Towards Service Excellence II

-- Follow-up Paper to the HKCSI Position Paper on Promoting Services
Februart 1996

Summary of Recommendations

The scope of promotion

1. "Promotion" of services should embody the following three aspects:
1. Marketing
2. Promotion of standards and quality
3. Promoting regulatory efficiency

Organisation Options

Organisation principles

2. Principle 1:In promoting services the best use should be made of all existing promotional agencies of Hong Kong. These existing agencies include:
1. government offices such as the overseas Economic & Trade Offices;
2. public bodies like the Trade Development Council and the Hong Kong Productivity Council;
3. private sector representative bodies including the HKCSI and other trade and professional associations;
4. private sector practitioners involved in promotional activities.
3. Principle 2:There should be a better understanding of existing promotional resources. There is a good case for the TDC and HKPC to consider a restructuring of their activities to reflect the changed nature of manufacturing in Hong Kong, rather than treat the services promotion as merely an additional task. In the case of the private sector, there is a need to better understand the resources and constraints of private sector bodies with a view to developing measures to enhance their contribution to the respective industries and hence facilitate industry efficiency.
4. Principle 3:There should be a proper division of labour among promotional agencies. Strategy formulation should be firmly led by the private sector. In the implementation of promotion, there should be a clear demarkation between the efforts of the TDC and HKPC and private sector service providers. As a matter of principle the TDC and HKPC should not be promoter and competitive service provider at the same time.
5. Principle 4.Coordination is vital in order that there is maximum synergy without duplication of efforts. This includes coordination among promotional agencies (government, TDC/HKPC, CSI and trade/professional associations, and private sector service providers) as well as among service sectors themselves.

Organisation proposals

6. We propose that the above principles can be put into practice through the creation of a "Service Industries Council":
1. The role of the Service Industries Council is to deal independently with the planning, strategy formulation, management and development of services promotion. As such this Council will be more involved in leadership, coordination and development rather than the actual execution of promotion. Its tasks would include the development of promotional strategy and programmes, coordination amongst promotional agencies, and coordinating resources utilisation.
2. This Service Industries Council could be set up by the TDC, as a separate body, or by the CSI. Justified by its current wealth of resources the TDC option would be appropriate although this would call for a radical restructuring of the TDC the practicability of which remains to be seen.
7. At the same time the work of the HKCSI should be expanded in the following areas:
1. Facilitating private sector industry bodies;
2. Promotion of self-regulation and high quality;
3. Facilitating regulatory efficiency;
4. Monitoring international development;
5. Research support; and
6. Encouraging good performance.

Funding

8. In considering funding for the Service Industries Council and the expanded functions of the HKCSI, consideration should be given to the following:
1. the funding involved is likely to be comparatively small as the functions in question are thought-intensive rather than labour intensive.
2. Some costs may be met through other means, such as assistance in kind
3. Some funding may be made available on a case by case basis provided that a mechanism for funding of industry-support projects is available.

Hong Kong Award for Services

9. An independent award scheme for services can be organised in one of three ways.
1. A combination of some existing awards on services
2. Awards based on specific service sectors with a variable criteria

Awards based on service-related themes rather than individual sectors.

The outcome of the choice of option will depend on the result of discussion and coordination with other interested agencies. The HKCSI is prepared to initiate discussion with interested parties and we suggest that government should play a positive role in facilitating discussion. As to timing of the award, the principle should be that a good start is preferable to an early start.

Sectoral recommendations

Financial Services

10. Overseas marketing: There should be a two-prone approach in marketing Hong Kong's services to new investors and users:
1. Broad promotion of Hong Kong's advantages as a financial centre.
2. Focused campaigns on Hong Kong's comparative advantages on a product by product basis.
11. Regulatory efficiency: To ensure that Hong Kong's financial regulatory regime is cost-effective, we recommend two immediate studies, one to evaluate Hong Kong's financial regulatory regime in light of the regulatory principles as identified by the City Research Project of the City of London, and the other to determine the direct and indirect costs of Hong Kong's regulatory system.

