In meeting the departmental objective of excellence through continuous improvement, the Formation Inspection Team (FIT) was tasked with the mission to carry out quality inspections, studies and reviews across the department.

2. In 2003, FIT conducted various reviews on the utilization and management of the vehicle fleets under the Reward and Special Services Fund, the video interview system installed in various offices of the department as well as the supply of general stores. To enable better management of the resources, FIT made recommendations on their proper control and use.

3. To streamline the procedures of the Trade Controls Officer Grade in handling suspects, FIT reviewed the procedures regarding the search, arrest, detention and interrogation of suspects in TCB operations. FIT made recommendations of improvement, including the strengthening of staff training and the use of facilities.

4. In 2004, FIT reset its prime objective as promoting corporate modernization, institutionalization and professionalism. In achieving the objective, FIT reviewed its quality management system basing on international standards and worked for attaining the ISO 9001:2000 Certification within the fiscal year of 2004-2005.

5. Throughout the year of 2004, FIT carried out its tasks along with its set objectives. In a review of the department’s Complaints Investigation System, FIT promoted objectivity and impartiality by introducing a Complaints Investigation and Assessment Panel and a Complaint Appeals Committee. The former was tasked to scrutinise all complaint investigations while the latter was responsible to deal with appeals from the complainants. To facilitate the implementation of the new system, FIT compiled a comprehensive set of procedures to cater for the changes.

6. In strengthening the safety and security of detained person, FIT studied the detention system and facilities of the department. The study would continue until 2005.

7. In fostering occupational safety, FIT reviewed the department’s Staff Occupational Safety Management System. FIT drew up proposals to improve the system and benchmarked good practices for safety enhancement. FIT also produced a tool-kit providing Formation Safety Managers with useful and handy information on the subject.

8. The tasks completed by FIT in 2004 demonstrated fully the department’s values in questing for modernization, institutionalization and professionalism.

Management Support Team

9. Against the background of growing community expectations, changing demands and ever-diminishing resources, the Management Support Team (MST) was established in late 2000 to strengthen strategic support to the directorate in best achieving the business objectives of the department and effectively coping with the unprecedented challenges. Since its inception, the MST has taken on strategic researches and studies, and coordinated the implementation of large-scale organisational reforms and projects. It has also evolved towards a ‘think-tank’ to help crystallising innovative ideas and churning out practical solutions for the directorate in making management decisions, setting strategies and priorities, and formulating forward planning of the department’s business.

10. In 2003 and 2004, the MST continued to devote its resources to commission various researches and studies for enhancing departmental efficiency and improving the quality of services to the community. Major projects undertaken by the MST included a Customer Satisfaction Survey on Customs passenger clearance services, which helped to collect public opinions on the department’s services for improvement. Meanwhile, the initiative taken to re-engineer the departmental statistical system also brought forth an enhanced system for the provision of timely and comprehensive statistics to facilitate the senior management in monitoring departmental performances, analysing on-going trends and formulating strategic directions. Other strategic researches conducted by the MST included an assessment of the implication of the Mainland and Hong Kong Closer Economic Partnership Arrangement (CEPA) on the department’s development and a preliminary study of the overseas models on the Goods and Services Tax, which kicked-off the department’s in-depth study into the subject. In addition, to facilitate the department in coping with the challenges ahead, the MST played a proactive role in ‘environmental scanning’ to identify issues that would have impact on the department.

11. During these two years, in sustaining the government’s policy objective of developing Hong Kong into an international transportation centre and a regional logistics hub, the department put in great effort in promoting and supporting logistics development in Hong Kong. The role of MST in assisting the directorate in formulating the department’s strategies on trade facilitation and speeding up of cargo flow has thus intensified, particularly for efficient clearance of road cargoes at the land boundary control points. The MST conducted various researches and strategic studies to help steer and strengthen the department’s participation in various logistics initiatives put forward either by the Hong Kong Logistics Development Council, the trade community or the government’s high-level steering committees. Examples included the Logistics Pipeline Initiative, the application of Radio Frequency Identification (RFID), Global Positioning System (GPS) and e-seal technology to facilitate cargo clearance. To further enhance service quality and speed up cargo flow, the MST also joined hands with other major formations concerned in streamlining the cargo clearance procedures. Significant projects conducted during 2004 included the re-engineering of cross-boundary truck clearance procedures and the introduction of one-stop clearance for inter-modal transshipment.

Major Projects

12. To further enhance the department's capabilities in processing the ever-increasing cross-boundary passengers and vehicles, Phase II of the Lok Ma Chau boundary crossing improvement works was launched in November 2000. It covered the expansion of the passenger terminal, improvement of the cargo examination facilities, re-provisioning of the existing vehicle processing kiosks and installation of two sets of fixed X-ray vehicle inspection system. The construction of the Inbound and Outbound X-ray Vehicle Inspection Buildings in the first stage was completed in early 2003 while the works in the second stage were completed in September 2003.

