LCQ9: Implementation of infrastructure projects

Following is a question by the Hon Frederick Fung Kin-kee and a written reply by the Secretary for Development, Mrs Carrie Lam, in the Legislative Council today (October 29):


Under economic recession looming, the Government has advised that it will expedite the implementation of infrastructure projects to boost the economy and create employment opportunities.  In this connection, will the Government inform this Council:

(a) whether it has conducted any review on the difficulties encountered in the implementation of infrastructure projects; if it has, of the results; if not, the reasons for that;

(b) of the projects anticipated to commence in the next two years and the ones that can be implemented more expeditiously, as well as the latest specific measures to improve the established procedure so that the infrastructure projects can make an early start; and

(c) how it ensures that the employment opportunities for local workers to be created by these projects will not be lost as a result of the work processes being contracted out and prefabricated components produced on the Mainland being used?



In his Policy Address, the Chief Executive reiterated the strategy to help power ahead Hong Kong's economy through infrastructure development.  This becomes even more important at the time of economic downturn.  Infrastructure projects will create employment opportunities at the construction stage as well as boost economic development upon completion and meet the community needs.

My reply to Hon Fung's three-part question on the implementation of infrastructure projects is as follows:

(a) The Government reviews regularly the workflow of implementing infrastructure projects, in particular the difficulties encountered in our preparatory planning and seeking approval, so that we can put forward improvement measures as soon as possible to resolve the problems early and get the projects started.

In his 2007-08 Policy Address, the Chief Executive announced the implementation of ten major infrastructure projects.  In parallel, we will press ahead with other projects to enhance the quality of life in our community.  Over the past year, we reviewed continuously the progress of various projects and related procedures in order to strengthen our capability of taking forward various projects.  On October 22, 2008, the Development Bureau (DEVB) submitted a paper to the Panel on Development, which set out in detail our findings, in particular the problems that may be encountered.  The findings are summarised as follows:

First, the pre-construction planning of infrastructure projects involves many statutory procedures as well as much co-ordination work among bureaux and departments, which often causes difficulties and delays.  Therefore, it is necessary for DEVB to enhance high-level co-ordination to deal with these problems so that they can be resolved as soon as possible.

Second, we have noted the soaring prices of construction materials since mid-2007.  The rising material prices and labour costs have led to two problems: the funds for the on-going projects with price adjustment clauses in their contracts are insufficient to cope with the price fluctuations; and the tender prices returned in tendering far exceed the approved project estimates.  To avoid delay, we will soon propose to the Public Works Sub-committee (PWSC) that the approved project estimates of these projects be raised.

Third, we have to ensure that manpower in the construction industry is sufficient to cope with the increased workload.  In the last quarter (June to August 2008), the unemployment rate of the construction industry was about 6.3%.  While the manpower situation is not yet tense, we have to study in advance the possible mismatches in skills (for example, the types of workers required for various trades) and to step up training whenever necessary.  We also need to tackle other problems, for example, the ageing construction workforce and the reluctance of young people to join the industry.  In this connection, the Construction Industry Council is conducting a study to assess and estimate the demand and supply of construction workers and supervisory/technical staff in the next few years.  The DEVB has also commissioned a consultancy study on the professional staff of the construction industry.  Both studies will engage the stakeholders of the industry.

Looking ahead, we will closely monitor the impact of the financial tsunami on the construction cost and other aspects of the industry.  We will also conduct reviews in the light of actual circumstances so as to implement the infrastructure projects smoothly.

(b) The Government will submit an information paper to the PWSC on November 7, 2008.  The paper will provide information on capital works projects (including item numbers, project numbers, project titles and tentative start dates) to be submitted to the PWSC for approval in the 2008-09 legislative session.  Construction will commence shortly after these projects have been recommended by the PWSC and approved by the Finance Committee for funding.

As to how best the established procedures can be improved in order to expedite the implementation of infrastructure projects, please refer to our response in para (a).

(c) As a number of projects will enter the construction stage, more job opportunities will be created for the construction industry.  We expect that local workers will benefit from these projects.

Under the prevailing policy, contractors must give priority to local workers in filling job vacancies available in the market.  Only under very exceptional circumstances (for example, the contractor can prove that, with all due diligence, he is still unable to recruit suitable local workers to fill the job vacancies), can workers be imported.  According to the Labour Department, such case is very rare.  Therefore, local workers stand to benefit from the implementation of infrastructure projects no matter whether the work processes are contracted out or not.

The Government's procurement policy follows the principles of fair and open competition, transparency as well as cost-effectiveness.  However, it imposes no restrictions on the sources of the services or products to be procured.  The use of imported prefabricated components is driven by the market force.  Apart from cost savings, some of these components are just too enormous in size to be produced locally.  Moreover, Hong Kong is bound by the Agreement on Government Procurement of the World Trade Organisation.  This means that we cannot impose any local production requirement on the procurement of prefabricated components.

Ends/Wednesday, October 29, 2008
Issued at HKT 14:49