Real estate services sector

12. Overseas promotion:In promoting real estate services to China and around the region, it is essential to link the service providers with the investors and the providers of capital. Government should also consider more active sponsorship/involvement for professional firms prospecting or pioneering offshore.
13. Quality and standards: Government and the private sector should cooperate to
1. formulate measures to improve professionalism of property agency and sales staff
2. consider gradually introducing Multiple-Listing Service
3. educate buyers and sellers on consumer rights
4. exercise more control on the quality of material used for buildings
5. require saleable area instead gross floor area to be quoted and/or published
14. Regulatory efficiency: Before implementing policy, government should allow more time to discuss its practicality with practitioners. A case in point is that of conveyancing where thorough discussion would be needed to avoid administrative difficulties which may affect purchasers' willingness to purchase and foreign developers' willingness to invest in real estate in Hong Kong.

Management consultants

15. In view of the need for a coordinated effort in promoting management consultancy services of Hong Kong, a Management Consultants Group was established in January 1996 as a subcommittee of the HKCSI Professional Services Committee. As an immediate step the Management Consulting Group has set itself the tasks of:
1. promoting the HKCSI voluntary code of ethics;
2. formulating a set of indicative criteria for government in selection of management consultants; and
3. designing guidelines for clients on the nature of consultancy services, fees, and how to select a consultant.

The Management Consultants Group believes that there is an urgent need for a full study to be conducted of the management consultancy sector of Hong Kong, before an effective promotional campaign can be designed and implemented. For this purpose an outline Terms of Reference has been proposed for the study. We suggest that the study be commissioned by the HKCSI and conducted by local academic institutions, with funding provided by government.

Towards Service Excellence II

-- Follow-up Paper to the HKCSI Position Paper on Promoting Services
Februart 1996

Introduction

1. The Hong Kong Coalition of Service Industries submitted a position paper "Towards Service Excellence" to the Financial Secretary on 20 December 1995 setting out the HKCSI's framework for promotion as well as some recommendations for action. The purpose of the present paper is to follow up some of the issues identified in the earlier paper, namely:
• the scope of promotion
• organisation option
• the award on services
• additional sectoral recommendation

The scope of promotion

2. When KPMG Peat Marwick was commissioned in late 1994 to conduct the study on promotion of services, "promotion" was clearly understood to mean marketing of Hong Kong's services abroad. As the subject is further pursued by the Financial Secretary's current task force, the meaning and scope of "promotion" has been considerably widened and attention is focused not just on exports but also extended to domestic capacity of service industries. As the discussion continues, there seems to be less and less precision over what is meant by promotion. In our view, there is a need for a full understanding of what is meant by "promotion" in order that continual dialogue is pursued meaningfully.
3. In our earlier paper we have set out what we regard as a broad framework for the development of service industries, namely, that there is a need to improve quality in a more open and liberalised international context for services. In the context of this framework, the "promotion" of services should embody the following three aspects:
1. Marketing, especially to overseas investors and users. This has been covered comprehensively in the KPMG report.
2. Promotion of standards and quality. This is important as standards and quality underlie the competitiveness of Hong Kong industries.
3. Promoting regulatory efficiency through monitoring regulatory regimes and ensuring that the regulatory emphasis is on market rather than administrative solutions, and on standard setting rather than rule-making. Although this does not appear a direct form of business promotion, it serves an important promotional function in making the market more efficient and more attractive for entry by competitive businesses.

