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     The Hong Kong 2022 International Society for the Performing Arts (ISPA) Congress is being held from today (May 25) until May 27 (Friday) online under the theme of “To Connect Beyond”, marking Hong Kong as the first Asian city that has won the bid for organising the ISPA Congress twice, following the success of hosting this international event in 2006.

     Presented by the Leisure and Cultural Services Department, this ISPA mid-year Congress gathers some 400 leaders from the arts and cultural industry, and professionals of performing arts from over 30 regions. The programme includes panel discussions, keynotes, performance showcases and more as the Congress explores topics such as the connection between artists and the community, the relationship between culture territories and performing venues, and the inheritance of culture and art tech. In addition, 10 innovative projects selected by the ISPA will be presented to the delegates at the “Pitch New Works” sessions of the Congress. Among the 10 selected works, four are by Hong Kong groups including KNG Studio, City Contemporary Dance Company, Tang Shu-wing Theatre Studio and Hong Kong Dance Company.

     Speakers from across the globe include conductor and composer Mr Tan Dun; the Chief Executive Officer of West Kowloon Cultural District Authority, Mrs Betty Fung; choreographer and art director Mr Shen Wei; Artistic Director of the Ronald O. Perelman Performing Arts Center in the United States Mr Bill Rauch; Artistic Director and Chief Executive of London’s Sadler’s Wells Theatre Sir Alistair Spalding; the Chief Executive Officer of the National Arts Council Singapore, Mrs Rosa Daniel, and many more.

     Speaking at the opening of the Congress, the Acting Secretary for Home Affairs, Mr Jack Chan, said that Hong Kong is honoured to host this important international performance arts congress for the second time after the first hosting in 2006. Under the National 14th Five-Year Plan, the Central People’s Government has supported Hong Kong as a hub for international arts and cultural exchanges, and as a springboard for enhanced networks between arts institutions and practitioners that brings new opportunities for intercultural collaboration in the region and worldwide. 
 
     Mr Chan said with the completion or imminent opening of a number of new or revitalised cultural projects, performance venues and facilities in Hong Kong, including the West Kowloon Cultural District, the East Kowloon Cultural Centre and the Tai Kwun, Hong Kong is about to turn a new page in its cultural development, striving to become vital connector between the Mainland and other global regions and as a hub, gathering creative inspirations and exploring infinite possibilities.
 
     He said, “Through the many sessions of this virtual Congress, I am sure ISPA delegates will continue to connect and navigate as a community, enhancing mutual understanding, building a good foundation for closer collaboration in arenas outside the Congress and beyond.”

     The ISPA has established the ISPA Awards since 1975 to recognise outstanding individuals for their contribution to the performing arts and their communities. The 2022 award recipients were announced earlier. The “Distinguished Artist Award” went to renowned choreographer, dancer, artist and painter Mr Shen Wei, and the Artistic Director and Principal Conductor for Life of the Hong Kong Chinese Orchestra, Mr Yan Huichang. The Chief Executive of the Hong Kong Arts Development Council, Ms Winsome Chow, was awarded the “International Citation of Merit”, and the “Angel Award” was presented to veteran arts administrator Professor Tseng Sun-Man. The award ceremony will be broadcast via the virtual platform during the Congress period.

     Founded in 1948, the ISPA is a global association of more than 500 arts management leaders from 56 regions, who come together with the shared goal of strengthening and developing the arts internationally. It achieves this by building leadership abilities, recognising and discussing field-wide trends and new developments, and deepening global exchanges through the arts. ISPA members include presenters, performing arts organisations, artist managers, funders, consultants and other professionals working in the performing arts. read more

     Following is a question by the Hon Chan Yuet-ming and a written reply by the Secretary for Education, Mr Kevin Yeung, in the Legislative Council today (May 25):
 
Question:
 
     The Quality Education Fund (QEF) aims to support projects that are innovative and capable of enriching students’ learning experiences and encouraging school-based initiatives. Regarding the QEF, will the Government inform this Council:
 
(1) of the number of staff members in the QEF Secretariat and, among them, the number of those who are responsible for handling applications for grants; the total payroll expenses for staff in the QEF Secretariat last year;
 
