Annual Report
The Postmaster General's Statement
As a government department, we have fulfilled our performance pledges and provided an efficient, effective and affordable postal service for the public, handling 1.33 billion mail items, running a network of 133 post offices, processing 23.2 million bills, and issuing 12 sets of special postage stamps, among others, during the year. We have received praise from the general public and acclaim from international postal organisations and other postal administrations overseas for our people-oriented and highly professional services. At the risk of sounding immodest, I can stake a claim that Hongkong Post is one of the best performing postal organisations in the world.
As a Trading Fund and, hence, a business enterprise, we have excelled ourselves again in over-achieving the return target set for us by the Government, with a total turnover of HK$4,115 million and an operational profit of HK$447.3 million. We have benefited a lot from the thriving economy, but we still have to continue our efforts in widening our revenue base by introducing more new and better services, and in curbing operating costs. We are beginning to see the effect of these measures and we are confident that they will come to fruition in the very near future.
Yet my year-long experience in Hongkong Post has led me to realise that the biggest challenge for Hongkong Post lies not with the problems in providing an efficient and affordable public service, or with maintaining a profitable business operation in a competitive market. Rather, our greatest difficulty is the need to combine both objectives, which is to say, having to run a government department on a commercial basis, compete with operators in the private sector without the essential flexibility available in the commercial arena, and make a profit without overall control over the costs of operation or the freedom to price our products and services.
Just as an illustration, the latest round of civil service pay rise is putting an additional $90 million on our payroll each year, not taking into account possible further pay adjustments on top of that in future, while any postage adjustment is an issue more of a political than commercial interest.
On top of the problems arising from the hybrid nature of Hongkong Post as a Trading Fund government department, external pressure is also at work which keeps us always on the alert. Major multinational couriers and integrators are becoming more and more ferocious in scrambling for greater market share. Many are exerting pressure on their own national governments to tighten control over postal traffic in order to reduce the edges traditionally enjoyed by the posts. The Universal Postal Union (UPU), the highest international authority in postal matters, is considering introducing a new method of calculating terminal dues* for handling international mail, which, if adopted, will force Hongkong Post to pay 40-60% more in such dues to the industrialised countries for handling mail from Hong Kong. This will represent about a 20% increase in our cost for handling each international mail item which will have to be borne by senders.
One fun in life is to meet challenges. We are all geared up to have some fun. We are exploring new routes and new services for Speedpost, Hongkong Post's own flagship in Express Mail Services. We will partner with China Post, United States Postal Service and Singapore Post, among other interested postal administrations, to develop more business opportunities. We are studying the business potential in ASEAN countries, on the Indian sub-continent and in the Middle East hub. We have also identified market niches in the logistics business where we hope to provide an alternative channel to help SMEs to move goods around. We are making use of all the international forums open to us to air our concerns on issues and measures which are unfavourable to our interests. Only when we are assured of our financial vibrancy can we continue to provide and to improve our services for the local community.
I have a highly professional and highly motivated team of colleagues to work together to strengthen and further develop the business of Hongkong Post. We all understand that we must keep pace with the social and economic development of Hong Kong in order to survive the keen competition that exists so that we can continue to play the dual role of a government department and a profit-making commercial enterprise. We will invest further in human resources by providing more training opportunities and better working conditions. We must also invest more in information technology to ensure that we are well-equipped to meet the more demanding standard of service expected by our clients.
In the longer term, however, we must take steps to sort out the future of Hongkong Post and decide whether it is a fish or a fowl. For Hongkong Post doing business in a truly competitive market, the Trading Fund operation can only be an interim arrangement and it is not conducive to a sustainable and profitable operation. Either we are allowed to be more competitive by introducing bold and profound corporate reforms, or one day, in the worst-case scenario, we could find Hongkong Post reverting back to being a governmentfunded department, with all the profitable bits of our operation lost to our competitors.
Despite the very rapid development of electronic technology and devices, the ominous prediction that the postal service would become obsolete and be totally displaced by more advanced means of communication, happily for the posts, has not come true. Postal services remain an essential part of the communications network. We are still relevant to the business world as much as ever for interpersonal communication. Parents always long for an occasional letter or postcard from their children, and clients also appreciate letters from their banks, insurance companies, fund managers or travel agents to tell them how much they are treasured. An e-mail or even a telephone call simply does not have quite the same effect.
By the way, may I remind you that it is already time for you to start preparing your Christmas card list.
* Terminal Due is a way to calculate the charge paid to destination postal administrations for delivery of a letter sent abroad.
TAM Wing-pong
Postmaster General and
General Manager of the Post Office Trading Fund
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