positive for the SAR economy, he does not believe the government should subsidise its construction.

Mr Woo yesterday said that in his capacity as chairman of the Trade Development Council, he had already voiced his support for the bridge.

"I support [building the bridge] as it will benefit Hong Kong in the long term," he said.

However, Mr Woo added that "all infrastructure in Hong Kong should be responsible for its own profit and loss. The government should not subsidise [the construction]".

He said it was too early to say whether Wheelock would invest in the bridge, which is being proposed by Hopewell Holdings chairman Sir Gordon Wu Ying-sheung.

"Mr Wu has not talked with me [about co-operation]," Mr Woo said.

He said he was optimistic about exports in China. He expected mainland export growth to outperform the country's 7 per cent gross domestic product growth forecast.

Mr Woo believed Pearl River Delta exports would grow with a good business model and macro-economic figures and terminal throughput in the delta area would also increase.

Wheelock associate Wharf (Holdings) owns Modern Terminals, a large terminal operator in Hong Kong.

Speaking after Wheelock's annual general meeting yesterday, Mr Woo said he backed the action taken by the SAR government to stabilise the property market.

He said the housing market was gradually picking up and the government policy was positive.

He hoped an equilibrium of housing supply and demand would come soon.

"Recently, there were several successful private residential sales [despite the ample supply]," Mr Woo said.

However, he did not rule out the possibility of further provisions being made for the group's Bellagio residential project in Sham Tseng.

11. Cultural custodian considers cheaper Linux
ANH-THU PHAN, SCMP Sep 5, 2002

The Leisure and Cultural Services Department has asked software vendors for estimates on a project that could see the Linux operating system installed on 2,000 desktops.

If the project goes ahead, it would be the first major installation of Linux on government desktops, although the operating system is used on several servers, including some at the department.

Sufan Kan of Shaolin Microsystems said the department, which oversees Hong Kong's museums, concert halls, libraries and playgrounds, has about 1,000 desktop computers running Microsoft Windows. The department is considering Linux as a cheaper alternative to upgrading to Windows XP. Plans under consideration include the purchase of new computers, doubling the number of terminals to 2,000.

The department's systems analyst, Christine Chong Yuk-kam, said a move to Linux was being considered, but nothing had been finalised.

"Yes, there is the possibility but it is not up to the planning stage yet," Ms Chong said.
Another software vendor, Thiz Linux, has also been asked for an estimate, according to Ms Kan. Shaolin Microsystems specialises in software that helps administrators install and manage desktop Linux over a network, while Thiz has developed Chinese-language versions of the Linux OS and office applications.

Because the Linux kernel was developed by volunteer programmers and is available free over the Internet, the cost of licences is lower. Governments in developing countries, including China, have advocated Linux as a way to keep information technology costs down.

Microsoft counters that the long-term costs of running Linux may be higher than for Windows.

Ms Kan said if the department went ahead with a desktop Linux project, implementation would take up to two years as users would need to be trained.

Interest in Shaolin Microsystems' products was coming from Germany, the United States and the mainland, with many universities and high schools looking to deploy Linux in their computer labs, she said.

Mainland government departments in Beijing and Guangdong have awarded high-profile Linux contracts to domestic vendors over the past year, including Red Flag, Chinese2000 and Kingsoft. The Guangdong contract, announced last month, was worth about HK$4 million and came soon after the similar-sized purchase of Microsoft licences.