(2) of the following information of the projects financed by the QEF in relation to the seven priority themes for 2020-2021 (i.e. (a) STEM education, (b) Information Technology in Education, (c) Assessment Literacy, (d) Life-wide Learning, (e) Positive Values, (f) Students’ Balanced Development and (g) Effective Leadership and School Management): (i) number of projects, (ii) amount of funding granted, (iii) highest per capita allocation and (iv) lowest per capita allocation (i.e. the per capita allocation among students directly benefitted from each project) (set out in the following table);
 

Priority theme	2020-2021 school year				2021-2022 school year to date				Total
	(i)	(ii)	(iii)	(iv)	(i)	(ii)	(iii)	(iv)	(i)	(ii)
(a)
…
(g)
Total

 
(3) of the average time taken by the QEF to vet and approve an application for grant in the past three years; whether it has assessed if the length of time taken for vetting and approving applications will affect the effectiveness of schools in enhancing the quality of education; if it has, of the details; if not, the reasons for that;
 
(4) given that for the year ended August 31, 2021, the QEF’s expenditure on grants only amounted to about $300 million but its accumulated surplus stood as high as about $10.5 billion, some members of the public have queried that the resources under the QEF have not been properly utilised, and that the Fund’s objective has changed from promoting quality of education to making investments or savings, whether the Government has examined the reasons for the presence of a huge surplus in the QEF; if so, of the details; if not, the reasons for that;
 
(5) of the total number of projects with national education-related themes that were financed by the QEF in the past five years and the amount of funding involved, and set out, by project name in a table, the name of the applicant organisation, the year in which the funding was approved and the amount of funding approved; and
 
(6) whether the Education Bureau will consider setting national education as one of the yearly priority themes of the QEF, and adding under QEF funding programmes that are related to enhancing the quality of national education; if so, of the details; if not, the reasons for that?
 
Reply:
 
President,
 
     The Quality Education Fund (QEF) was established in 1998 to fund projects that aim to raise the quality of school education and to promote quality school education at all levels. The Permanent Secretary for Education Incorporated (PSEdI) holds the QEF upon trust. Being the trustee of the QEF, the PSEdI approves funding for worthwhile projects and signs with individual grantees an agreement setting out the terms and conditions of the funds. The PSEdI sets up a steering committee under the QEF to set policies for the allocation of funds, and make recommendations to the Government on all funding applications. The steering committee is supported by a secretariat. Since its establishment, the QEF has funded over 12 700 projects with a total funding amount of over $6.1 billion.
 
     Our reply to the Hon Chan Yuet-ming’s question is as follows:
 
(1) The QEF Secretariat, set up under the Education Bureau (EDB), has overall management responsibility for the QEF. Besides providing secretarial support to the steering committee, it is also responsible for various duties such as processing applications, monitoring progress of projects, and disseminating good practices and experiences of funded projects. Currently, there are 22 staff members of the QEF Secretariat mainly responsible for processing applications. As the staff salary expenditure of the QEF Secretariat is subsumed in the overall expenditure of the EDB, a breakdown is not available.
 
(2) – (4) Initiatives implemented on a school-based pilot basis in kindergarten, primary, secondary and special education, with a view to enabling students to attain all-round development and develop positive values and attitudes as well as enhancing the professional capacity of teachers, will raise the quality of education and are worthy of the QEF’s funding support. Schools, educational bodies, tertiary institutions, non-governmental organisations as well as individuals can apply for a one-off funding from the QEF to carry out projects that meet the needs of schools and contribute to the improvement of the quality of school education.
 
     Starting from 2003, the QEF has introduced priority themes which address the needs of education. The QEF reviews the priority themes from time to time and makes adjustment on a need basis so as to meet the needs of education development in Hong Kong. In the 2020/21 and 2021/22 school year, the QEF has introduced seven priority themes, including STEM Education, Information Technology in Education, Assessment Literacy, Life-wide Learning, Positive Values, Students’ Balanced Development and Effective Leadership and School Management. The priority themes may not be exhaustive. Hence, apart from the priority themes, the QEF also provides funding support to other quality projects that meet the needs of schools.
 
