The Commissioner of Customs and Excise, Mr Hermes Tang, gave a review of law enforcement and trade facilitation work by the Customs and Excise Department (C&ED) last year at the 2017 year-end review press conference held at the Customs Headquarters Building today (February 7). He also outlined the department's future work plan.
Overall situation
In 2017, a total of 16 387 cases related to laws enforced by the C&ED were detected. While the number of cases was on a par with that in 2016, the total value of seizures decreased by 6 per cent to around $1.3 billion. About 50 per cent of the cases were illicit cigarette cases, followed by dangerous drug and infringement cases.
Dangerous drugs
Last year, 983 drug cases were detected with 329 arrests, representing increases of 29 per cent and 0.3 per cent respectively. A total of 1 158 kilograms of drugs were seized, a 6 per cent decrease compared to 2016.
Major seizures included 372kg of cathinone (bath salts), representing an increase of 1.1-fold; 234kg of cannabis, an increase of 63 per cent; and 145kg of cocaine, a 41 per cent drop from 2016.
About 65 per cent of the total drug seizure was made at the airport, with 283kg at air cargo terminals, which was a 51 per cent increase from the figure in 2016.
In addition to fostering closer co-operation with the Mainland and overseas enforcement agencies by intelligence exchange and joint operations to smash the source supply to Hong Kong or to other places via the city, the C&ED will also continue to work with the five major express courier operators through the established intelligence exchange mechanism. During the year, the mechanism worked well, with a total of 108 drug cases detected.
Smuggling
In regard to smuggling, increases were registered for the number of cases, the number of persons arrested and the total seizure value.
A total of 213 smuggling cases were detected in the year, up 23 per cent from 2016. While the number of arrested persons increased by 12 per cent to 216, the seizure value also jumped 26 per cent to $529 million.
About 82 per cent, or 175, of the detected cases involved smuggling activities between the Mainland and Hong Kong, an increase of 17 per cent compared to 2016. The number of arrests for this type of smuggling activity also increased by 11 per cent to 206 while a 63 per cent increase to $494 million was recorded for the seizure value.
The major categories of seizures were electrical and electronic goods ($101 million, up 24 per cent from 2016), precious metals ($97 million, up one-fold), cigarettes ($97 million, up 52 per cent) and computer products and accessories ($89 million, up 2.2-fold).
A record ivory seizure was made in the year, with around 7 000kg of raw ivory tusks valued at approximately $70 million seized. This was the biggest-ever seizure of its type in the world.
The C&ED will continue to strengthen its risk-assessment and intelligence exchange with the Mainland and overseas law enforcement agencies to combat smuggling at source. Sea and land patrols will also be stepped up. To stop smuggling syndicates more effectively, the department will keep up proactive investigation under the Organized and Serious Crimes Ordinance to restrain and confiscate criminal proceeds.
Since the implementation of export control on powdered formula in March 2013, there has been a considerable drop in the number of illegal export cases, from an average of about 430 cases per month in 2013 down 25 per cent to around 324 in 2017. The C&ED will continue its targeted operations for stringent enforcement action.
The department has stepped up enforcement action ahead of the Lunar New Year period and worked with the Mainland and relevant departments in taking appropriate control measures to maintain proper order and ensure smooth operation at all boundary control points, so that passenger flow would not be hindered by parallel trade activities.
Illicit cigarettes
On anti-illicit cigarette operations, 7 959 cases were detected, with 60.7 million cigarettes involving excise duty of $116 million seized, all representing a 4 per cent drop as compared to 2016. The quantity of cigarettes seized in 2017 actually registered an annual increase of 68 per cent, if excluding individual mega seizures from marine transit cases. Due to a more stringent strategy, the number of inbound mega cases (those involving 500 000 cigarettes or more) jumped 41 per cent to 24, resulting in the seizure of 40.7 million cigarettes.
Tackling at source has proved to be an effective way to cut off the illicit cigarette supply chain, resulting in a decrease in the overall figures. The department will keep up the holistic enforcement approach in a bid to achieve an all-round strategy: interception in the upper stream, storehouse smashing in the middle, and tackling the selling activities in the lower end. The C&ED has also strengthened its partnership with the Housing Department to cut off phone ordering by extending the Joint Effort with Community against Illicit Cigarettes programme to more than 180 public housing estates.
