proposal for corporatisation of the survey and mapping ... · smo’s main customers are government...

Proposal for Corporatisationof theSurvey and Mapping Office (SMO)

February 2001

Table of Contents

1

Contents Page

Executive Summary 2

Section 1 – Introduction 14

Section 2 – SMO today 17

Section 3 – Opportunities 29

Section 4 – Benefits of corporatisation 50

Section 5 – Initial operations of the Corporation 56

Section 6 – Staffing arrangements 71

Section 7 – Financial plans 78

Section 8 – Next steps 94

Annexes

Annex A - Products and services of SMO

Annex B - Government use of SMO data

Annex C - International case studies

Annex D - Current fees for SMO’s products and services

Annex E - Staff employment package

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Executive Summary

Background

The Survey and Mapping Office (SMO), one of the four functional offices within Lands Department, provides survey and mappingservices to the Government, the broader community and the private sector. The applications and market for the spatial data thatthese services generate have been expanding rapidly with the development of digital technologies, geographic information systems(GIS) and global positioning systems (GPS). It is important to the continued growth and success of Hong Kong that theGovernment, the community and the private sector are able to benefit from the rich array of services and business opportunitieswhich will flow from leveraging the full value from SMO’s data and skills. This requires institutional change to give SMO themanagerial and commercial flexibility and culture to make the best use of its assets for the benefit of Hong Kong.

Purpose of this Report

In May 2000, the Administration decided to draw up detailed proposals on corporatisation. This report sets out these detailedproposals and the strong case for corporatisation. The report also provides further detail on how SMO would work as the Surveyand Mapping Corporation (SMC), its organisation and the terms which current SMO staff would be offered to either move to thecorporation or retain their civil servant status.

Executive Summary

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SMO today

Operation and rolesSMO is one of four functional offices within the Lands Department. Its function is to act as the central authority for land surveys andto provide:

• Maps and plans for various purposes

• Land survey services for the support of Government land management

• Geographic network and standards for land and engineering surveys

• Boundary records of all land parcels.

In addition to these services, SMO supplies professional and technical support to a variety of government departments. SMO alsohas three other important roles:

• Survey authority – assisting the Land Survey Authority to administer the Land Survey Ordinance by maintaining recordsof deposited plans, setting codes and standards of survey practice, implementing surveying policies, and registeringauthorised land surveyors.

• Spatial data infrastructure provider – responsible for providing geographic reference framework and data dictionary forGIS, and maintaining metadata records for the Planning, Lands and Works group of departments

• Leading provider of digital maps and advice – as the sole provider of Hong Kong’s large scale digital maps, SMOassumes an important role as supplier and advisor in the development of various government GIS applications.

SMO employs around 1,320 staff, most of whom are technical and survey support staff. The core operations of SMO centre arounda number of ongoing surveys including geodetic survey, topographic survey, cadastral survey and photogrammetric survey.

Executive Summary

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Products and servicesUsing data collected by the surveys, SMO produces digital mapping databases and paper map products. It also operates the LandInformation Centre, which provides comprehensive and up-to-date land data, and as such represents a unique geographicframework and standard upon which other users may build their own sub-systems. SMO also provides consultancy support(particularly in relation to the development of GIS applications by customers, training, and reprographic services). The Office alsoseconds staff to other government departments to provide on-going support (currently around 240 staff).

Customer segmentsSMO’s main customers are government departments (which account for the majority of current services) and technicalprofessionals and business professionals within the private sector. The Lands Department itself is SMO’s largest single customer(supporting land administration), whilst SMO’s mapping data supports many government departments in their daily operation andplanning, and SMO’s spatial data is a vital contributor to many of the Government’s policy initiatives.

In the private sector market, technical professionals, including infrastructure providers, utilities surveyors, civil engineers andarchitects, have been the main customer segment for SMO. SMO’s products are used extensively to support the development andmaintenance of Hong Kong’s infrastructure. More recently technological change and growing awareness of the potentialapplications of spatial data have been driving increasing demand from the business professional segment.

Opportunities ahead

Industry trendsGlobal industry trends are leading to expanding and changing demands for the type of spatial data and services SMO provides:

• Globalisation of spatial data acquisition and management standards.

• Technological advancement like satellite imaging, which enhances spatial data collection.

• Digitisation of mapping data, allowing convenient storage, exchange and integration with other information systems.

Executive Summary

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Spatial information is increasingly applied in various public sector and business applications, including GIS, internet, and WirelessApplication Protocol (WAP), placing an increasingly high value on spatial information and locating infrastructure.

Emerging Government needsSMO’s data will have a vital role in supporting areas such as the work of the Urban Renewal Authority, the development of thePavement Management System by Highways Department and the implementation of the second Railway Development Strategy.Overseas developments suggest the potential to develop many new public sector applications of spatial information such aselectronic service delivery, tourism and inward investment, traffic management, air quality management and building safety.

Private sector business opportunitiesMany new opportunities will come from the private sector, shifting the balance of revenue and reducing reliance on income fromgovernment customers. Emerging commercial applications of spatial data include distribution and logistics management, customerservice support for retail and banking, real estate and new economy applications involving the internet and WAP. IncreasinglySMO’s private sector customers will be divided between end users, buying products and services for their own use, and value-added resellers, who will repackage the data and sell it on to end users.

Chosen focusFour broad opportunities have been selected as the focus for SMC:

• Spatial data co-ordinator: Building on the role of the Land Information Centre as a clearing house and consolidator forspatial data to include other government departments and the private sector.

• Provider of e-commerce maps: Developing standard interface application for digital maps as the mapping base for e-commerce applications.

• Positioning infrastructure provider: Providing Differential Global Positioning Systems correction data to value-addedresellers.

• Provider of GIS consultancy services: and partnering with the private sector to produce value-added GIS products.

Executive Summary

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Intellectual propertySMC’s revenues, especially those from the provision of digital mapping data, will depend on its ability to preserve its ownership ofthe core data, particularly when supplying data to value-added resellers. There are policy issues here in striking the right balancebetween open access to data (which may in some cases serve community interests, but could in others deter essential investments)and appropriate protection of intellectual property rights.

Benefits of corporatisation

Current constraintsIn recent years SMO has sought to respond to the early stages of this growth in demand and increasing change in its market placeby establishing arrangements with private sector organisations to provide new services. Examples include real estate and directoryservices delivering internet-based mapping products offering information ranging from the property market to directories forcommunity services, tourist spots and transport.

However, SMO has become acutely aware of the limitations it faces in responding flexibly to new customers while remaining avote-funded government department – including limited authority in decision making, complexity in establishing private sectorpartnerships and investment limitations. The need for a shift to a more commercial culture which focuses on customers, meetingemerging needs and effectively leveraging the value of SMO’s assets, is equally pressing. As a result, both SMO and theGovernment recognise that only through institutional change to a corporate body can SMO’s valuable spatial data assets beleveraged to their full value.

Executive Summary

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Benefits to all sectorsCorporatisation offers benefits to SMO, staff, Government, the private sector and the broader community:

• SMO itself will gain the essential agility and flexibility to respond to a fast changing market, and maximise the value of itsspatial data and skills.