     Besides, the QEF has also launched theme-based funding programmes in recent years, including the Dedicated Funding Programme for Publicly-funded Schools for schools to implement school-based curriculum design and/or student support measures; the “My Pledge to Act” Funding Programme to facilitate schools to nurture positive values and attitudes among students; and the Enhanced “My Pledge to Act” Funding Programme to further support schools to promote national education, national security education as well as media and information literacy education, with the application procedures for the latter two programmes being further streamlined. Schools can, with due regard to their own context and students’ needs, devise school-based project proposals and apply to the QEF for funding. The above-mentioned theme-based funding programmes are welcomed by the school sector. Since its launch in the 2018/19 school year, an accumulative total of over 2 000 applications under the Dedicated Funding Programme for Publicly-funded Schools have been received. As for the “My Pledge to Act” Funding Programme and the Enhanced “My Pledge to Act” Funding Programme subsequently launched, more than 1 200 applications have been received in total.
 
     Upon the implementation of various theme-based funding programmes, schools provided with more options might not necessarily apply for funding under the priority themes. In the 2020/21 and 2021/22 school year, the number of priority themes projects funded by the QEF with breakdown by theme and the respective funding amount are set out as follows:
 

Priority themes	Number of projects funded by the QEF	Amount of funding (about $ million)
STEM Education	18	21
Information Technology in Education	15	13
Assessment Literacy	2	2
Life-wide Learning	10	8
Positive Values	23	29
Students’ Balanced Development	6	7
Effective Leadership and School Management	2	2
Total	76	82

 
     The QEF launched a variety of funding programmes for applications by various sectors of society (including school and non-school organisations as well as individuals). Applicants can devise project details (including funding amount sought, number and types of beneficiaries, etc) on their own accord with due regard to the needs of schools. The QEF considers each application according to the prevailing assessment criteria with due consideration to its effectiveness in enhancing the quality of school education as a whole, instead of evaluating an application merely based on per capita allocation. Projects funded by the QEF cover diversified aspects of school education, including learning and teaching, student support and development, teachers’ professional development, home-school co-operation. In general, project activities are implemented by grantees using a whole school approach and the beneficiaries, apart from students, often include different stakeholders such as teachers and parents. Implementing project activities funded by the QEF not only benefits students’ learning and development, but also brings positive impact on teachers’ professional development, home-school co-operation, school culture and atmosphere, etc. All these outcomes are not quantifiable. The per capita allocation calculated based on the funding amount and the number of student beneficiaries could neither fully reflect the actual circumstances of project implementation nor the project impact on school education; it might also lead to unnecessary misinterpretation.
 
     In the past three years, the QEF had received more than 3 000 applications. Individual applications were processed in accordance with the prevailing procedures and assessment criteria. In view of the difference in magnitude, complexity and funding amount sought, the time required for processing individual applications varies. In general, the processing time for projects of a smaller scale is relatively shorter. For those schools’ applications lacking sufficient details, the QEF Secretariat would have to follow up with the schools for clarification and supplementary information on a need basis, leading to longer processing time. However, the related process allows schools to further review and refine the project proposals, improve the project design and enhance the overall effectiveness of project implementation. Hence, there is no direct relationship between the amount of the processing time and the effectiveness of the project on enhancing the quality of school education.
 
     The accumulation of surplus of the fund is not a result of ineffective use of available resources. As long as the applications submitted to the QEF will contribute to the improvement of the quality of school education, they will be supported by the QEF regardless of their scale. The accumulated surplus of the QEF is mainly from the gains from investment over the years. The Director of Accounting Services is responsible for handling the investment of the QEF with the objective of generating a reasonable growth in the value of the funds whilst producing recurrent income to meet funding needs. The QEF has been adopting a prudent strategy in diversifying its investment with proper risk management. The surplus recorded is mainly attributed to favourable investment returns. As at August 31, 2021, the balance of the QEF is around $10.5 billion which has to be earmarked to cover a number of current funding programmes. Just the Dedicated Funding Programme for Publicly-funded Schools ($3 billion earmarked), the e-Learning Funding Programme ($1.5 billion earmarked) and the e-Learning Ancillary Facilities Programme ($500 million earmarked) have accounted for a total of $5 billion being set aside, not to mention other programmes requiring funding support of the QEF including the Priority Themes Funding Programme, the “My Pledge to Act” Funding Programme (funding cap of $200,000 for each publicly-funded school and kindergarten joining the kindergarten education scheme), and the Enhanced “My Pledge to Act” Funding Programme (funding cap of $300,000 for each publicly-funded school and $150,000 for each kindergarten joining the kindergarten education scheme). These funding programmes are currently under implementation.
 