Organisation Options

Organisation principles

4. In the previous paper we stated that in considering the organisation structure in promotion of services, the guiding principle should be that "promotion should be private sector led with current resources (both public and private sector) deployed in the most cost effective manner." (Recommendation 19) After further consultation, we have now developed this further into four inter-related principles as follows.
5. Principle 1: In promoting services the best use should be made of all existing promotional agencies of Hong Kong. Promotion of services is a multisectoral effort with the following parties all having a major part:
1. government offices such as the overseas Economic & Trade Offices;
2. public bodies like the Trade Development Council and the Hong Kong Productivity Council;
3. private sector representative bodies including the HKCSI and other trade and professional associations;
4. private sector practitioners involved in promotional activities.
6. Before new organisations and institutions are created, existing resources should be made full use of. In particular, TDC and HKPC have made substantial contribution to the advancement of trade and manufacturing sectors of Hong Kong and their experience and expertise should be drawn on for the promotion of services. At the same time, promotion of services is a multi-sectoral effort and in order that resources are most cost-effectively deployed, two tasks will have to be performed:
1. There should be a better understanding of existing promotional resources.
2. There should be a proper division of labour among different promotional agencies.
7. Principle 2:There should be a better understanding of existing promotional resources. A wide range of promotional activities are already being undertaken by the public and the private sectors but they are not always understood. There is thus a need for a better understanding of these existing promotional resources.
8. In the case of public bodies, the TDC and HKPC are already providing for the service sector although not always explicitly so. In the case of the HKPC, this is reflected in its headcount and revenue which have been growing otwithstanding the decline of manufacturing. As to the TDC, many of its current programmes are already heavily service-sector oriented, such as the recent "Money World Asia" exhibition. As their role in services promotion is being developed, there is a very good case for the TDC and HKPC to consider a restructuring of their activities to reflect the changed nature of manufacturing in Hong Kong, rather than treat the services promotion as merely an additional task. In other words, what is required may be a rationalisation rather than an expansion of the organisation.
9. In the case of the private sector, we would emphasise that businesses have a self-interest in promotion and higher productivity which should be exploited. There are a number of initiatives from the service sectors themselves in promotion, for example, the Retail Management Association's service award, seminars on Hong Kong's telecommunications market, exhibitions on the transport industries, etc. At the same time, private sector bodies devote much effort to ensuring regulatory efficiency by monitoring and seeking to influence government policy. Typically, however, such efforts have been haphazard and often uncoordinated. In order that the dynamism of the private sector is made full use of, there is a need to better understand the resources and constraints of private sector bodies with a view to developing measures to enhance their contribution to the respective industries and hence facilitate industry efficiency.
10. Principle 3:There should be a proper division of labour among promotional agencies. In particular, there should be a division of responsibility between:
1. strategy formulation and implementation
2. promotion and providing of service
11. Because promotion of services is ultimately about enhancing the capacity of Hong Kong industries to provide services and encouraging the use of these services, strategy formulation should be firmly led by the private sector although all promotional agencies including HKPC and TDC should play a part. The main function of the latter should be to take on an implementation role.
12. In the implementation of promotion, there should be a clear demarkation between the efforts of the TDC and HKPC and private sector service providers in order that effectiveness of promotional efforts is maximised. As a matter of principle the TDC and HKPC should not be promoter and competitive service provider at the same time. In other words, they should not compete with service providers in those services which are well provided for by the market, such as exhibition organising and management consultancy. Thus the TDC and HKPC should be mainly involved in industry-wide promotional programmes such as those of an awareness nature, leaving other promotion-related services to private sector practitioners. We acknowledge that in practice it is sometimes not easy to differentiate between promotional programmes of an industry-wide and awareness nature and that of competitive services. Where there is competition between the private sector and TDC/HKPC, such competition has been fair. However, since services promotion is much more complicated than that of goods, there is a need for better coordination and agreement amongst different promotional agencies to ensure that such fairness is maintained and that the division of labour works towards the maximum benefits of the service industries.
13. Principle 4.Coordination is vital in order that there is maximum synergy without duplication of efforts. There are two aspects of coordination which are equally important:
1. Coordination among promotional agencies (government, TDC/HKPC, CSI and trade/professional associations, and private sector service providers). This is necessary to ensure that the initiatives of individual bodies are be placed within a wider context of the promotion of services rather than conducted in isolation from one another.
2. Coordination among service sectors themselves: Well-established bodies such as the Stock Exchange and the Hong Kong Tourist Association will no doubt continue to organise their own promotional activities. At the same time, there will be an increasing call by other service industries for promotional activities in their own respective sectors. Because of diversity and fragmentation, a mechanism for overall coordination will be required in order to achieve synergy rather than conflict.

Organisation proposals

14. We propose that the above principles can be put into practice through the creation of a "Service Industries Council" and an expansion of the current role of the HKCSI.

