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Hong Kong and Sichuan sign cooperation arrangement on support of reconstruction in the Sichuan earthquake stricken areas
(with photos/videos)
 
   

The HKSAR Government signed a "Cooperation Arrangement on Support of Restoration and Reconstruction in the Sichuan Earthquake Stricken Areas" (Cooperation Arrangement) with the People's Government of Sichuan Province in Chengdu today (October 11) and has started to invite applications from non-government organisations (NGOs) for grants to take forward reconstruction work in the Sichuan quake-stricken areas.

After obtaining approval from the Finance Committee of the Legislative Council on July 18 for a financial commitment of $2 billion for the establishment of the Trust Fund in Support of Reconstruction in the Sichuan Earthquake Stricken Areas (the Fund), the HKSAR Government has been actively following up with the Sichuan Provincial Government to work out the detailed operation arrangements for the reconstruction support work and the Fund.

The Chief Secretary for Administration, Mr Henry Tang, convened the first meeting of "HKSAR's Participation in Restoration and Reconstruction Coordination Mechanism" jointly with Executive Vice-governor of Sichuan Provincial Government, Mr Wei Hong, on August 1. Thereafter, officials at the working level of the two governments had met and conducted site visits on many occasions and reached an agreement on the basic principles, the first stage reconstruction projects, the project fund management, as well as the liaison and coordination mechanism.

The content of the Cooperation Arrangement signed today is summarised as follows:

Basic Principles
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Projects directly funded by donations from Hong Kong will be identified by the Sichuan and Hong Kong sides through consultation. Hong Kong's assistance in taking forward the agreed projects should be undertaken on a project basis and in phases. Both sides have agreed that each funded project will be a separate project, project fund management should follow the principle that disbursement of funds shall be made in accordance with the progress of work and the funds required will be released by installment having regard to the progress of work and in accordance with the relevant financial legislation and rules of the HKSAR, and technical standards for the work projects should comply with the rules and regulations of the Mainland and should be subject to appropriate monitoring mechanism.

First Stage Reconstruction Projects
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After deliberation, the HKSAR Government has agreed to first identify a total of 20 reconstruction projects for implementation at the first stage. These include projects on infrastructural facilities, medical services, education and social welfare services etc, with an estimated financial commitment of HK$1,897 million.

The first stage reconstruction projects are identified with reference to the list of pre-selected projects provided by the Sichuan side drawn up in accordance with the "Overall Planning for the Post-Wenchuan Earthquake Restoration and Reconstruction". In selecting the projects, priorities have been given to basic living and public services facilities affecting victims’ livelihood and to include as many projects of different nature as possible. According to the Sichuan side, the victims' need for residential premises and other basic necessities before the arrival of winter have been largely met; thus the HKSAR Government's first stage reconstruction projects will focus on other urgent items, including the setting up of a "Sichuan Hong Kong Rehabilitation Centre" in the Sichuan Provincial People's Hospital, the reconstruction of medical facilities, schools and social welfare facilities in other areas of the province. The HKSAR Government will also assist in the construction of a section of 303 Provincial Road from Yingxiu to Wolong to provide an access road to Wolong, so that full-scale reconstruction of the disaster-stricken Wolong area can be taken forward as soon as possible.

Project and Fund Management
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The technical standards for the work projects funded by the Hong Kong side should comply with the legislation and regulations of the Mainland, and should be subject to the appropriate monitoring mechanism. The Hong Kong funded projects in the Mainland and the related technical standards should comply with the relevant legislation, regulations and policies of the Mainland. The Sichuan side would like to take advantage of this opportunity to bring in the HKSAR's experience and technical know-how in planning, design and management and to draw references from the expertise of the professional agencies/personnel assigned by the Hong Kong side on the planning, design, implementation, consultancy, management, monitoring, accounting and auditing of the funded projects provided on a need basis within the parameters of the relevant State requirements and policies.

For projects directly funded by donations from Hong Kong, the Sichuan side should be responsible for the actual implementation, as well as the daily management and supervision of the projects. Tendering of these projects should be conducted in accordance with the relevant legislation, regulations and institutional procedures of the Mainland and may call for contracting enterprises with a higher level of qualification, so as to ensure that the contractors will have the competence and quality to complete the projects. The Sichuan and Hong Kong sides will jointly examine the actual progress of the projects, organise regular or irregular inspections and conduct site inspections of the works to check on the progress, quantity and quality of the materials used as well as the use of the allocated funds. In case of need, the Hong Kong side may consider appointing professional agencies/personnel to take part in the inspection work. To ensure proper implementation of the projects, any discrepancies found in the course will be discussed and handled by both sides in a timely manner.

To ensure efficient and effective use of the funds appropriated for construction support work, both sides have agreed that each funded project will be a separate project. Each phase of the funded programme will be clearly defined, setting out the nature, contents, scope, estimates, and beneficiaries for each and every project covered by the programme. Disbursement of project funds will be made in accordance with the progress of work. Funds required will be released by installment having regard to the actual progress of each phase. The Sichuan side will set up a "Dedicated Account (the Dedicated Account) for the HKSAR's Trust Fund in Support of Reconstruction Works (the Reconstruction Support Fund)" in Sichuan to handle cross-boundary fund inflows and outflows and disbursement under the Reconstruction Support Fund. To meet the funding needs of the projects, the Hong Kong side will, as far as possible, transfer funds required from the Reconstruction Support Fund to the Dedicated Account during every 12-month period.