(5) National education being an integral part of values education includes the understanding of Chinese culture, Chinese history, national affairs, the Constitution, the Basic Law and the concept of national security, as well as to cultivate students’ identity with Chinese culture and the nation, and strengthen the awareness of teachers and students of their common responsibility to safeguard national security. In the past five years, 189 applications related to national education had been approved with total funding amount of around $97 million. From the 2017/18 to 2021/22 school year, the number of applications in relation to national education funded by the QEF in each of the school year and the respective funding amount are set out as follows:
 

School year	Number of applications funded by the QEF	Amount of funding (about $ million)
2017/18	17	10
2018/19	22	21
2019/20	13	14
2020/21	14	22
2021/22+	123* (497 applications are under processing)	30* (Applications with total amount of funding sought of around $130 million are under processing)
Total	189*	97*

As a prevailing practice, the QEF does not disclose the names of individual organisations to avoid labelling effect and piece-meal interpretation of individual applications and results.
+ As at mid-May 2022
* Facilitating measures for the Enhanced “My Pledge to Act” Funding Programme have been launched by the QEF with the application deadline extended to end of January 2024. Hence, schools are still making applications. As at mid-May 2022, the QEF has received a total of 618 applications with total amount of funding sought of around $150 million. According to records, over 90 per cent of applications under the Enhanced “My Pledge to Act” Funding Programme were approved with funding support.
 
(6) The EDB has been optimising the usage of the QEF to support schools’ development needs and enhance the quality of education with the priority themes reviewed regularly and theme-based funding programmes introduced on a timely basis. To support schools to nurture students’ positive values and attitudes, the QEF has included Positive Values encompassing national identity as a priority theme. The QEF also launched the Enhanced “My Pledge to Act” Funding Programme last year for schools’ application for additional funding to step up measures to promote values education, including national education and national security education. read more

     Following is a question by the Hon Cheung Kwok-kwan and a reply by the Secretary for Education, Mr Kevin Yeung, in the Legislative Council today (May 25):
 
Question:

     The Chief Executive announced in the 2021 Policy Address that starting from the 2022-2023 school year, newly-appointed regular teachers in public sector schools are required to pass the Basic Law Test (BLT) in order to be considered for appointment. In this connection, will the Government inform this Council:

(1) whether it will make public the number of teachers who obtained a pass in the first round of BLT held in January this year; if so, of such number, together with a breakdown by type of newly-appointed regular teachers (i.e. newly-joined teachers, and in-service teachers who were changing schools or switching to a regular teaching post), as well as the respective percentages of that number of passed teachers in the number of teachers who sat for BLT and in the number of teachers in public sector schools across the territory;

(2) of the number, in the second round of BLT held this month, of those teachers who re-sat BLT as they had not obtained a pass in the first round of BLT, and when the Government will announce the results of this round of BLT; and

(3) as some members of the education sector have relayed that May to July each year is the peak season for schools to conduct teachers recruitment, whether it has assessed if the two rounds of BLT conducted so far by the Government for teachers could meet the demand of schools; if it has assessed and the outcome is in the negative, whether it will consider immediately arranging additional BLT sessions and allowing teachers to submit their BLT results later on, so as to help schools rationalise the procedure for teachers recruitment; if so, of the details; if not, the reasons for that?
 
Reply:
 
President,

     The Basic Law is the constitutional document for the Hong Kong Special Administrative Region (HKSAR) which enshrines the basic policies of the People’s Republic of China regarding Hong Kong, provides a solid constitutional basis for the implementation of the concept of “one country, two systems” and the various systems in the HKSAR. It is closely related to our daily lives. The Basic Law has been a key element of the school curriculum. Students learn the related concept and its importance through diverse learning experience within and beyond the classroom. Besides, the words and deeds of teachers have a far-reaching impact on students’ growth. Teachers should be committed to nurturing students into quality citizens with a sense of social responsibility and national identity, an affection for Hong Kong as well as an international perspective. In this regard, teachers should have a correct understanding of the Basic Law so that they could enlighten students and help them correctly understand the constitutional status of Hong Kong and develop positive attitudes towards the Basic Law and “one country, two systems”. We require teachers to have a clear understanding of the Basic Law, and make it one of the entry requirements for teachers.

