Reforming outdated legislation and promoting the development of innovation and technology (2017/07/05)

MR YIU SI-WING (in Cantonese): Deputy President, with continuous advances in technology, changes in the social environment and people's habits and behaviour are inevitable. Accordingly, timely and appropriate updates of legislation are necessary so as to keep in tune with the trend of social development. Reforming outdated legislation can in turn promote the use of innovation and technology, thereby enabling the creative industries to keep pace with the global trend in a timely manner. This is indisputable.

Nevertheless, innovation and legislation carry distinctly different features. Innovation requires creative thinking that breaks with convention, changing conventional modalities with gradual replacement of the status quo, while legislation needs to manifest appropriateness and fairness, concluding rules having regard to the actual situation. Enacting or amending legislation within the framework of justice in the interest of the vast majority serves to maintain the sustainability and stability of the social system. While technology may progress by leaps and bounds, legislation must not be changed constantly. Amendments may be introduced only after thorough discussions by various sectors of the community and major shareholders, with a balance struck between the interests of stakeholders and protection of consumer rights and interests, so as to avoid anyconsequent disputes or even social unrest soon after the introduction of legislation, otherwise it will defeat the original intent of the lawmaker. As Legislative Council Members who are empowered to scrutinize legislation, we should listen more to the views of various shareholders and draw conclusions only after thorough discussions.

Deputy President, a controversy has been raging in society over some sharing economy platforms these days, particularly the two platforms Uber and Airbnb, which have been launching publicity campaigns and operating in the name of innovation and technology in Hong Kong while disregarding local legislation. Sharing economy has gained global popularity thanks to its unique mode of sharing, which enables more owners of idle resources to reap benefits by selling or leasing such resources easily via the Internet. Meanwhile, consumers may acquire the necessary services and products at a below-market price through various information platforms which, as intermediaries, will in turn generate income through facilitating deals.

There is little controversy over certain forms of sharing economy, such as bicycle-sharing and sharing of personal idle resources. Such environmentally friendly and energy saving practices compliant with the existing legislation can reduce waste. Nevertheless, the mode of service delivery by Uber and Airbnb is different. Such platforms operate in the name of sharing economy, but in reality, they engage in unfair competition by low-cost means in breach of local legislation for risk-shifting purposes. First of all, both platforms share a common feature of carrying out low-cost expansion, thereby constituting unfair competition against conventional service providers. Both platforms only provide information sharing services. They have millions of rooms or numerous hire cars to offer without any actual investment, ownership of accommodation rooms or purchase of vehicles. In contrast, hotel investors have to bear construction costs amounting to billions of dollars, while hire car operators also have to bear tendering and licencing costs amounting to millions of dollars. They even need to employ a large workforce locally, pay for day-to-day operating costs and commission, etc. Nevertheless, while the two platforms operate at much lower costs, they can reap handsome returns. Just imagine, if things run out of control, will industry investors be willing to make further investments? If things go on like this, government income and people's employment opportunities will definitely be affected.

Second, it is difficult for both platforms to operate in compliance with local legislation. Their business stretches across different jurisdictions, and the legislation regulating product suppliers varies from one place to another. While they are permitted to operate on a limited scale in some places, conditions are not yet ripe in Hong Kong. At present, hotels, guesthouses and hire cars are subject to strict regulation in Hong Kong for the purpose of laying in a reasonable supply, avoiding vicious competition and protecting user rights and interests. Operators must meet stringent requirements to get a licence, and a comprehensive dispute resolution mechanism must also be in place to ensure orderly operation.

Take hotels and guesthouses as an example. Subject to the Hotel and Guesthouse Accommodation Ordinance, a hotel or guesthouse licence is required for accommodation with a tenancy term of less than 28 days. The vetting and approval criteria for such licences are exceedingly stringent with stricter requirements imposed on the fire safety installations and building structure of the premises, and it takes a longer time to vet and approve such applications. For the construction of hotels, tenders have to be submitted for hotel-specific sites, and applicants have to clear one hurdle after another in order to get a licence. As for hire cars, applicants for such licences also face various regulations and restrictions, and quite some capital injection and resources are required.

If the sharing platforms actually provide leasing services free from any regulation in the name of encouraging innovation and free economy, and the Government imposes no legal restriction on such service providers, how can there be fairness for licensed hotels, guesthouses and hire cars? If things run out of control, driven by benefits, more people will definitely take such risks, thereby rendering the existing legislation meaningless.

Third, it is difficult for consumers to be accorded suitable protection. Even if both platforms are backed by an extensive array of legal advisers, given the diverse sources of supply which are on the rise, it is impossible for the platforms to certify the accommodation and car supplies. In addition, the different legal benchmarks adopted by various places in terms of user protection and restriction on service providers which involve complex domains in law will easily give rise to potential safety pitfalls and unfair compensation.

As an intermediary for home-stay lodging services, Airbnb may fit in with some places. But given that Hong Kong is congested with high-rise blocks and densely populated, the conditions of the urban areas simply do not favour the  development of home-stay lodgings. In the absence of effective regulation, turning residential units into home-stay lodgings will not only put the safety of occupants at risk, but also affect the security of buildings and the daily lives of residents, while landlords of rental properties will face a high risk of prosecution. As an intermediary for hire car services, Uber also has deficiencies in the protection of users and rentor-owners. Recently, five Uber drivers were charged with the counts of "driving a motor vehicle for hire or reward" and "using a vehicle without third-party insurance", each was fined $10,000 and imposed a 12-month driving ban. Assuming the role as a profit-making intermediary, Uber has nonetheless managed to get away with it, shifting the risks to service providers under the laws of Hong Kong. Summing up all of these, I do not support relaxing the law to allow companies of a nature similar to that of the two platforms mentioned earlier to operate in Hong Kong.

Deputy President, while I encourage innovation, it does not mean that I support any anti-competitive conduct in the name of innovation or a complete subversion of the existing well-established system. If the Government needs to amend the legislation in light of market changes, it must consider the social reality, industry conditions and the interests of stakeholders in a holistic manner, conducting extensive consultation and proceeding with care on the premise of protecting fair competition and consumer rights and interests.

Deputy President, I so submit.