• The proposals for corporatisation will bring reassurance and new opportunities for staff, who may remain as civil servantsor join SMC on corporation’s employment terms, meanwhile gaining access to enhanced skills, experience and careeropportunities.

• Government will gain improved support for the services and initiatives dependent on SMC’s products and services,achieve improvements in both service and productivity for all customers, and be able to secure all this alongside apossible revenue growth.

• The private sector will gain from the economic impact of effective exploitation of spatial data, improved service andefficiency from SMC, and new opportunities for partnership with the public sector. This in turn will contribute to theGovernment’s policy objective of ensuring that Hong Kong is a leader in the digital global economy.

• The community at large will gain in terms of prosperity and quality of life – supported by improvements in the breadth andquality of both public and private sector services.

Initial operations of the corporation

RevenueGiven that it will take some time to develop new services and revenue streams, the prudent approach is to base the business planfor the initial operation around current services. Government customers will remain as the largest customer segment during theinitial operations. SMC will enter into a Service Level Agreement (SLA) defining all the services it currently provides to Governmentcustomers, and the cost to Government.

Executive Summary

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Again to be conservative in the financial projections, it has been assumed that private sector customers will take up broadly theexisting services in the early years. Pricing for SMC’s products and services for this segment will be market based or, in theabsence of market competition, be value based.

Structure and staffingSMC needs to develop new skills and to adopt a new organisation structure in order to respond promptly to the emerging market.The key capabilities to be developed include:

• Taking a proactive role in identifying and exploiting the rapidly developing market for geographical information systems –facilitating the market’s development in Hong Kong.

• Lifting research and development capacity to keep pace with the rapid developments in geographic information systemsand their business and community applications.

• Building market awareness of SMC’s services through planned and targeted marketing activities.

• Achieving greater customer focus as SMC serves a broader range of customers across the public and private sectors.

• Greater autonomy for separate business units within SMC to give them the flexibility to manage resources to best effectand tailor their services to the rapidly evolving needs of their customers.

• Building commercial management expertise at all levels.

• Establishing self-contained support services such as financial management and human resources services.

Apart from the need to retain all its existing staff, SMC will need a chief executive officer and around 40 additional staff with newexpertise. SMC will be structured into two divisions: the Central and Spatial Services Division containing all the functionsnecessary to exploit new markets and meet business management needs; and the Survey Operations Division, which will includethe current survey operations and the necessary headquarters support. The new structure will allow greater autonomy for theseparate business units which can then manage resources most effectively to meet customer needs promptly, in turn laying thefoundation for SMC’s future growth and success.

Executive Summary

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Staff arrangements

The two most important assets SMO will take with it as it moves to corporate status are the information it holds and the experiencedstaff who bring hands on expertise in the survey and mapping business in Hong Kong. It is therefore vital to the success of theCorporation that these staff are retained and motivated to contribute to the full in the new Corporation. Both for this reason and toensure fairness to staff, very careful thought has been given to the terms to be offered to staff. The key elements of the proposalson staffing are:

• No forced redundancy, with all SMO departmental grades staff having the choice of retaining their civil servant status,terms and conditions, and be seconded to SMC or retiring voluntarily with both compensation and the offer of employmentby SMC.

• Staff who choose to retire voluntarily will be granted a compensation package similar to the service-wide voluntaryretirement package offered successfully last year.

• Staff who choose to transfer to SMC on new terms will be offered a comparable job at a pay level equivalent to the dollarvalue of their civil service pay point at the time of conversion.

• Staff employed by SMC (including those transferring from SMO) will receive a remuneration package designed to meetmarket levels for similar employment.

• The choice of whether to remain as a civil servant or to retire, and whether to take up employment with the Corporation,will entirely be a personal decision for individual members of staff. Those staff choosing to retain civil servant status willbe accommodated on the civil service establishment, with normal promotion opportunities equitable with staff who transferto SMC, until they leave the service in the normal manner.

Executive Summary

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Financial plans for the first five years

RevenueRevenue from Government under the SLA is forecast to decline marginally over time from $805 million in Year 1 to $719 million inYear 5 of operation. This decline reflects both the completion of existing projects and efficiency savings. Commercial and otherrevenue, on the other hand, is conservatively forecast to grow from $66 million in Year 1 to $211 million in Year 5. The resultingtotal revenue for SMC is thus projected to increase from $871 million in Year 1 to $930 million in Year 5 (on a constant dollar basis).The increases in commercial revenue will be derived from the following sources:

• New infrastructure projects such as railway development and urban renewal will require surveying and mapping productsand services and hence will provide new revenue.

• GIS consultancy and advisory services, and therefore revenue, will increase as the scope of commercial applicationsbroadens.

• Products developed through partnering with private sector will continue to grow and therefore also give rise to revenue.

ExpenditureExpenditures for SMC are forecast to decline slightly over the 5-year planning horizon, from $848 million in Year 1 to $837 million inYear 5. These forecasts include the provision for all the current staff of SMO. It is assumed that 50% of SMO staff will opt forvoluntary retirement and join the corporation under the proposed package over a period of two years. The other 50% are assumedto retain their status as civil servants and be seconded to the Corporation. The forecasts have also included efficiency savings.

ProfitabilityOn this basis SMC is expected to be profitable throughout the five year planning period. Owing to growth in commercial revenueand more efficient operations in line with the transformation to a corporation, profit before tax will increase from $23 million in Year1 to $93 million in Year 5. Net profit margin is projected to increase from 2.2% in Year 1 to 8.4% in Year 5.

Executive Summary

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InvestmentIn order to develop new commercial revenue SMO will need to invest in information technology. Total capital expenditure over thefive year period is estimated to be $202 million.

Assets, working capital and dividendsAt the inception of the Corporation, the Government will vest all the existing assets used by SMO to SMC as Government’s equitycapital in the Corporation. The net book value of these assets is estimated to be $58.5 million. To provide working capital at thebeginning, a loan will be sought from the Government subject to necessary approval to be obtained. SMC will be able to finance itscapital expenditure by internal generated funds and the loan from Government will be fully repaid by end of Year 2.

In addition, the corporation will be able to distribute 50% of profit after tax as dividends to the Government while retaining the other50% for its future development. Retained profit is projected to reach $143 million at the end of fifth year. Based on these financialprojections, SMO will therefore be a viable business, as illustrated by the diagram below.

Forecast Revenue and Expenditure of SMC

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Executive Summary

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The continued viability of the corporation will require sensible review mechanisms for the SLA covering services to Government,and commercial freedom to adjust the prices of products and services for the private sector so as to cater for market demands andchange in cost of operations.

Next steps

SMO intends to move forward to corporatisation on the basis of proposals and financial projections set out above. To that end,SMO will allocate dedicated resources to carry out a number of important tasks in the coming twelve months:

• Building support for corporatisation from legislators, the staff, relevant industry stakeholders and the public at large.

• Developing the overall corporate framework which will provide the foundation for the transition from a vote-fundeddepartment to a corporate body.