     Starting from the 2022/23 school year, regular teachers in public sector schools are required to pass the designated Basic Law Tests (BLT) before they could be considered for appointment. This requirement is applicable to newly appointed regular teachers including newly-joined teachers, teachers changing schools, teachers switching to a regular teaching post from a teaching post outside the approved establishment and monthly-paid temporary teachers. Designated BLTs include the BLTs organised by the Education Bureau (EDB) and the Civil Service Bureau (CSB), as well as the Basic Law and National Security Law Test (BLNST) newly introduced by the CSB in June 2022.

     Our reply to the Hon Cheung Kwok-kwan’s question is as follows:
 
(1) & (2) To tie in with the above requirement, the EDB conducted two rounds of the BLT on a pilot basis. The first round was held on January 8, 2022 with around 5 400 applicants. Around 4 200 candidates sat for the test and the attendance rate was about 80 per cent. Over 70 per cent of the attendees obtained a pass result in the test, which was similar to the results of the BLTs conducted by the CSB. The second round of the BLT, originally scheduled to be held in late February, was postponed to May 21 in light of the severe epidemic situation. There were around 9 100 applicants and the attendance rate was about 80 per cent. We are now speeding up the marking and checking processes and it is expected that the test results will be issued to candidates starting from late May to early June.

     The objective of organising the two rounds of the BLT is to help teachers who plan to join a school and those changing schools in the public school sector in the 2022/23 school year to fulfil the relevant requirement. The test results will be recognised regardless of which rounds of the BLT the candidates joined or whether they joined the second round after failing to obtain a pass result in the first round. Therefore, relevant data analyses on candidates of these two rounds of test are not conducted.

     Persons who join the above BLTs are required to possess a bachelor’s degree or are to-be graduates with equivalent qualifications. However, there is no requirement that they must be newly-joined teachers or teachers changing schools. In fact, we do not have data on whether they will apply for joining a school or changing schools, or whether they have successfully joined a school or changed schools. Firstly, most schools have not started their recruitment exercise for the 2022/23 school year. More importantly, it is not meaningful to provide such data as whether candidates of the BLT will apply for joining a school or changing schools and whether their applications are successful depend on a number of factors. Currently, the BLT requirement is only applicable to newly-appointed teachers within the approved establishment in public sector schools. As candidates who obtain a pass result may not necessarily join a school or change schools, it is not appropriate to compare the number of candidates passing the test with the number of teachers in all public sector schools in Hong Kong.

     The EDB will consolidate the experience gained from the pilot tests, review in detail the relevant arrangements, including the mode of the test and the content of the test, and draw up the arrangements for the 2023/24 school year and thereafter.
 
(3) The EDB issued a circular to schools and a press release to the public on November 11, 2021 announcing the above BLT requirement and relevant arrangements. The arrangements for the second round test were also announced through press releases on January 20, February 10 and April 11, 2022. The above documents are also uploaded onto the EDB webpage. When announcing the details of the second round test, we have clearly specified that it would be the last round of BLT organised by the EDB in this school year. As the test was postponed to May 21 due to the epidemic, application was reopened. For each round of application, while it was specified that the number of places was limited, we have arranged more test centres to provide more places to meet the needs of all the teachers. In the end, all applications were accepted. In other words, the EDB has announced clearly the test arrangements on many occasions and provided sufficient opportunities and places for interested applicants. Teachers who wish to change their working environment have been provided with amble opportunities to thoroughly consider if they would take the test. The two rounds of the test accepted a total of around 14 500 applications and the number of attendees is about 11 480. In addition, if persons who wish to join a public sector school or to change school have obtained a pass result in a BLT (Degree/Professional Grades) conducted by the CSB or the BLNST (Degree/Professional Grades) it organised from June 2022 will be considered to have met the relevant requirement. We expect that schools should not have recruitment difficulties due to the BLT requirement. If there are special situations of individual schools, we will consider on a case-by-case basis.