Service Industries Council

15. The idea of a Service Industries Council is a development of the "Services Advisory Committee" which the HKCSI suggested earlier in its response to the KPMG study on promotion of export of services. Such a Council is required to deal independently with the planning, strategy formulation, management and development of services promotion. As such this Council will be more involved in leadership, coordination and development rather than the actual execution of promotion - such as trade fairs, roadshows, missions, business receptions, trade enquiries, database services, trade publications, information and market intelligence, advertising and media campaigns, representative offices, etc - which should be conducted by promotional agencies ranging from government, TDC, HKPC, trade associations to private sector practitioners.
16. The Services Industries Council will therefore be a policy rather than an executive agency. Its tasks should include the following:
1. Development of promotional strategy and programmes
   1. To formulate promotional strategies for implementation by promotional agencies, including
      • examining linkages of sectors,
      • identifying themes for cross-sectoral promotional campaigns,
      • keeping promotional plans up to date,
      • monitoring promotional programmes and
      • recommending strategies to cater for changing needs.
   2. Sector specific promotion, including
      • determining the needs and demands of specific sectors in respect of promotion,
      • evaluating proposals for dedicated promotional programmes for specialised sectors,
      • addressing the needs of smaller sectors, and
      • coordinating concerted promotion with other sectors.
   3. To identify and advise on support services to be implemented by TDC or other appropriate agencies.
2. Coordination amongst promotional agencies
   1. To act as a link between government, TDC, HKPC, private sector promotional agencies, client industries, and overseas counterparts in the planning, development and execution of promotional programmes.
   2. To facilitate the execution of promotional programmes through providing guidance to other promotional agencies on
      • cross-linkages between goods and services,
      • synergies between promotion of goods and services,
      • synergies between trade and investment promotion, and
      • the needs of specific sectors in the design and implementation of promotional programmes.
   3. Resources utilisation: To get the promotional campaign up and running, it would probably be necessary for the TDC and HKPC each to create a new Division for promotion of services before the issue of restructuring is fully addressed. However, the need for rationalisation rather than expansion should always be kept in mind. Ultimately, an organisational review of TDC, HKPC and private sector bodies should be conducted with a view to finding out the best means of redeploying resources. One of the tasks of the Service Industries Council should therefore be to study and recommend deployment of resources both within and amongst different agencies.
3. As to how this Service Industries Council should be set up there are a number of possibilities.
1. Justified by its current wealth of resources the TDC would appear to be the most appropriate body to establish the Service Industries Council. However, before the Council could become an effective body within the TDC, there are a number of barriers to overcome arising from the TDC's nature as a predominantly trade-promotion body. For reasons which have been detailed in the CSI's response to the KPMG study, the service sectors have strong reservations about giving the TDC the leadership role in the promotion of services exports. These reservations are further reinforced as the scope of promotion is now extended beyond exports. Despite this, the TDC would still be an option if it could rationalise its structure and resources more in line with Hong Kong's economic structure. It would have to become much more private sector-oriented, develop a service-sector outlook, become investment- as well as export-oriented, and acquire a different corporate culture and attitude. Such an organisation - which would more appropriately be named Economic Development Council - would be radically different from the TDC as itcurrently stands necessitating an almost complete restructuring of the organisation. This is probably the best solution if it could be achieved, although it remains to be seen whether this is practicable.
2. A second option is to establish the Service Industries Council as a separate body. This would have the advantage of giving it a fresh identity with a clear mandate. Such a Council would enjoy the flexibility of a new body without being constrained by organisational and cultural barriers of established bodies such as TDC. A possibility, for example, would be to build upon the existing Trade Advisory Board. The disadvantage is that as a new structure it would probably have to be constituted as a public body funded by government, for example, a body similar to that of the Port Development Board which, like all public agencies, risks becoming detached from the private sector. There are also potential problems of inter-organisational relationships.
3. Another option is to have the Council established within the HKCSI. The merit is that it will become a firmly private sector-based body thus ensuring its closeness to the business sector. However, this would mean having to superimpose a structure and resources over the existing CSI.