• Staffing the new corporation, ensuring SMC has access to staff resources with the essential capabilities.

• Executing commercial operations to move SMO onto a commercial basis as early as possible.

• Detailed operational planning to make a smooth transition to the new SMC.

Government and SMO are confident that by undertaking these tasks and moving towards corporatisation, real benefits will berealised by SMO, its staff, the Government, the private sector and the community at large as SMC fully leverages and grows thevalue of its information assets and expertise.

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Proposal for Corporatisationof theSurvey and Mapping Office (SMO)

February 2001

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Section 1 - Introduction

Context

The Survey and Mapping Office (SMO), part of the Lands Department, provides survey and mapping services to the Government,the broader community and the private sector. The applications and market for the spatial data that these services generate havebeen expanding rapidly with the development of digital technologies, geographic information systems (GIS) and global positioningsystems (GPS). It is important to the continued growth and success of Hong Kong that the Government, the community and theprivate sector are able to benefit from the rich array of services and business opportunities which will flow from leveraging the fullvalue from SMO’s data and skills. This requires institutional change to give SMO the managerial and commercial flexibility to makethe best use of its assets for the benefit of Hong Kong.

This section sets out the:

• Broad context to the report.

• Purpose of the report.

• History of corporatisation, including the reasons for corporatising and how it is vital toSMO’s continued success.

• Organisation of the remainder of the report.

Section 1 – Introduction

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Purpose of this report

In May 2000, the Administration decided to draw up detailed proposals on corporatisation. This report sets out these detailedproposals and the strong case for corporatisation. The report also provides further detail on how SMO would work as the Surveyand Mapping Corporation (SMC), its organisation and the terms which current SMO staff will be offered to either move to thecorporation or retain their civil servant status.

History of the proposals to corporatise SMO

Early in 1999, the Administration evaluated institutional change towards a corporation, driven by the recognition that newapplications using spatial data were beginning to appear in Hong Kong and that this would drive rapid growth and change in thedemand for SMO’s services and data. This growth would expand SMO’s customer base in both the public and the private sectors.These new customers were likely to have different and more demanding requirements than SMO’s existing customers.

In considering how to respond to these challenges and opportunities, SMO concluded that institutional change was essential ifimproved services, efficiency and services were to be delivered flexibly enough to respond to the fast developing market. SMO’score asset, spatial data for Hong Kong, was growing substantially in value to the Government, the community and the private sector.Corporatisation was seen as essential to making full use of this valuable data because it would provide SMO with:

• Agility to develop new services for new customers at the speed the market and applications forspatial data are emerging.

• Authority to enter into business partnerships to develop up-market products to meet changingdemands.

• Flexibility to manage resources to best effect and to respond to changing demands by applying therevenue received.

• Freedom to invest in research and development on the basis of commercial judgements about futurereturns to produce more value-added services.

Section 1 – Introduction

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• Greater flexibility to retain, develop and recruit staff with the necessary expertise not only in its coresurvey and spatial data services but also essential commercial disciplines such as commercialmanagement, marketing and research and development.

• Greater self-sufficiency in support services and visibility of full costs and benefits, so as to driveimproved operational efficiency.

Organisation of the report

The remainder of the report is structured as follows:

Section 2 - SMO today, discussing SMO’s current business in terms of its customers and services.

Section 3 - Opportunities, considering the demand for services today and into the future, and the expanding businessopportunities to exploit the services and spatial data available to SMO.

Section 4 - Benefits of corporatisation, presenting the main arguments for corporatisation, including the obstacles torealising the value of SMO data as a vote-funded department.

Section 5 - Initial operation of the Corporation, describing the specific services SMC will offer during its first years ofoperation, the customers for these services, the anticipated volume of these services and the resulting revenue.

Section 6 - Staffing arrangements, describes the terms and conditions for the transfer of the current civil service staff to thenew Corporation, which will provide all departmental staff with the choice of whether to be seconded or to take upemployment with the new SMC.

Section 7 - Financial plans, brings together the costs and revenues associated with the provision of services described inSection 5 as the basis for assessing the financial position of SMC.

Section 8 - Next steps, sets out the action in taking forward corporatisation.

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Section 2 – SMO today

Description of the Survey and Mapping Office

SMO is one of four functional offices within the Lands Department. Its function is to act as the central authority for land surveys andto provide:

• Maps and plans for various purposes

• Land survey services for the support of Government land management

• Geographic network and standards for land and engineering surveys

• Boundary records of all land parcels.

SMO delivers these services through its Headquarters, twelve District Survey Offices and its Training School.

This section sets out SMO’s current:

• Operations, staffing and costs.

• Services and products.

• Government customers, including some of the major public policy initiatives SMOsupports.

• Private sector customers, including some of the innovative attempts to establish newpartnerships, and the limitations of trying to do this as a vote-funded department.

This description of SMO today forms the context for the opportunities ahead in Section 3.


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In addition to these services, SMO supplies professional and technical support to a wide variety of government departments. Thissupport includes consulting services and the secondment of staff for ongoing support. As at Jan 2001, SMO employed around1,320 staff, as shown in Figure 1.

Figure 1: SMO Staff as of January 2001

Grade At SMOSeconded toother offices Total

• Professional Staff 80 39 119• Technical Staff 595 201 796• Survey Support Staff 280 280• Motor Drivers 58 58• General Grade Staff 68 68Total 1,081 240 1,321

In 1999/2000, SMO:

• Provided about 184,000 digital maps and 35,000 colour maps to various government departments

• Sold about 140,000 publications and prints and 50,000 sheets of digital maps to commercial and public customers

• Delivered its products and services for an estimated cost of $839 million ($140.5 million of which was the cost of staffseconded to other departments).


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Other important roles of SMO

Today, SMO also fulfils the following important roles:

• Survey authority – assisting the Land Survey Authority to administer the Land Survey Ordinance by maintainingrecords of deposited plans, setting codes and standards of survey practice, implementing surveying policies, andregistering authorised land surveyors.

• Spatial data infrastructure provider – responsible for providing geographic reference framework and data dictionaryfor GIS, and maintaining metadata records for the Planning, Lands and Works group of departments.

• Leading provider of digital maps and advice – as the sole provider of Hong Kong’s large scale digital maps, SMOassumes an important role as supplier and advisor in the development of various government GIS applications.

SMO’s products and services

In undertaking these roles, SMO provides a number of products and services. In broad terms, these include:

• Digital databases – a digital topographic map database, a digital land boundary database, and a geo-referencedatabase.

• Paper map products – large and medium scale plans, topographic maps, aerial photographs, and special mapsfocusing on a variety of themes (e.g., Countryside series, Hong Kong Guide series, Geological maps, Airport HeightRestriction Plans and Aeronautical charts).

• Survey and mapping services – consulting and training, survey support to government departments, survey supporton special projects, land boundary surveys and production of aeronautical charts.