     Thank you, President. read more

     Following is a question by the Hon Joephy Chan and a reply by the Secretary for Financial Services and the Treasury, Mr Christopher Hui, in the Legislative Council today (May 25):

Question:

     There are comments pointing out that currently, offline fundraising activities (e.g. flag sales and lottery ticket sales) may only be carried out after the applications have been vetted and approved by the relevant government departments. However, there is no dedicated legislation and government departments that regulate fundraising activities carried out online, resulting in a situation that fundraising activities are regulated if they are conducted offline but are not regulated if conducted online. It has been reported that during the riots in 2019, there were even people who conducted online fundraising for organising illegal activities that endangered national security. In this connection, will the Government inform this Council:

(1) whether it has compiled statistics on the number of online fundraising activities allegedly carried out for Hong Kong affairs in each of the past three years and, among such activities, the respective numbers of those launched via crowdfunding platforms and the social media accounts of individuals/organisations; of the total amount of funds raised in such fundraising activities, and the number of activities the organisers of which had made public the amounts of funds raised and their accounts on expenses;

(2) whether the Government will consider establishing a standardised regulatory mechanism for various types of online and offline fundraising activities; if so, when the Government plans to submit the relevant proposals to this Council; and

(3) as it is learnt that some people carried out public fundraising under the guise of selling things (e.g. meal vouchers and gifts), how the Government prevents those fundraising activities which evade regulation by adopting this approach (especially those adopting an online approach)?

Reply:

President,

     First, I thank the Hon Joephy Chan for raising this question, giving us an opportunity to explain the approach of the Government in regulating crowdfunding activities.

     Any funds raised, transferred and used, whether through internet or physical means, must abide by the law. If any person or entity engages in illegal acts, such as money laundering, fraud, theft, acts and activities that endanger national security, or incite, aid, abet or provide pecuniary or other financial assistance or property for other persons to commit offences endangering national security, he or she would be subject to criminal liability, including fine and imprisonment, in accordance with the Organized and Serious Crimes Ordinance (Cap. 455), the Drug Trafficking (Recovery of Proceeds) Ordinance (Cap. 405), the Theft Ordinance (Cap. 210), the Crimes Ordinance (Cap. 200) and the Hong Kong National Security Law. In addition, financial services-related activities involving an offer to the public for purchase of securities or money lending are regulated respectively by the Securities and Futures Ordinance (Cap. 571), the Companies (Winding Up and Miscellaneous Provisions) Ordinance (Cap. 32) and the Money Lenders Ordinance (Cap. 163).

     We however note that many online crowdfunding activities of diverse purposes and nature have emerged in Hong Kong in recent years, as mentioned by the Hon Joephy Chan. While we have the law specified above, we do not have a dedicated legislation or government department or regulatory authority to deal specifically with the various kinds of online crowdfunding activities.

     In this connection, I remarked last month that the Government has been reviewing the regulation of crowdfunding in order to provide clearer regulatory requirements, and to strengthen the transparency and accountability of crowdfunding activities, with a view to preventing illegal acts and protecting public interests. We plan to conduct a public consultation within this year which will cover the specific contents of the future regulatory framework, including the scope of crowdfunding activities to be regulated, regulatory requirements applicable to different types of crowdfunding activities such as whether application, registration, disclosure and account auditing, is required for the platform and fundraiser of crowdfunding activities, as well as the corresponding legislative work, regulatory agencies and enforcement arrangement.

     Regarding the Hon Joephy Chan’s question, in consultation with the Security Bureau, my reply is as follows:

(1) As it is now not always necessary to make prior application before the conduct of online crowdfunding activities, the Government does not possess a complete set of data in this aspect. However, the law enforcement agencies, in light of the actual circumstances, have constantly been monitoring the situation for any illicit fundraising activities and taking appropriate enforcement actions. For example, in the past three years, the Police have investigated and made arrests for those who were suspected of using funds gathered from online crowdfunding for illegal activities such as money laundering and fraud. In these cases, the arrested persons were suspected of using the proceeds raised from online crowdfunding for purposes different from the proclaimed purposes, and instead for personal consumption, investment and entertainment; or raising funds by impersonating social welfare and educational institutions. The Government will continue to combat the illegal use of proceeds raised from online crowdfunding.

(2) At present, physical fundraising activities are subject to certain regulations. For instance, a permit must be obtained from the Director of Social Welfare or the Secretary for Home Affairs, depending on whether the fundraising activity is charitable or non-charitable in nature, in accordance with section 4(17) of the Summary Offences Ordinance (Cap. 228). In addition, the Government has implemented a series of administrative measures over the years to enhance the transparency of charitable fundraising activities, safeguard the interests of donors, etc.

     When formulating our proposal on the regulatory framework for online crowdfunding activities, we will make appropriate reference to the above existing measures, and consider the relationship between the regulatory arrangements for fundraising and crowdfunding activities conducted in different modes and the consistency of the measures, and protect the public interest. The public consultation we plan to conduct this year will cover these issues.