Revenue collection
For revenue collection on dutiable commodities, duty collected by the department last year amounted to $10.59 billion, a slight decrease of 1 per cent as compared to 2016. Of the total amount, $6.28 billion was from tobacco products, $3.78 billion was from hydrocarbon oil, and the rest came from alcoholic products. As a result of a better public understanding following the department's strengthened publicity of the Motor Vehicles (First Registration Tax) Ordinance, 32 cases of ordinance violation were detected in 2017, a 30 per cent drop from 2016.
Intellectual property rights protection
On intellectual property rights protection, a total of 916 infringing cases were detected, 718 people were arrested and 1.6 million infringing items with a total market value of about $118 million were seized. Major seizures included electrical and electronic goods, optical discs and pharmaceutical products as well as clothes and accessories. While the number of cases and arrested persons rose 8 per cent and 2 per cent respectively, the number of items seized was on a par with that in 2016 and the seizure value dropped 27 per cent.
In 2017, the department detected 202 cases of Internet piracy, a slight increase of 0.5 per cent when compared with the 2016 figure.
It is worth noting that 27 cases of making use of Internet platforms by physical shops in soliciting for business were detected, which was a 1.7-fold increase from 2016. The number of items seized also jumped 10 per cent to 15 000.
With stringent enforcement action and unwavering public education efforts, the number of students arrested was down 23 per cent to 65 in the year.
In the first-ever case in Hong Kong, members of a piracy syndicate circumventing paid TV channels were found guilty of providing a circumvention device or service and conspiracy to defraud. The department welcomed the prison sentences ranging from 21 to 27 months.
With a view to stepping up enforcement action, the C&ED at the end of last year launched the new Big Data System, which is an automatic system running round the clock to analyse mass information on different Internet platforms for effective screening and updates on infringing activities. The system has been working smoothly since the launch with initial encouraging results reported.
Consumer protection
More than 4 000 checks and inspections were conducted in the year and 108 enforcement cases were made, bringing about 68 successful prosecutions.
In one case, a removal and storage company's proprietor was found guilty of wrongly accepting payment, in contravention of the Trade Descriptions Ordinance (TDO). A six-month jail term was given to the proprietor, who was also ordered to pay the victim $10,000 in compensation. This is the heaviest penalty ever for engaging in unfair trade practices in the course of selling in Hong Kong.
In the department's first successful prosecution against a fitness centre, a sales manager was found guilty of breaching the TDO by forcing a customer to purchase a fitness package. The manager was sentenced to 160 hours of community service.
In another case, a beautician and a beauty consultant were each sentenced to 200 hours of community service for forcing a customer to purchase beauty services.
In another first prosecution of its kind, a renovation company and its director were found guilty of unfair trade practices, and were fined $30,000 and sentenced to 240 hours of community service.
In the meantime, the C&ED was highly concerned about the selling of products not matching sales descriptions on social networking platforms. Nine successful prosecutions were made in the year. In one case, a trader was sentenced to 100 hours of community service for making use of false trade description in alleging that the health supplement he sold carried an effect of gaining body height.
The department's Quick Action Team was deployed to handle 73 TDO-related complaints by short-term visitors to Hong Kong.
With regard to toys and children's product safety, general consumer goods safety and short weighing, the department conducted more than 4 700 checks and inspections altogether, with 81, 61 and 51 enforcement cases effected respectively, resulting in 28 successful prosecutions.
The C&ED will continue to step up enforcement action for consumer rights protection. With the approach of the Lunar New Year, Customs officers will conduct more checks and inspections in popular tourist shopping spots, remind traders to comply with laws and regulations and promote smart-shopping tips to customers.
Money service operator supervision
In 2017, the department issued 262 money service operator (MSO) licences and renewed 363 others. During the year, the department conducted checks on 175 MSOs' compliance with the customer due diligence, record-keeping obligations and other licensing requirements. Disciplinary action was taken in two cases while six unlicensed operations were detected.