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Vital role of survey and mapping in maintaining value

The value of these products and services has stemmed from the core operations of SMO, ongoing surveys which collect, refine andmaintain the accuracy of its databases, maps and services. Four main types of survey are conducted by SMO:

• Geodetic survey: This survey establishes and maintains horizontal, vertical, and gravity control points covering the entireterritory of Hong Kong. The resulting control points act as reference and coordinating points for mapping all topographic, landand engineering surveys. The control points therefore form a fundamental reference system to support legal, contracts andmeasurement standards relating to position fixing in Hong Kong. A territory-wide network of GPS reference stations is beingestablished that will enable many types of land and engineering survey to be carried out more efficiently and more cost-effectively, and support various GIS applications.

• Topographic survey: This survey records all natural and manmade ground surfaces in Hong Kong. It enables the productionof both paper and digital maps. The basic map is the topographic map of 1:1,000 scale, which is essential for detailed townplanning and land administration purposes. A variety of other maps are also derived from this data. The total area of landrevised / newly inspected annually has been rising rapidly in the last four years, from 10,000 hectares in 1996-97 to 90,000hectares in 1999-2000.

• Cadastral survey: Also known as a land boundary survey. This type of survey represents a major area of SMO work for theGovernment. The survey defines (i.e., measures, records and marks) boundaries of land parcels for the alienation ofGovernment land to private owners and non-government bodies, the allocation of land to various government departments, andthe surrender of private land for the purpose of road widening, etc. This work currently accounts for the largest deployment ofSMO resources.

• Photogrammetric survey: SMO generally uses photogrammetric surveys to produce digital terrain data for engineering designand earthwork computation, and to monitor the progress of construction work. This type of survey uses aerial, satellite, andother photographs to derive measurements of the objects under study. Typical uses include mapping, land use planning, landuse enforcement, engineering design, earthwork computation, deformation monitoring and change detection. ThePhotogrammetric and Air Survey Section supports large scale mapping and provides much of the information for updating thebasic maps of the region. By employing digital photogrammetric systems, digital products such as orthophoto, animated scene,flythrough, and interactive 3-D city modelling can be produced.


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Applications of the data

These surveys, and the skills and expertise of SMO’s staff, are enabling SMO to establish and maintain an accurate, rigid andcomprehensive network of horizontal and vertical control points which will eventually cover the whole of Hong Kong. The network,together with the deployment of GPS technologies and the establishment of active reference stations, will facilitate thedetermination of positions in real time, which is essential for various GIS applications. This data represents an important asset, andleveraging its full value through a dynamic survey and mapping operation is vital to Hong Kong’s future growth and success. As acorporation, SMC will be uniquely well placed to continue to build and leverage this asset.

From this data, SMO produces and updates maps of various scales. SMO’s cartographic and reprographic services design andcompile the maps, colours and symbols, producing repromats. Reprographic services include photographic products, scanning andimage processing, colour proofing, larger format copying and processing, plotting and laminating of large-size posters andphotographs. Basic mapping in Hong Kong is carried out at 1:1,000 scale. These 3,100 basic survey sheets require continuousupdating. All maps and plans are bilingual.

A computerised Land Information System (LIS) under the control of the Land Information Centre has been installed in all the DistrictSurvey Offices (DSOs). The system contains comprehensive and up-to-date land data. It has a unique geographic framework andstandard upon which other users may build their own sub-systems, enabling the integration of a network of land and land-relatedinformation systems in the future.

Other services

Provision of cartographic and reprographic services is one of the core activities of SMO. Cartographic services are essential for thedesign and compilation of maps. Reprographic services include photographic products, scanning and image processing, colourproofing, larger format copying and processing, plotting and laminating of large-size posters and photographs.

SMO Training School, established in 1965, provides training in land survey and cartography. It provides in-house training forSurvey Officers and Technical Officers of the Lands Department and courses for officers of other government departments.


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Sales counters are set up in the Lands Department headquarters and District Survey Offices to sell map products, aerialphotographs and survey records. A detailed list of all SMO products and services can be found in Annex A.

SMO’s current customers

SMO serves many public and private-sector customers. The bulk of its products and services are provided to a wide range ofgovernment departments, but it does provide some products and services, such as colour maps, digital maps, reprographicservices, etc. to the public and commercial customers (both technical and business). SMO’s three main customer segments areshown below.

Figure 2: Customers of the Survey & Mapping Office

Public Sector(GovernmentDepartments)

• Lands• Highways• Drainage Services• Civil Engineering• Planning• Transport• Architectural Services• Water Supplies

• EnvironmentalProtection

• Agriculture, Fisheries &Conservation

• Hong Kong Police• Education• Customs & Excise• Home Affairs

• Buildings• Rating & Valuation• Electrical &

Mechanical Services• Territory

Development• Census & Statistics• Housing

• Marine• Post Office• Registration &

Electoral Office• Office of

Telecom.Authority

• Fire Services

Private SectorTechnical

ProfessionalMarket

• Utility Companies (China Light and Power, HongKong Electric, Hong Kong and China GasCompany, PCCW Telecom)

• Railways (Mass Transit Railway Corporation,Kowloon-Canton Railway Corporation)

• Architects• Land Surveyors• Contractors• Civil engineering and specialist

consultants• Academic institutions


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Private SectorBusiness

ProfessionalMarket

• Property developers• Retail• Real Estate

• Distribution• Marketing

Public sector customers

The largest public sector customer of SMO is Lands Department, which receives a number of services from SMO such as lotboundary definition, plan preparation, advisory services and reprographic and survey services, maintenance of computerised landinformation system, etc. In addition, digital and paper maps are provided to Lands Department for its uses. Lands Department isnot, however, the primary user of digital maps. The demand for these products is instead spread across a number of Departmentsas shown below in Figure 3.

Figure 3: Public Sector Customers for Digital Map Products (1999/2000)

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Environmental Protection Department (15%)

Highways Department (14%)

Transport Department (10%)

Civil Engineering Department (9%)

Drainage Services Department (7%)

Census & Statistics Department (7%)

Planning Department (6%)

Water Supplies Department (4%)

Top 8 Users

(72%)

Other

Departments

(28%)


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Major public policy initiatives supported by SMO

SMO’s spatial data makes a significant contribution to many current and future developments in Government’s effort to serve thecommunity. It provides an essential foundation upon which Government is building sophisticated planning, monitoring andmanagement tools to carry out its policy agenda. Applications include:

• Landslip protection – Identifying and addressing landslips is a high priority for Hong Kong’s Civil EngineeringDepartment (CED). GIS, with aerial photography and other input data, can then be used to analyse the stability ofprivate and public slopes, enabling more effective monitoring of risk areas, illegal structures and cultivation that mayimpair slope stability.

Benefits: Fewer landslips, reduced injuries and loss of life, economic damage minimised.

• Environmental protection – This has become a pressing issue for the community and GIS applications are a proventool for preserving the environment and ecology and managing waste. GIS enables environmental experts to planmore effectively, monitor changes in the environment and take timely remedial action.

Benefit: Cleaner environment with balanced eco-system.

• Land administration and surveying – The use of GIS and GPS related technologies enhances the efficiency of landadministration work undertaken by Lands Department and enables it to provide accurate and up-to-date cadastraldata for land boundary definition and reference data to support all kinds of engineering surveys.