(3) There are four common types of crowdfunding activities. In addition to the financial-related ones such as equity crowdfunding and peer-to-peer lending, there are also crowdfunding activities which the Hon Joephy Chan are concerned about, including donation-based crowdfunding, whereby funds are raised for making donations to charitable activities or other causes such as making donations for political activities; and reward or pre-sale-based crowdfunding, whereby fundraisers provide goods or services in return for funds provided by contributors. The above four types of online crowdfunding activities fall under the scope of our review, and we will put forward corresponding regulatory recommendations in the public consultation later this year to avoid any person making use of fraudulent crowdfunding activities for potentially illegal purposes.

     Thank you President. read more

     Following is a question by the Hon Holden Chow and a written reply by the Secretary for Transport and Housing, Mr Frank Chan Fan, in the Legislative Council today (May 25):

Question:

     The Government proposes to amend the Inland Revenue Ordinance (Cap. 112) to provide for a dedicated tax regime to attract shipping commercial principals (namely ship managers, ship agents and ship brokers) to set up presence in Hong Kong. In this connection, will the Government inform this Council:

(1) given that in order to ensure that only those entities which undertake the core income generating activities in Hong Kong would benefit from the dedicated tax regime, the Government proposes to stipulate that a qualifying shipping commercial principal must employ at least one full-time qualified employee in Hong Kong for meeting one of the minimum thresholds of the substantial activity requirement, of the difference between such a requirement and the relevant requirement in other jurisdictions (e.g. Singapore and the United Kingdom) (set out in a table);

(2) of (i) the number of enterprises engaged in ship management, ship agency and shipbroking businesses in Hong Kong (with a breakdown by class of employment size (i.e. 1 to 50 persons, 51 to 100 persons, and 101 persons or above)) and (ii) the total number of their employees, in each of the past five years;

(3) as the Task Force on Commercial Principals has estimated that the dedicated tax regime will, over 10 years, (i) create direct and indirect employment of around 27 000 and 50 000-odd jobs respectively in the relevant sectors, and (ii) generate cumulative incremental business of about $32.5 billion, of the calculation method for the numbers of the relevant jobs, the types and natures of the jobs concerned, as well as the assumptions and data based on which the cumulative incremental business is arrived at; and

(4) whether it will consider regularly compiling statistics on an annual basis on the numbers of new enterprises established and jobs created in the relevant sectors after the introduction of the dedicated tax regime, so as to evaluate the effectiveness of such policy; if so, of the details; if not, the reasons for that?

Reply:

President,

     â€‹To attract more maritime enterprises to establish presence in Hong Kong, the Hong Kong Maritime and Port Board (HKMPB) set up a dedicated Task Force in 2020 to study the economic impact and details of providing tax concessions to specified shipping commercial principals, namely ship agents, ship managers and ship brokers. The Task Force has made reference to the work of introducing tax concessions for ship leasing and made recommendations on the tax concessions to the HKMPB. The recommendations include providing half-tax concessions (i.e. tax rate being 8.25 per cent, half of the profits tax rate for corporations at 16.5 per cent) for specified shipping commercial principals, with a view to facilitating the development of the maritime industry in Hong Kong and consolidating the overall capabilities of Hong Kong as a leading international maritime centre. With the HKMPB’s endorsement of the relevant recommendations, the Government is working full-speed on the legislative amendment exercise, and has consulted the Legislative Council (LegCo) Panel on Economic Development on the legislative proposal, targeting to introduce the relevant legislative amendment proposal to the LegCo in June 2022.

     â€‹Having consulted the Inland Revenue Department and the Census and Statistics Department (C&SD), our reply to various parts of the Hon Holden Chow’s question is as follows:

(1) The tax concession proposal includes specifying the coverage of tax concessions and incorporating anti-abuse features so as to safeguard the integrity of the tax system and comply with international tax rules. In determining whether a preferential tax regime provided by a jurisdiction meets the international standards on countering base erosion and profit shifting, the Organisation for Economic Co-operation and Development (OECD) will take into account whether the regime has incorporated substantial activity requirements to ensure that only those entities which undertake the core income generating activities (CIGAs) in the jurisdiction would benefit from the regime. To satisfy the substantial activity requirements, one of the requirements is that an entity should employ an adequate number of full-time qualified employees for carrying out the CIGAs in the jurisdiction. It is understood that the OECD Forum on Harmful Tax Practices conducted reviews of the shipping supporting services-related tax regimes devised by two jurisdictions and the minimum threshold requirements on the number of employees prescribed under the tax regimes are as follows:
 