Expansion of HKCSI Services

18. The HKCSI is the most representative body of service industries of Hong Kong, yet many industries and sectors are still unrepresented, especially smaller but perhaps no less significant sectors. Because industries do not always have enough critical mass to support a trade association, some of them have to rely on one or two vocal spokesperson or their academic counterparts to make representation on their behalf. There is no means however of ensuring that the views thus presented are balanced or representative. There is therefore a need for the CSI to further strengthen its coordination amongst service sectors.
19. The following are services of the HKCSI which should be expanded on the basis of what the CSI has been doing over the past six years:
1. Facilitating private sector industry bodies: Assisting the development of new and smaller service sectors through the formation of industry bodies.
2. Promotion of self-regulation and high quality through developing codes of practice for service sectors.
3. Facilitating regulatory efficiency through assisting private sector trade/professional bodies in contributing to as well as monitoring policies and regulations. To have the secretariat of a number of smaller industries and sectors within the same office will improve collectively the cost-effectiveness of these industries bodies as well as enhance coordination and cooperation among sectors. This will be particularly helpful to smaller industries and sectors.
4. Monitoring international development:
   • assess competitiveness of Hong Kong compared to other services centres;
   • research on regulatory regimes and trade barriers overseas; and
   • monitor development in international trade policy and formulate broad strategies accordingly.
5. Research support:
   1. To conduct research and compile data on quality, standards, and international best practice.
   2. To provide a focal point between industry, academic institutions and HKPC for research in support activities, such as methodology for benchmarking, TQM and TQS.
   3. Encouraging good performance:
      1. organising the Hong Kong Award for Industry for the service sector;
      2. coordinating and promoting benchmarking through
         • providing basic support such as information, research and referral
         • acting as a repository for benchmarking standards and practices.

Funding

20. Funding for both the Service Industries Council and the expanded functions of the CSI presents a potential problem as there are two apparently opposing conditions:
• The Service Industries Council and the HKCSI should both be of and by the private sector.
• As a broad "industry support" function the secretariat of the Service Industries Council should be funded by government. In the case of the HKCSI, it is hitherto totally funded by the private sector but it seems unlikely that the extended tasks outlined above could be achieved without some kind of subsidy. The case for additional government funding is on the same ground that many of the functions are also of an "industry support" nature.
21. The potential problem arises from the fact that if the above were funded wholly by government, they risk being subject to government control and hence losing the flexibility and independence of the private sector. If government funding is not available, on the other hand, the private sector may not be able to raise sufficient funds to enable them to function properly.
22. Our view is that this funding dilemma should not be a big problem for the following reasons:
1. In the first place, the funding involved is likely to be comparatively small, as both the Service Industries Council and the CSI's expanded services will essentially be secretariat functions which are thought-intensive rather than labour intensive. Without a main executive function, the manpower establishment is likely to be small. As in the example of British Invisibles, the main expenses is likely to be salaries, with operating costs about two thirds of staff costs.
2. Some costs may be met through other means, such as assistance in kind through provision of additional office, equipment, meeting venue, etc. by government or other public bodies.
3. Some funding may be made available on a case by case basis provided that a mechanism for funding of industry-support projects is available, as in the case of manufacturing. This will be especially beneficial for the HKCSI and the private sector.

20. 
    

    Hong Kong Award for Services

    23. In February 1995 the HKCSI submitted a paper to government suggesting that a new category be created in the Hong Kong Industry Award (formerly the Governor's Award for Industry) for the service industries. The HKCSI has sought to pursue this through creating a new "Trade in Services Award" be added to the existing Hong Kong Industry Award. At the same time, the desirability and feasibility of an independent award scheme for services was also seriously considered. The HKCSI's view, as indicated in its earlier submission of December 1995, is that "If funding for such a new scheme of awards could be made available from government... there is no reason why the award scheme for services could not be organised in 1996. Indeed, we are confident that such a scheme could be run in a most cost-effective manner by the HKCSI."
    24. An independent award scheme for services can be organised in one of three ways.
    1. A number of existing awards on services could be combined and consolidated into a single award scheme. This could consist, for example, of the following:
    1. The service award of the Retail Management Association
    2. The Association of Accredited Advertising Agents' Award
    3. The Trade in Services Award proposed by HKCSI

       The HKCSI will have to coordinate with other organisations to determine the feasibility of combining these awards.