• Benefits: Enhanced efficiency in land administration, land and engineering surveys.

• Land use planning – The use of GIS facilitates territorial land use planning and developments.

Benefit: Enhanced land use planning.


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• Public works – GIS, photogrammetry, and aerial surveys are an important tool for the Works Bureau anddepartments to plan and manage public works and to integrate these with other developments. Examples includeinfrastructure location for drainage services and water supplies.

Benefits: Indirect benefits to other GIS-based systems, increased efficiency in Works projects.

• Election and polling– The use of GIS facilitates the delineation of electoral boundaries and siting of polling stationsat suitable locations to better serve the voters.

Benefit : Better election and polling arrangements

Annex B provides a more detailed description of each of these and other planned applications.

Private sector customers

Services to the private sector, while relatively small by comparison to government-related services, are by no means insignificant.For example, the top ten commercial customers for digital spatial information have provided over $22 million in sales to date. Inthe past, SMO’s products and services have been in demand in the technical professional market, including infrastructure providers(KCRC, MTRC), utility companies (CLP, HKCGC) and overseas libraries.

More recently, new private sector customers have been approaching SMO, including both additional players in the existingtechnical professional market and new participants in the business professional market, such as property developers, marketresearch companies, health care providers and real estate agents.

Private sector operations to date

The utilities have been a driving force behind the early demand for SMO’s digitised topographic data as they developed GIS tosecure improved management, maintenance, and planning of their infrastructure. Many of these systems have now beencompleted, but SMO expects continued demand for ongoing support, providing updated map data on a periodic basis.


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Technical services professionals, such as surveyors, civil engineers and architects, are also an important commercial source ofbusiness for SMO. Like the utilities, technological advancements in modelling, planning, and management have enhanced thedemand for digitised topographic data. The purchase of SMO’s products by these professionals, however, is believed to besubstantially less than their actual consumption because of the free issue of mapping data to contractors and consultantsundertaking government projects.

MTRC and KCRC are also significant buyers of SMO’s products to support their railway developments and effective managementof their infrastructure. Their use of data mirrors that of the technical services professionals.

The remainder of the professional technical services segment are primarily low-volume buyers of a variety of paper-based maps,including topographic, land boundary plans and maps, aerial photographs, small and mid-scale maps.

Outside of the professional technical services segment, the demand for and use of SMO’s services has been low. This appears tobe caused by the low level of awareness of the potential of geographic based applications within the business professional market.

Recent indications are, however, that awareness in the business professional market is picking up. This is borne out by both theincrease in the number of current and prospective business professional customers, and the increased demand for SMO’s productsand services in recent years. Digital map sales to commercial and private customers, for example, nearly trebled from 1998/1999to 1999/2000. This demand illustrates the extent to which the value of SMO’s spatial information is increasing.

Experience of private sector involvement

In response, SMO has sought to exploit its spatial information assets. In recent years, SMO has made substantial headway inpursuing new business opportunities such as ES Map, a digital map product produced by E&S Land Data ManagementConsultants Ltd., and an internet-based mapping product produced in partnership with Centaline Property Agency Ltd. andTelecom Directories Ltd. (see Box 1 below). While these undertakings have served to demonstrate that SMO’s spatial data hascommercial value, they have also served to demonstrate the difficulties of pursuing commercial opportunities as a vote-fundedgovernment department. As a result, they have to some extent served as an impetus to move towards corporatisation.


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Box 1: The MISI Story

In 1997, the Government’s Task Force on Exploiting Internet Technology, headed by the Secretary for Treasury, endorsed the Lands Department’s proposalto implement the Mapping Information Services by Internet (MISI) project. Implementation of the project was to adopt a public-private partnership approachin which:

• Government provided digital maps and other public service information to the business partners (BPs) and monitors the standard of their services.

• BPs provided hardware, software, and human resources to develop, market, sell and deliver the services/products to the public.

• Government was not required to fund the project, but could share in revenues generated from sale of the services with BPs.

Centaline Property Agency Ltd. (Centaline) and Telecom Directories Ltd. (TDL) were selected as the BPs in an open tender.

The BPs launched two web sites, Centamap and YPMap, on November 19, 1999. These sites provide a free bilingual map guide and location searchservice for police stations, fire stations, hospitals, post offices, and similar facilities. Since the web sites’ launch, information has been added on the propertymarket and development, public infrastructure developments, popular tourist spots, weather map, tourist map, residential building information, Green-MiniBus routes, etc.

The web sites have gained increasing popularity. The current total monthly pageview figure is 4.3 million, three times that at the time of launch. TheCentamap has also won third prize in the contest of the MapObject Internet Map Server Application in 20th ESRI Annual User Conference. However,revenue generation and the response from private sector have not met the expectations.

As a government department developing commercial services, Lands Department has experienced many barriers in the project implementation:

• Lands Department was not empowered to decide contract terms or the renewal approach.

• As public-private sector involvement, and the commercial web-based service were both new to many government departments, many hadreservations in providing the information for use in the project.

• Recruitment restrictions meant using professional and technical staff on overtime, increasing costs far beyond the revenues received from thebusiness.

• BPs had little commercial flexibility under the existing arrangements, as Government requires the types of advertisement services and scale ofcharges be made to be publicly available. This prevented BPs negotiating individual deals with customers.

• BPs were not allowed to provide exclusive advertising service to any private firm, despite the fact that this might have generated more revenue.

• Lands Department had to rely totally on the BPs to generate revenues, although they might have competing commercial objectives (i.e. promotingtheir own company image verses generating revenue from the web site).


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Achievement and Recognition

SMO’s achievements in applying GIS technology, namely the setting up of the Computerised Land Information System, have wonlocal and international recognition. In 2000, the System was given a Bronze Award by the Hong Kong Computer Society and thePresidential Award for Best System by the ESRI User Conference in the USA.

Key messages of this section

SMO provides vital spatial data to the Government . This is crucial to the delivery of basic services andto the success of important policy objectives and developments which ensure Hong Kong’s future andsuccess and the community’s quality of life. Developments in digital technologies, GIS and GPS will onlyincrease the value of SMO’s spatial data and expertise to Hong Kong.

The spatial data also has significant actual and potential value to the private sector. While the demandfor this data in the private sector has previously been predominantly driven by the technical professionalmarket, technological change and new applications are already leading to growing demand in thebusiness professional market.

SMO has sought to respond to this demand and has successfully undertaken some commercialoperations. In so doing, however, SMO has become acutely aware of the limitations it faces inresponding to new customers in a fast changing market while remaining a vote-funded governmentdepartment. SMO and the Government recognise that only through institutional change to a corporatebody can SMO’s valuable spatial data assets be leveraged to their full value.

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Section 3: Opportunities

Industry trends

Three global industry drivers are behind the growth in the demand for and value of SMO’s spatial data and services:

− Globalisation of data collection, storage, representation, and communication standards for spatial information.

− Shifts in emphasis from seeing spatial information as a source of national security to recognising it as public goods.

− Technological advancements enabling enhancements in the collection and quality of spatial data, as well as thedevelopments of sophisticated, high value user-applications of spatial data.