13. In order to facilitate customs clearance of containerized cargo generated from Container Terminal No. 9 at Tsing Yi, the department has set up the Customs Tsing Yi Station which occupies a site area of about 4 258m² and comprises a two-storey office block, a cargo examination compound and Customs detector dog kennels. The construction works of the last berth were completed in the 3^rd quarter of 2004.

14. An extension of passenger railway stretching from Sheung Shui to a new terminal at Lok Ma Chau will be constructed to address the overcrowded condition at the Lo Wu Station. Customs clearance facilities, including baggage examination facilities, Customs offices, Customs detector dog kennels, etc., will be set up at the Lok Ma Chau Terminus. The construction works commenced at the end of 2002 and are scheduled for completion in 2007.

New initiatives / Projects

15. To cope with the present and future traffic demand between Hong Kong and Shenzhen, the governments of the two places have been constructing the first control point for providing co-located passenger and vehicle clearance at Namshan, Shenzhen. Customs clearance facilities in the new control point include inbound and outbound passenger hall and cargo examination buildings, two sets of fixed X-ray inspection system, two sets of mobile X-ray vehicle scanning system (MXRVS) and Customs offices etc. The construction works commenced in August 2003 and are expected for completion in July 2006. Both governments agreed that the new crossing facility would be named as "Shenzhen Bay Control Point". It will serve the cross boundary passengers round the clock.

16. The operation hours of the Sha Tau Kok Control Point have been extended from 7:00am-6:00pm to 7:00am-8:00pm since December 1997. In order to meet the operational requirements of the user departments and to make improvements to passenger facilities, construction works for expansion commenced in December 2004. Apart from the provision of additional office space for user departments and the construction of a Customs kennel, enhanced public facilities such as the extension of covered walkways, the erection of canopies in passenger loading/unloading areas and relocation of Customs departure cubicle for a larger queuing area will also be provided. The expansion project is expected for completion by mid-2006.

Customs Equipment and Facilities

17. On 11 March 2003, two sets of fixed X-ray vehicle inspection system were inaugurated at the Lok Ma Chau control point. This hi-tech equipment enables Customs officers to view the content of a whole container truck without opening the container. The inspection time for each goods vehicle has been shortened greatly from the previous three - four hours to less than 20 minutes. This has largely reduced the impact of cargo inspection on the industry. Since the operation of the two systems in 2003, officers at the control point have detected a total of 79 smuggling cases involving seizures valued at a total of $164.4 million, exceeding the system cost of $113.8 million. With the enhancement of container clearance efficiency, a win-win scenario between Customs enforcement and trade facilitation was created. It signifies a remarkable breakthrough of the Customs clearance methodology and exemplifies the department’s forward looking vision.

18. In April 2004, two more sets of mobile X-ray vehicle scanning systems (MXRVS) were commissioned into service. Among the four sets of MXRVS in total, two are located at the Kwai Chung Container Terminals, while the other two at Man Kam To control point and Sha Tau Kok control point respectively. These systems can scan a whole container truck at a time and officers can inspect the content of the container without unloading the goods. The systems have made cargo clearance work more efficient and cost-effective while enabling Customs to achieve trade facilitation at the same time.

19. In March 2003, Automatic Vehicle Recognition System was fully operative at all the Customs kiosks at Lok Ma Chau, Man Kam To and Sha Tau Kok control points. The system captures the registration number of a passing vehicle, and inputs it into the Land Boundary Systems (Customs computer system for vehicle clearance). It saves a kiosk officer’s effort to key in the vehicle number and thus reduces the average processing time of a vehicle by three seconds.

Passenger Clearance Cubicles

20. With a view to enhancing passenger flow, the department rolled out a new clearance mode at various passenger control points and the Hong Kong International Airport by using "Customs Clearance Cubicles" to replace the conventional baggage examination counters for passenger clearance since the 3^rd quarter of 2003. Inside a search cubicle, there are advanced equipment such as X-ray checker and recording system. Passengers chosen for further check will be processed inside a search cubicle. The recording system will take down the clearance process, and the advanced X-ray checker will make baggage clearance more efficient. It offers more privacy to the passengers being checked as compared to the conventional practice and reduces the embarrassment they may experience.

21. "Customs Clearance Cubicle" has proved to be very effective since its trial operation at the Arrival Hall of HK-Macau Ferry Terminal in November 2002. The department has extended its application to other control points by phases for enhanced efficiency in passenger clearance. At present, "Customs Clearance Cubicles" have been set up in all control points.