Trade facilitation
The number of enterprises accredited as Authorized Economic Operators (AEOs) under the AEO Programme increased to 45 as at December 31, 2017. With the latest Mutual Recognition Arrangement (MRA) signed last year with Australia, Hong Kong has signed eight MRAs since the launch of the AEO Programme in April 2012, making the city the third economic entity following Korea and the United States in terms of the number of MRA partners engaged. The MRA with Australia was signed on top of those with the Mainland, India, Korea, Singapore, Thailand, Malaysia and Japan signed earlier. In mid-December last year, the C&ED also signed Action Plans with its counterparts in Israel and New Zealand, signifying the commencement of formal MRA procedures with the two entities.
Under the Single E-lock Scheme which started in March 2016 for the purpose of speedy cargo clearance, Hong Kong Customs' Intermodal Transshipment Facilitation Scheme is interconnected with the Speedy Customs Clearance of the Customs administrations of Guangdong Province. With its extension to Hunan Province in September 2017, 46 speedy cargo clearance points and 408 transhipment routes have been made available to the scheme's participants.
Rolled out at the end of 2015, the Free Trade Agreement Transhipment Facilitation Scheme has been well received with 9 255 applications with goods valued around US$740 million and estimated tariff reduction exceeding US$49 million by the end of 2017.
Manpower recruitment
In order to meet the operational demand, the department has adopted since last October a flexible approach in recruiting Customs Officers throughout the year. The results are encouraging, with more than 10 000 applications received up to the end of January this year. Meanwhile, the Probationary Customs Inspector recruitment exercise for 2018 started last month.
Way forward
In talking about the department's way forward, Mr Tang noted that three major cross-boundary infrastructure projects, namely the Hong Kong-Zhuhai-Macao Bridge, the Guangzhou-Shenzhen-Hong Kong Express Rail Link and the Liantang/Heung Yuen Wai Boundary Control Point, will come into operation one after another, adding that it is undoubtedly an unprecedented challenge for the department to provide clearance services at the projects within tight deadlines.
"We have to ensure that our manpower, facilities, equipment and workflow can tie in with the completion of each project," Mr Tang said.
"With the rapid development of e-commerce and Internet shopping business, heavy demand for logistic services has been seen in recent years, with more than 1 800 smuggling cases detected through postal parcel and express courier channels in 2017, a 28 per cent increase from 2016," he added.
In order to optimise customs clearance capacity, Mr Tang said that a Gantry Type X-ray Vehicle Inspection System and a Dual Energy Mobile X-ray Vehicle Scanning System will be installed at land boundary control points, while Handheld Narcotics Identifiers will also be used extensively. A video on vehicle inspection and scanning systems was shown and equipment demonstrations were also made at the press conference.
Mr Tang pledged to further develop the newly introduced Big Data System and increase its capacity to the maximum.
He assured that more efforts would be taken to step up compliance promotion for traders and public education for consumers in a bid to fight against unfair trade practices. The department will step up compliance promotion for high-risk sectors by means of meetings and seminars, reminding both traders and workers to observe laws and regulations and encouraging traders to set up guidelines and increase staff supervision and training.
As for public education, a series of short videos on unfair trade practices and a pamphlet on successful prosecutions will be produced. Collaboration with other government departments and the Consumer Council will also be strengthened in co-organising TDO seminars for different groups in a bid to raise public awareness and understanding of the ordinance.
In regard to trade facilitation, Mr Tang said that preparations for the commencement of the Trade Single Window (SW), with its Phase I expected to be rolled out by mid-2018, are under way. The SW will be operated by the C&ED.
Concluding his briefing, Mr Tang noted that Hong Kong Customs is now developing in an important historical stage, with the completion of various targets just around the corner.
"To the department, 2018 is expected to be a momentous year of carrying forward the past and opening up the future. In anticipation of the upcoming significant developments, the department is poised to become a more diversified and multi-functional enforcement agency with a wider network," he said.
Ends/Wednesday, February 7, 2018