This section focuses on the background and nature of the opportunities SMO will be pursuing as acorporation and covers:

• Industry trends driving growth in the demand for and value of spatial data for exploitationthrough digital technologies.

• Areas of growth in public sector needs for such data, drawing on overseas case studies.

• Areas of growth for private sector application of spatial data, again drawing on casestudies.

• Impact these factors are likely to have for demand for SMO’s services and products.

• Opportunities which this demand will likely present to SMO.

• Importance of ensuring proper protection of SMO’s intellectual property as it moves to acorporation charging full cost for its services and products.

Section 3 – Opportunities

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These industry drivers have resulted in a number of trends, which include:

• Increased use of satellite imagery and aerial photography – The use of technologies in satellite imagery and aerialphotography enable the mapping of areas in a reasonably quick and detailed manner. These techniques are alreadybeing widely applied in initial planning exercises, environmental impact assessments, emergency surveys, and surveyingunder bad weather conditions. In these cases, speed and frequent updating of land data, even real-time monitoring, arecritical and traditional surveying methods cannot fulfil customer needs cost-effectively.

• Digitisation of mapping data – The development of digital mapping technology has enabled maps to be stored in digitalformat. As a result, the complete series of 1:1,000 map sheets covering the whole of Hong Kong have been convertedfrom analogue to digital form, and are now available for sale by SMO. Many customers in the Government and technicalprofessional sectors have been substituting digital map products for traditional paper maps, as digital mapping data aremore convenient in terms of storage and data retrieval, and can be integrated with other information systems.

• Development of data and storage standards and systems - Digital maps are increasingly being applied as thebackbone for other information systems. These include community services information systems, electronic street guidesystems, transport management systems and utility services information systems. Standards have consequently begunto emerge in the collection and storage of spatial data so that systems may communicate and data can be exchangedlocally and internationally. This, in turn, has led to lower system costs and improved functionality, making digital productsmore affordable and more user-friendly to customers in the business professional sectors, who are typically non-expertsin GIS.

• Emergence of sophisticated user applications - As standards and systems have emerged, the application of digitalmaps has spread to non-traditional users in the business professional sector such as retail, distribution and logistics, andmarketing. Examples include the combination of digital mapping data with demographic and marketing data, enablingbusinesses to manipulate the data to identify potential customers within a geographic area. Customer informationdatabases or other proprietary databases can be integrated with the digital mapping data, and such products have beenincreasingly applied in customer relationship management, logistics management, network planning for utility companies,direct marketing, and site location analysis.


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• New economy technologies - Advancements in internet and mobile technology (Wireless Application Protocol or WAP),which allow more rapid transmission of high resolution images, will further boost the application of digital mapping datafor businesses and individuals. Some promising areas include tourism information, business and community servicedirectories, and information on road / traffic conditions.

• Segmentation of service – Different customer segments are demanding more targeted digital map products, and morechoice in terms of geographic coverage, scale and level of detail. Customers are generally unwilling to pay a high pricefor products targeted at many user categories and containing unwanted information. For example, civil engineers,architects, land surveyors and building contractors normally require mapping data of specific sites on a project by projectbasis and have no use for map updates once the project is completed. On the other hand, retail chains, logistics andmarketing firms need frequent updating for monitoring their market / operating environment but may care little aboutspecific site details.

Growth in public sector demand

Government will continue to be the primary customer of SMO, as spatial data underpins much of Hong Kong’s public services andpolicy initiatives. There are already a number of specific initiatives planned which will rely on these services, and thus drive newareas of Government demand for SMO’s products and services, including:

• Emergency services - The use of GIS and GPS allows the emergency services to identify quickly the location ofemergency sites, dispatch emergency vehicles from the nearest location, and route those vehicles in the quickestmanner.

Benefits: Lives saved, economic damage minimised.

• Police protection – Spatial data allows crime patterns to be captured, analysed and understood better. Through theuse of GIS, the Hong Kong Police have been able to track occurrence of crime and better plan deployment of vehiclesand beat patrol.

Benefits: Lower crime, reduced injuries and loss of life.


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• Building safety and maintenance – As Hong Kong’s buildings continue to age, GIS can assist the BuildingsDepartment in enforcing the Buildings Ordinance by identifying and locating high-risk buildings, unauthorisedstructures and works, and illegal rooftop structures.

Benefits: Reduced injuries and loss of life, improved built environment.

• Transportation optimisation and planning – Hong Kong’s limited land-base, growing population, and increasingaffluence present new and challenging problems for transport planners. Through the use of GIS and GPS, however,planning can take account of the ebb and flow of travel through sophisticated modelling, allowing transport plannersto work with a number of scenarios simultaneously. Operationally, these systems can work dynamically with GIS,GPS and other locating devices, to manage traffic congestion. Spatial data also forms a vital tool in planning for coretransport infrastructure projects, such as the Airport Core Programme and West Rail Phase I.

Benefits: Reduced travel time, cleaner environment, lower demand for investment in infrastructure.

• Education – The Schools Improvement Programme, underway since 1993 and set to continue to 2005, aims toimprove the teaching and learning environment within Hong Kong. To facilitate school improvement work, spatial andland information such as site boundary, land status, tenancy details, buildings in school and nearby areas, etc. will berequired. GIS can also be used to assist in the design of school zones, service catchment, and placement of students.From another perspective, with on-line education becoming more important, the need for geographic information indigital format for teaching local geography to students will increase.

Benefits: Enhanced quality of education, reduced student travel time.

• Health and welfare – Location of health and welfare facilities in the areas of greatest need for such services is key touser-friendliness and effectiveness. Again, the Government is using GIS-based applications to assist in this importantplanning function by assessing the demand for services and identifying the most suitable locations for facilities.

Benefits: Increased effectiveness of facilities, reduced user travel time, improved quality of life for users.


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• Highway maintenance – Maintenance of Hong Kong’s roads is a costly endeavour, and one made more so by theconstant opening of roads for utility and infrastructure work. A recent review of the use of GIS by HighwaysDepartment recommended the development of a Pavement Management System. The system will become animportant and necessary tool to assist in increasingly complex management decisions as to when, where, and howmuch to spend on the highway system.

Benefits: Improved highways, reduced traffic disruption.

• Railway development – The recent completion of the Railway Development Strategy – 2000, which includes newrailway lines for both Hong Kong and the New Territories, will increase the demand for SMO’s products and services,supporting the railway companies and developers in building the railways, and supporting the Government inmonitoring railway development.

Benefit: Increased efficiency in railway design and alignment.

• Urban renewal – The Urban Renewal Authority, to be established later this year, will be charged with theresponsibility of redeveloping or promoting the redevelopment of Hong Kong’s old districts and buildings. Effectiveplanning, design, construction, monitoring, and management of this redevelopment will rely on mapping andsurveying services from SMO.

Benefits: Better urban planning and environment.

Annex B provides more detailed description of some of the planned applications.