Radioactive Substance Detector

22. To join the international forces to combat terrorist activities, the department has since early 2003 stepped up the capability to detect dangerous substances commonly used by terrorists such as explosives, chemical warfare agents and radioactive substances. The department has procured a number of explosives/ chemical warfare agents detectors for use by front line officers and upgraded Customs X-ray checkers to spot suspected explosive concealments inside baggage and cargo packages. Furthermore, Customs MXRVS to detect radioactive substances concealed inside cargo containers have been upgraded as well.

Open Tunnel X-ray Scanning System

23. To further enhance the operational efficiency of cargo examination at the Hong Kong International Airport, an Open Tunnel X-ray Scanning System, at a cost of $1.8 million, was procured and installed at the Customs Examination Hall of HACTL Super Terminal One in 2003. With its open tunnel design, the system can be used to scan large objects of irregular shape. In addition, the enhanced X-ray scanning and micro dose technology of the new system offers greater detection capability.

SkyPier

24. The SkyPier, a cross boundary ferry terminal to provide ferry services for transit passengers between the Hong Kong International Airport and other ports at the Pearl River Delta (PRD) of Mainland China including Macau, commenced operation in September 2003. Ferry services between the Hong Kong International Airport and four PRD ports, namely Macau, Tai Ping, Shekou and Shenzhen were provided in the initial stage and will be extended to other PRD ports. As the passengers using the service are not required to undergo CIQ process at the Hong Kong International Airport, the SkyPier offers a speedy and seamless travel experience to passengers plying between other countries and the PRD of Mainland China. Transiting passengers and their baggage are transferred between the Passenger Terminal Building (PTB) of the Hong Kong International Airport and the SkyPier by sealed buses along a dedicated and bonded road which is designated as restricted area. In view of the security arrangement so provided, Customs operations are conducted at the SkyPier on a strike and search basis to facilitate trade and tourism.

25. Since the commencement of operation in September 2003, the daily passenger throughput of SkyPier had picked up significantly by 267 percent for sea-to-air passengers and 280 percent for air-to-sea passengers in December 2004. In view of the increasing demand for the services, the SkyPier, apart from providing ferry services for transit passengers between the Hong Kong International Airport and the four PRD ports, has extended its services to cover Zhongshan and Lianhuashan ports since December 2004.

Legislation

26. Significant legislation affecting the department enacted in 2003 and 2004 includes:-

(i) Import and Export (Facilitation) Bill – to provide for the relaxation of import, export and transportation control on nine categories of articles. They include the removal of the licence requirement for the import and export of left-hand drive vehicles and outboard engines and export of prescribed articles such as television sets, video cassette recorders, air conditioners and refrigerators. For transshipment cargoes, the licensing requirement for the import and export of Optical Disc Mastering and Replication Equipment has been replaced by a notification system.

(ii) Prevention of Child Pornography Bill – to enact provisions prohibiting child pornography, child sex tourism and pornographic performance by children. The new enactment implements the requirements of Article 34 of the United Nations Convention on the Rights of the Child.

(iii) Chemical Weapons (Convention) Bill – to enact provisions in banning the development, production, stockpiling and use of chemical weapons. The new enactment implements the requirement of an international treaty called the "Convention on the Prohibition of the Development, Production, Stockpiling and Use of Chemical Weapons and on their Destruction".

(iv) Import and Export (General) (Amendment) Regulation – to amend the Seventh Schedule of the Import and Export (General) Regulation (Cap. 60 sub. leg. A) for the purpose of implementing in Hong Kong an international certification scheme for rough diamonds known as the Kimberly Process Certificate Scheme. The scheme aims to stop trading in rough diamonds used by rebel movements or their allies to finance armed conflicts, activities of rebel movements and illicit proliferation of armament.

(v) Broadcasting (Amendment) Bill – to amend the Broadcasting Ordinance (Cap.562) and to make it an offence to possess or use or authorize another person to possess or use an unauthorized decoder for commercial purposes. The enactment of this amendment ordinance on 7 July 2004 empowers the department to enforce import and export control on unauthorized decoders at the control points.

Multilingual Information System

27. Four sets of computer with LCD touch-screen display function were procured for the installation of the Multilingual Information System. The system is available in the personal search rooms of the Customs Halls to replace the previous multi-language information booklet. It has been put into use since March 2004 which enables passengers to make quicker reference to Customs clearance requirements, the relevant laws and their rights in 20 commonly-used languages.

New Duty Payment Facility at the Air Cargo Terminal

28. As time and speed are critical in the express cargo industry, express cargo operators will clear consignments on behalf of their customers including the payment of duty for consignments containing dutiable commodities. With a strong commitment to e-commerce and a dedicated initiative to work hand in hand with Customs business partners in fostering Hong Kong as an air cargo hub, the department introduced a new duty payment method in June 2004 for air cargo handlers to clear their dutiable goods consignments at the Hong Kong International Airport.