Both Sichuan and Hong Kong will work out by agreement the milestones for each project. Except for projects of a special nature, the works milestones will be divided into four phases: completion of foundation works, completion of 50 per cent of the superstructure, completion of the superstructure and completion of building services, internal fitting and any other works remaining. Both sides will agree on the funding requirement and timing of each milestone before the projects are taken forward. The first installment should be paid out by the Hong Kong side in the form of advance payment, the amount of which will be determined by the Sichuan side's projection of works milestones to be completed in the first 12 months and the total expenditures of all projects thus incurred. Nearing to the end of the 12-month period, the Sichuan and Hong Kong sides will jointly examine the actual progress of the each project, confirm the works completed and conduct site inspections. The project implementation unit of the Sichuan side should submit documents such as report by an independent notary, project programme/photos/plans showing the progress of works, notes of meetings and records of test as proof. Before proceeding with the second milestone, the Sichuan side will work out the project cost required for the next 12-month period in the light of actual progress of work, the remaining volume of work (on the basis of the works milestones) and the construction period for each project and will discuss with the Hong Kong side the funds for the next installment.

Liaison and Coordination Mechanism
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To follow up on and take forward the reconstruction support work, the Sichuan and Hong Kong sides have agreed to set up a three-tier coordination mechanism to facilitate the HKSAR's liaison with its Sichuan counterparts. The coordination mechanism includes a high-level coordination group formed by the Chief Secretary for Administration of the HKSAR Government and Vice-governor of the Sichuan Provincial Government, a coordination group formed by representatives from the relevant bureaux/departments of the HKSAR Government and representatives from relevant departments of the Sichuan Provincial Government, and dedicated project groups for individual projects/areas of work (such as medical services, education and Wolong Natural Reserve Projects). The second and third tiers of the liaison mechanism have also started operation in the past few months.

The Secretary for Constitutional and Mainland Affairs, Mr Stephen Lam, signed the Cooperation Arrangement on behalf of the HKSAR Government with the Director of the Sichuan Provincial Development and Reform Commission, Mr Liu Jie, in Chengdu today.

In addition, the HKSAR Government understands that many NGOs in Hong Kong have expressed interest to participate in the post-quake reconstruction support work. It has been announced that the Hong Kong NGOs may participate in the reconstruction support work in the following three modes of operation:

(i) For those Hong Kong voluntary organisations which have already started relief programmes in stricken areas in Sichuan Province and have accumulated certain experience, the Sichuan Provincial Government, guided by the overall planning framework for the reconstruction and the relevant requirements in the Mainland, will allow them to continue with their work subject to the relevant procedural approval.

(ii) For those Hong Kong NGOs (including professional bodies and voluntary organisations) which intend to apply to the HKSAR Government for grants from the Fund to take forward reconstruction work in the Sichuan stricken areas, they are required to form partnership with a government department or organisation in Sichuan approved by the Sichuan Provincial Government and consent should be obtained from the relevant Sichuan government department for the reconstruction projects to ensure that the projects tie in with the overall planning and needs of the stricken areas.

(iii) For Hong Kong NGOs which take forward reconstruction support work in Sichuan with their own resources, they are not required to seek coordination with HKSAR Government and can directly contact the designated government departments in Sichuan. The Sichuan side will process the application in accordance with the relevant Mainland legislation and needs arisen.

On the basis of paragraph (ii) above, the HKSAR Government has worked out the Guidelines for Grants to NGOs. Given that Sichuan Province is the hardest hit area in the Wenchuan earthquake, the Fund will focus on providing funding for the stricken areas in Sichuan, with reference to the overall national planning framework for the post-quake reconstruction work. The proposed beneficiaries of the projects under application shall be those in the Sichuan stricken areas in the main. The reconstruction work should be on project basis. The proposed projects may be in the form of hardware or software of the reconstruction support work or both. The former includes reconstruction of social services facilities and the latter includes support services such as medical and rehabilitation services and vocational training.

The first round of invitation for application will start on October 13. The Guidelines for Grants and application form will be uploaded to the relevant website on This link will open in a new windowwww.gov.hk. The applicant should be a non-profit-making organisation legally incorporated in Hong Kong with charitable status under section 88 of the Inland Revenue Ordinance (Cap. 112). The applicant is required to form a partnership with a government department or organisation in Sichuan approved by the Sichuan Provincial Government and consent should be obtained from the relevant Sichuan government department for the reconstruction projects to ensure that the projects tie in with the overall planning and needs of the stricken areas. In order to accommodate more applicants, the general financial limit of the first round applications is set at HK$10 million per project, but the Government may consider applications of grant for over HK$10 million, having regard to the special circumstances of individual cases.

In assessing an application, the HKSAR Government will consider whether the proposed project ties in with the overall reconstruction planning and the needs of the stricken area in Sichuan and the overall direction and priorities of the HKSAR participation, whether the projects is technically viable, whether the project is financially viable (including the sources of funds other than the Fund and the operating and funding arrangements upon the completion of project, if any), as well as the objectives, main services provided, sources of fund, organisation, management and track record of the applicant. The Government aims to carry out assessment of the applications received in the first round by end November and to release the results as soon as possible.

The Next Step
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The HKSAR Government will continue to maintain close liaison with the Sichuan Provincial Government and other stakeholders with a view to taking forward the reconstruction support work as soon as possible. The Government will also report to the relevant panels of the Legislative Council the latest progress in due course.

Ends/Saturday, October 11, 2008
Issued at HKT 13:31

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