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Public sector opportunities highlighted by overseas experience

Public sector applications of GIS and spatial data-based systems developing overseas highlight likely future growth areas forSMO’s products and services, which the Corporation will be well positioned to pursue. These include:

• Electronic government – Hong Kong’s development of Electronic Service Delivery (ESD) is an important step towardsimproving the efficiency, ease of use, and effectiveness of services to the public. With the addition of GIS, ESD not onlybecomes significantly more user-friendly, but also allows a host of new services to be automated, including submission ofapplication (e.g., road opening, sidewalk repair, building maintenance), property information (e.g., slope, title, zoning),and locational services (e.g., Government offices, Post Office locations and Police). Box 2 on the next page provides acase study on such services from the United States.

• Health – Monitoring, identifying and controlling outbreaks of infectious diseases is gaining importance world-wide. Theability to apply spatial analysis to outbreaks, along with immunisation patterns, environment conditions, incomedistribution, education, demographics, and other variables presents a powerful tool in identifying patterns of dispersal,analysing contributory factors, modelling the potential spread of diseases, and developing response plans.

• Tourism – Spatial information has been effectively leveraged by other destinations to attract visitors and assist them inplanning their visits. By integrating GIS-based systems, these applications enable potential tourists to identify attractions,accommodation, and services. In an increasingly “on-line” world, these applications will become the norm for economiescompeting for tourist expenditure. Box 3 on page 36 provides a case study on GIS and tourism in Ontario and NovaScotia, Canada.


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Box 2: GIS and ESD in the United States

Located 40 miles South of Los Angeles, California, the City ofOntario boasts a population of just over 150,000 residents living in a50-square mile area. The primary industry in Ontario is logistics, withsubstantial employment being provided through the likes of theUnited Parcel Service, Federal Express, and others. The city playshome to MAG instruments, the world’s largest producer of flashlights,and the city’s largest employer in the manufacturing sector.

Although the City had dabbled in GIS since 1987, it wasn’t until 1994that its usefulness outside the engineering and planning arenas wasrecognised. During that year’s election, City officials observed thatresidents often did not know where to vote, thus inundating librariesand the City Clerk’s office with phone calls. In response, the Citydeveloped a polling place finder application which was madeavailable in 1996.

In order to increase the effectiveness of Government services andempower the public, Ontario has moved rapidly to become a leaderin integrated government applications, all built upon a single,centralised GIS system supported by three GIS professionals and anannual budget of under US$250,000. The system operates on over40 intranet computers and has a wide range of services available onthe internet. Last year, Ontario moved to add GPS to its system forimmediate benefits (increased accuracy in planning, surveying andmapping) and the future applications (e.g., asset management,infrastructure monitoring). Visit this site at: http://gis.ci.ontario.ca.us/gis/index.htm


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Box 3: Tourism and GIS

Tourism is geographic by its nature, and many tourism web sites have integrated GIS applications to their online search to facilitate travellers’ onlineexploration of places and activities of interest. Here are two good examples:

Ontario Explorer (OE), brings users a complete map-based tour of the region through a series of maps encompassing all tourism and travelactivities. The main purpose of the search engine is to allow the potential traveller to Ontario to explore the tourism possibilities within theprovince and contact the businesses and services that they may need. www.ontarioexplorer.com

Destination: Nova Scotia (NS), a winner of the Global Discoveries Select Site Award, provides a complete source of information on this oceanplayground. http://www.destination-ns.com/

Both web sites have GIS applications to help users explore online, but they are different in their organisation of information and features.

The NS web site organises its search by core tourist activities, such as accommodation, restaurants, recreation, sports, and points of interest, and theresults are attached with mapping functions to provide an indication of location. Users can manipulate the map views by zooming in and out.

OE adopts a map-oriented approach in organising contents. The search engine provides a series of maps in descending order from the highest-order ofNorth American map, to an individual city street map within Ontario. Users can go directly to any map from a master table of contents, or zoom in to anarea of specific interest by a simple click on a map.

Two interesting GIS features of the NS web site are:

• Interactive mapping: the web site has an advanced custom digital mapping function. When a place (e.g. a restaurant) is selected, a provincialmap highlighted by the selection is presented with a locator above it. By default, the map shown has only a basic layer of information(roadways). Other layers available to users include waterways, buildings, and text labels. Several drop-down boxes allow users to zoom in toparticular areas of interest.

• Routing: linked with Yahoo Maps, the NS web site also provides useful routing search between two Nova Scotia cities, or from a NorthAmerican city to a Nova Scotia city from a drop-down list. Details provided include driving directions, maps and drive times.

Although simple in nature, these GIS applications offer great conveniences to tourists in their online exploration and travel planning.


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• Traffic management and information system – GIS can be the platform to integrate and display all information relatedto traffic conditions, bus information, parking space availability, etc. The information is not only valuable for traffic controland for emergency services but can also be made available to all road users via Internet or displayed on digital roadsigns, transport interchange, shopping centres, tourist information centres, etc.

• Flood control – Flood control requires geographic information and location-based rainfall information to improvedrainage systems and surface vegetation to handle storm water, and support maintenance. GIS helps to determine whichareas and even which structures are susceptible to flooding. This then helps to ascertain the amount of damage that willoccur, the estimated financial loss, damage to the infrastructure, and which non-flooded areas will be affected by loss ofservice.

• Air quality management – Air quality management systems empowered by GIS can study the distribution and amountof air pollutants and suspension particles in relation to time, topography, prevailing wind direction and strength, and landuse pattern to estimate the effects on air quality.

• Building safety – GIS-enabled building information systems are able to scan and store building plans in digital form.This can improve building plan management and processes for considering applications for approvals for buildingalterations. In addition, digital maps of advertisement boards, and roof top and overhang structures, can strengthenefforts to tackle illegal structures, along with emergency rescue and fire fighting processes. GIS can also support legalenforcement processes by recording the location of dangerous buildings, the repair notice served and legal action taken.

• Inward investment – GIS-enabled web sites serve as virtual community brochures. They offer property search, regionalattraction and real estate site selection that encourage businesses to relocate and tourists to visit. Box 4 on the next pageprovides a case study on economic development and inward investment from California.

• Hydrology – GIS can be used to study drainage systems, monitor groundwater levels and recharge, visualisewatersheds, and in many other applications.

• Coastal management – GIS offers opportunities for coastal management including land use planning. GIS coastalapplications can monitor air and water quality and coastal resources, measure and visualise probable outcomes underdifferent scenarios to control coastal hazards, and manage coastal development.


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Box 4: Inward investment applications

The city of Vallejo, California, was thrown into economic turmoil when its nearby Mare Island Naval Shipyard closed in 1996, resulting in the loss of15,000 jobs, US$668 million in economic output, and US$553 million in earnings. Economic development became a top priority and the City turned toGIS to fill the increasing number of vacant properties and stem the reducing tax base.

The system, the Vallejo Economic Development Information System (VEDIS), focuses on providing a virtual avenue to understanding businessprospects within Vallejo. Businesses interested in opening operations in Vallejo can simply query the map-based system using size, property type, andtenure to gain access to a full list of properties (shown both graphically and in text).