Jurisdiction	Year of review	Tax regime concerned	Threshold on the number of employees
Greece	2002	Ship Management Offices	Not less than four (specified in 2019)
Singapore	2017	Maritime Sector Incentive Scheme Shipping-related Support Services Award	Not less than five

     To promote the development of shipping commercial principals in Hong Kong, we propose introducing the tax concessions to make our tax regime more competitive vis-à-vis our key competitors. Having consulted the trade and taken into account the operational needs of some start-up companies, we propose that a shipping commercial principal must employ at least one full-time qualified employee in Hong Kong. However, this is only the minimum requirement that a shipping commercial principal must satisfy in order that the CIGAs are regarded as having been carried out in Hong Kong. In accordance with the OECD’s requirement, we are also required to introduce the “adequacy test” for shipping commercial principals regime in the legislative proposal to ensure that the number of full-time qualified employees employed by a principal in Hong Kong must be adequate, compared with the principal’s business scale and operation, types and level of business activities, amount of profits earned, etc.

(2) The number of business establishments engaging in ship agency and ship management, and ship broking by size and their total number of employees in the past five years are tabulated below:
 

Number of establishments	Size (number of employees)	2016	2017	2018	2019	2020
Ship agents and managers	0-50	232	249	245	251	254
	51-100	13	17	16	11	17
	>100	18	17	15	14	13
	Sub-total	264	283	276	276	284
Ship brokers	0-50	47	39	42	54	61
	51-100	0	0	0	0	0
	>100	0	0	0	0	0
	Sub-total	47	39	42	54	61
Sum of the above	0-50	279	287	286	305	315
	51-100	13	17	16	11	17
	>100	18	17	15	14	13
	Total	311	321	317	330	345

 

Total number of employees	2016	2017	2018	2019	2020
Ship agents and managers	7 590	7 506	7 325	6 751	6 318
Ship brokers	204	141	238	230	219
Sum of the above	7 793	7 646	7 563	6 981	6 537

Note: There may be a slight discrepancy between the sum of individual items and the total as shown in the tables due to rounding.
Source: The C&SD – Annual Survey of Economic Activities

     The C&SD does not maintain separate statistics on ship agency and ship management businesses.

(3) The Task Force comprises tax, financial, legal and maritime experts. According to the economic assessment conducted by the Task Force, if the proposed new tax regime for qualifying ship agents, ship managers and ship brokers is put in place, comparing to the case with no introduction of tax measure, over 10 years it would bring about cumulative incremental ship agency, ship management and ship broking business receipts of approximately some $32.5 billion, as well as direct employment of approximately some 27 600 jobs and indirect employment of some 50 000 to 55 000 jobs. The Task Force’s assessment has made reference to the trends in global shipping commercial principal businesses and the current situation of Hong Kong amid the global maritime services scene. Assuming that the relevant tax measures would be introduced, the Task Force anticipated that over the next ten years, Hong Kong would be able to capture a larger global market share in these shipping commercial principal businesses, thus deriving the incremental amount of business receipts under normal economic conditions (e.g. barring protracted impediments to global business activities or unexpected economic impacts brought about by COVID-19). Making reference to the operating statistics of relevant maritime enterprises, the approximate incremental employment and value added were estimated. Based on the structure of shipping and maritime industries in Hong Kong, the incremental indirect employment was crudely estimated. The natures of the jobs created cover various maritime and other business services, including all ranks of staff working in relevant industries such as marine insurance, ship finance, equipment repairs and maintenance, etc.

(4) Every year, the C&SD conducts the Annual Survey of Economic Activities on major economic sectors. The survey aims to provide statistical information for gauging the business performance and operating characteristics of different economic sectors and for evaluating their contribution to Hong Kong’s Gross Domestic Product. Amongst others, the survey on the transportation, storage and courier services sector compiles the statistics on the business establishments and number of employees etc. engaging in the ship agency and ship management, and ship broking sectors. The statistics may be used for monitoring the trends in operating performance of relevant sectors after the implementation of the new tax regime. read more