    2. A new award scheme may be designed to consist of awards based on specific service sectors with a variable criteria which may change every year. As an example, the Award may consist of four sectors:
    • Financial services
    • Information services
    • Trade-related services
    • Business services

    The theme for 1996 may be "service quality", for 1997 "innovation", 1998 "marketing", etc. Major sectoral bodies may be invited to be co-organisers (e.g. Hong Kong Association of Banks for financial services). Other organisations may also act as co-organisers on an ad hoc basis depending on the annual theme, e.g. Hong Kong Productivity Council if the annual theme happens to be productivity.

    3. Alternatively, the award categories can be based on a few service-related themes rather than individual service sectors. For the sake of illustration, there can be four awards as follows, each award being open to all service industries:
       • a quality award
       • a trade in services award
       • a productivity award
       • an innovative award

       In terms of organisation, the model of the Hong Kong Industry Award may be followed, i.e. there could be a standing committee responsible for organising the award, comprising different "lead organisers" for each category of award (e.g. Hong Kong Productivity Council to be in charge of productivity award, Hong Kong Quality Assurance Centre to organise the quality award, etc).

    25. The HKCSI is confident that it could take up the organisation of the award whichever approach is adopted, provided that resources are available. However, as far as possible the HKCSI prefers to involve other bodies in the organising of the award scheme, even though this may take more time to organise. The outcome of the choice of option will therefore depend on the result of discussion and coordination with other interested agencies. The HKCSI is prepared to initiate discussion with interested parties and we suggest that government should play a positive role in facilitating discussion.
    26. As to timing of the award, we remain of the belief that 1996 is a realistic target for the first award to be launched. However, on the basis that a good start is preferable to an early start, we are prepared to allow more time for the organising of the event and thus to launch the award in early 1997 if necessary.

    
    

    Sectoral recommendations

    27. Before presenting our thoughts on the financial services, real estate and management consultancy sectors we wish to reiterate that the needs of individual sectors should be considered within the wider context of the overall promotion of services, and that sectoral consideration is by nature an ongoing exercise and we remain open to the opportunity in future of making further recommendations on these and other sectors.

    Financial Services

    28. In seeking to promote Hong Kong as a financial services centre, the HKCSI would focus initially on two aspects, namely:
    • overseas marketing
    • efficiency of regulatory infrastructure

    Overseas marketing

    29. There should be a two-prone approach in marketing Hong Kong's services to new investors and users:
    1. Broad promotion aimed at attracting business by promoting awareness of Hong Kong's advantages as a financial centre.
    2. In many cases, the focus of financial firms are on specific activities rather than generic "attractiveness" and business will flow naturally to Hong Kong if it can offer genuine and sector-specific advantages. In addition to of across-the-board promotion, therefore, there should be a focus on researching and understanding Hong Kong's comparative advantages on a product by product basis.
    30. We note the recent corporate plan published by the Securities and Futures Commission which contains many good proposals from the point of view of promoting Hong Kong as a financial centre, such as the recommendations on market development. Because the financial services sector is complicated with many highly-interrelated subsectors, a proper coordination of efforts is all the more necessary.

    Regulatory efficiency

    31. We are in agreement with the regulatory principles as identified by the City Research Project of the City of London, namely
    1. Only regulate when markets fail, due to dishonesty and fraud, lack of information, or systemic risks.
    2. Compensation to investors should include a "deductible" to ensure that investor is subject to the principle of caveat emptor.
    3. Focus of regulation should be on retail, rather than wholesale investors.
    4. Regulator should employ market solutions, e.g. using private agencies in a safekeeping or auditing role, rather than administrative solutions.
    5. Regulatory emphasis should be on standard setting rather than rule-making.
    32. One of the cornerstone of Hong Kong's economy is its simple tax regime. While this should be maintained, it does not followed that there is no room for fine-tuning of the tax regime, especially from the point of view of promoting the financial services industry. In this connection we would draw attention to a separate submission by the Hong Kong Association of Banks to the Financial Secretary specifically addressing the issue of taxation.
    33. To ensure that Hong Kong's financial regulatory regime is cost-effective, we recommend two immediate studies, one to evaluate Hong Kong's financial regulatory regime in light of the above principles, and the other to determine the direct and indirect costs of Hong Kong's regulatory system.

