The Electrical and Mechanical Services Trading Fund was established as a result of public sector reform undertaken by the Government in the early 90s. The aim of the Trading Fund is to model our operations on commercial principles, enhance our cost effectiveness and ensure full accountability for our activities.

The Fund was established in August 1996. In the past three years we have had a period of adjustment, reorganising and restructuring for the competitive environment and the challenges ahead. In August this year we moved into the next phase of the scheme, when we began the "untying" process which opens up the public sector market. "Untied" customers can choose to keep on using EMSD or their own E & M supplier in a competitive environment. About 25% of our existing business was "untied" in August 1999, with subsequent phases taking place every following year until 2002, when the process will be complete. When this happens, we will be operating in a highly competitive environment.

I would like to stress that for customers, who would like to continue using our services, it will be business as usual. They will not be affected in any way nor will they have to do anything to continue enjoying our services.

Change can be confusing but we have been careful to manage this change, keeping our customers fully informed of developments, what the new environment will mean and most important of all, how this new process will benefit us all.

First and foremost, being accountable for our activities means that we have to be open with customers. Secondly in a competitive environment, our prices have to be in line with market prices and our services have to be among the best in Hong Kong. This translates into quality and more cost-effective services for our customers all round.

You mentioned that customers will have a choice of supplier once they are untied. Why would they choose to retain your services?

Obviously, we have done a great deal of work within EMSD to meet the demands of the new and competitive environment. We have looked at best practices around the world, reorganised our operations to ensure customer-oriented services, reviewed our pricing structures to ensure their competitiveness and focused on improving productivity and efficiency.

When the Trading Fund was set up in August 1996, a major goal was to increase productivity by 15% over three years. Overall productivity improved by 12.5% in March this year. This saving has been passed directly on to our customers, costs for the same level of work in the past three years have actually come down by 12.5% in real terms. We have reviewed our productivity goal, with a view to further improvement in the coming years. This saving will also be passed on to customers.

I think that this is a major concern in any competitive and commercial organisation. Having said that, I believe competition is a positive process as it drives us to manage our operations in the most cost-efficient and productive way possible while offering the best possible services to our customers. The process has made us take a good look at ourselves to ensure that we are comparable to the best that the market has to offer.

With the untying, some customers will obviously try new suppliers but we always have the opportunity to tender for the work. Our goal is to be the preferred service provider in the public sector. We are therefore very pleased to have won many of the contracts that we have bid for in the past few years. Our Airport Sector Division is a prime example. We currently manage and maintain various operations at the airport under 12 contracts, 10 of which were won in a competitive environment.

The competition will keep us on our toes as we focus on retaining our customers, growing our existing business and securing new business.

There is a genuine concern among some customers that our prices are high or will rise as the Trading Fund funds its activities. However, as mentioned, the Trading Fund is not a profit-driven organisation. The number of tenders that we have won recently indicate that our prices are competitive and well in line with the market. Prices are also coming down in real terms as cost-efficiencies and productivity gains are reflected back to customers. I would also like to stress that the quality and professionalism of our services together with the value-added benefits offered, provide value-for-money services which will save customers' costs in the long-term.