    Real estate services sector

    Overseas promotion
    

    34. In terms of expansion of the real estate services sector, the opportunities lie off-shore, not only in China but also around the region as there is a wealth of experience and expertise that Hong Kong can bring to these emerging countries. In this context it is essential to link the service providers with the investors and the providers of capital as the foreign countries in question are often concerned mostly with foreign investment. Service providers should target to "piggy back" off any investment initiatives.
    35. One concept to consider is more active sponsorship/involvement on the part of government when professional firms go prospecting or pioneering offshore. At the moment, particularly in the case of emerging markets, the party seeking help invariably cannot fund the study, so that the consultant either proceeds at risk and hopes to convert the prospect into fee-earning work at a later stage or tries to secure funding from Asia Development Bank or even the World Bank. To support this, Hong Kong government could consider offering a range of different levels of support which at one extreme could comprise direct grants and soft loans and at the other end of the spectrum underwriting of fees by government in the event that there is default on the part of the instructing party. The seed money involved should not be large but access to a fund of this nature would further encourage professionals to pioneer offshore.

    Quality and standards

    36. Government and the private sector should cooperate to:
    1. formulate measures to improve professionalism of property agency and sales staff e.g. formal schooling for property management and marketing training.
    2. consider gradually introducing Multiple-Listing Service as practised by foreign countries, after other areas e.g. sole agency practice have been established.
    3. educate buyers and sellers more on their consumer rights.
    4. exercise more control on the quality of material used for buildings.
    5. require saleable area instead of letting the gross floor area to be quoted and/or published thus avoiding misleading sizes of units to be published which will affect the credibility of local developers.

    Regulatory efficiency

    37. Before implementing policy, government should allow more time to discuss its practicality with practitioners. A case in point is that of conveyancing where thorough discussion would be needed to avoid administrative difficulties which may affect purchasers' willingness to purchase and foreign developers' willingness to invest in real estate in Hong Kong:
    1. It is impractical to require purchasers of uncompleted buildings to pay 10% instead of a fixed amount of deposit on signing of the Preliminary Agreements because the purchaser will not know until the last minute which units they want to choose. As units on different floors and facing different directions fetch different purchase prices, the same cannot be ascertained beforehand.
    2. Downpayment at property's public sales is at present limited to payment through cashier orders, hence imposing unnecessary restriction and inconvenience to genuine home-buyers. Should consider allowing other payment methods that could achieve more or less same effect:
       • personal cheque (subject to cheque clearance)
       • bank authorization
       • credit card
       • traveller's cheque
    3. It is impractical to impose in consent letters a condition to the effect that the purchasers cannot sign Agreements for Sale and Purchase and Assignment by way of Powers of Attorney. As Hong Kong people travel a lot and the date of completion may not be ascertained beforehand (as the timing of the issuance of Certificate of Compliance or consent to assign is unpredictable), it is unrealistic to forbid the purchasers to appoint attorneys to execute Assignments on their behalf.

    Management consultants

    38. In view of the need for a coordinated effort in promoting management consultancy services of Hong Kong, a Management Consultants Group was established in January 1996 as a subcommittee of the HKCSI Professional Services Committee. As an immediate step the Management Consulting Group has set itself the tasks of:
    • promoting the HKCSI voluntary code of ethics;
    • formulating a set of indicative criteria for government in selection of management consultants; and
    • designing guidelines for clients on the nature of consultancy services, fees, and how to select a consultant.
    39. We understand a survey is being conducted by government Management Services Agency and we await with interest the outcome of this survey. At the same time, the Management Consultants Group believes that there is an urgent need for a full study to be conducted of the management consultancy sector of Hong Kong, before an effective promotional campaign can be designed and implemented. For this purpose an outline Terms of Reference has been developed for the study. For reasons of objectivity, the study should be carried out by an independent party and not a management consultancy practice. We suggest that it be commissioned by the HKCSI and conducted by local academic institutions, with funding provided by government.

    (ends)

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