A click of the mouse button brings the potential investor to the individual property level, with photo, description, contact details, prices, facilities, andbuilding condition. If the investor finds a suitable property, detailed demographics can be generated for any radius including:

• Population and household demographics

• Income distribution

• Detailed businesses list

• Restaurant and entertainment businesslist

• Services business list

• Industrial business list

• Consumer expenditures

The site is also linked to the Vallejo Economic Development Division’s systems, enabling investors to access information on business incentives,business infrastructure, ratings on the city and other pertinent information.

Development of the site took approximately 8 months and the system became operational in May of 1998. By December of that year a survey of realestate brokers revealed that 81% had used the system and 27% had received referrals from the system, one of which was initiated from Hawaii.

The site has won numerous awards including:

• U.S. Department of Commerce Economic Development Administration’s 25 "Innovative Local Economic Development Programs"

• 1999 Council for Urban Economic Development (CUED) Gold Award

• 1999 American Economic Development Council (AEDC) Superior Award

• 1999 Award of Excellence from the California Association for Local Economic Development(CALED)

• Governor's-Task-Force-developed California Geographic Information Association's 1999 Award for Outstanding Internet Web Site

• Industry awards for best Web Site and Best Internet Application of GIS

The site can be visited at: http://www.ci.vallejo.ca.us/ed.html


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Growth in private sector demand

Demand in the private sector for SMO’s products and services is already growing rapidly, with the emergence of a wide range ofcommercial applications for spatial data. The opportunities for SMC include:

• Transport applications – In addition to the numerous transportation-related applications being undertaken by theGovernment of the HKSAR, exciting advancements in the use of spatial information to optimise logistics, deliverytransportation and fleet management are emerging. These include optimised routing and scheduling, vehicletracking and dispatch, route analysis, facilities and depot management, and warehouse operations. Hong Kong’sfuture as a logistics centre for China and Asia will need to leverage these applications not only in Hong Kong, but indestination countries. See Box 5 on the next page for a case study on transport optimisation at Sears.

• Retail applications – From market analysis to site selection and operations, including marketing and sales, deliveryand routing, and customer care, GIS applications are increasingly helping retail companies to effectively competeand sell products. These may be either company- or third party-run, allowing, for example, small mail orderbusinesses to analyse geographies by postal code and income to determine where best to market, therebymaximising their limited budgets.

• Banking applications – Banks have a complex challenge staying on top of, and managing, their diverse portfolios ofloans, mortgages, and investments. Using GIS, banks are not only able to reap many of the same benefits asretailers, but also to improve risk and portfolio management by understanding the geographic aspects ofdemographic and economic trends. For example, understanding property value changes relative to specificmortgage holdings can add value by highlighting potential negative equity situations as well as new opportunities forre-mortgaging of properties with high appreciation.


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Box 5: The Sears Story

Sears, Roebuck and Company is one of the largest retailers of products and services in the world. Its logistics services business, which is responsible for

home delivery of furniture and appliances, makes over 4 million deliveries per year. Its product services business, which provides installation, repair, home

improvements and homeowner services, operates over 12,000 vehicles and receives 15 million calls for on-site service annually, making it the largest

home-service business in the United States.

Operation of the business presents immense challenges, as calls received the previous day must be organised by time of desired service, location, skill set

needs, vehicle capacity, and numerous other variables. This planning, which is carried out throughout the night, seeks to maximise customer service (right

time, with right service), reduce operational costs (optimised routing, reduced down time), increase asset utilisation (increased stops per vehicle), and

greater efficiency (routes). Sears introduced a GIS based routing system in 1993. This system employs heuristic modelling using complex algorithms built

upon spatial data. The output is an optimised route assignment for each driver to follow. In addition, the system is able to:

• Display all roads and their attributes

• Display work areas and their text

• Automatically zoom to a selected route and draw the stops

• Provide driving directions

• View all routes and stops

• Select a driver and assign new stops to him

Through the use of this system, Sears has been able to reap immense benefits, including:

• Annual savings of over US$30 million

• Reduction in delivery windows from 4 hours to 2 hours, and improving on-time delivery from roughly 80% to 95%

• Reduction in time spent planning from hours to minutes

• Reduction in facilities from 138 to 28

• Improved utilisation of vehicles from 16 stops to 20 stops per day

The use of spatial information to improve operations in this way not only gave Sears an advantage over its competition, but also created a better working

environment through improved planning, increased consistency, and positive performance.


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• Real estate applications – A natural fit for spatial information applications, real estate brokers can increaseefficiency, customer satisfaction, and listing turnover by using GIS-based systems to review real estate options withclients (both exclusive and multiple listing), take virtual tours of the properties, and shortlist a selection of propertiesfor site inspection. Customers of these systems are able to feel confident that their needs have been understood andmet before embarking on time-consuming tours with the agent.

• New economy applications – With internet and WAP penetrating every sector of economy, companies areintroducing interactive applications incorporating operational information combined with web based mapping. Suchdevelopments are at an early stage and difficult to predict, but the three examples below illustrate the scope of theopportunities:

− Insurance companies could use a map based platform with demographic, statistical and operational data toprovide on-line quotations and sale of insurance at differential pricing. For instance, a customer who wants tobuy insurance for his property can use the map background to locate the property. Detailed information aboutthe property can be automatically retrieved and, together with various location related risk information such astyphoon, flooding, fire, theft, be used to calculate the insurance premium.

− Through WAP, a customer can search for nearby restaurants, find the location of his or her chosen restaurantand make a reservation.

− Through WAP, GPS and customer relationship management systems, retail stores could identify pastcustomers located near the store and transmit customised sale and promotion messages to attract a returnvisit.


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Expected demand for SMO’s services

Hong Kong’s market for upstream land surveying services is expected to maintain slow, stable growth while exponential growth isexpected for certain downstream services like digital map production. The expected growth in specific SMO’s services is describedbelow:

• Geodetic survey – Planned land development in Hong Kong will result in a continuous need for the establishment ofnew control points and the maintenance of the existing geodetic infrastructure and records. It is expected that demandfor geodetic survey services will remain stable. SMO has maintained a dominant market position through itsestablishment of the geodetic infrastructure and ownership of the supporting massive amounts of data.

• Topographic survey – The recent upward trend in the total area revised / newly inspected should continue as a result ofland development, creating a need to survey new areas and to update existing topographic information. Again SMO isthe dominant service provider.

• Cadastral survey - Currently the largest operation within SMO, demand for cadastral survey services is driven by landredevelopment, especially in the old urban areas and in the New Territories. While SMO has been providing cadastralservices to other government departments, around 20 private practising land surveyors conduct land boundary surveys.In the last few years, demand for SMO’s cadastral survey services has been declining, most likely as a result of the lessactive land market. The creation of the URA, and further push into urban renewal, may well lead to renewed demand inthis area – albeit potentially shared with private sector providers.

• Photogrammetric survey - Demand for SMO’s photogrammetric surveys for engineering purposes has been small, ataround 20 cases per annum, as the service is required only by certain infrastructural projects. Meanwhile, demand foraerial surveys has been rising, as total area surveyed doubled between 1996-97 and 1999-2000, reaching 12,800hectare in 1999-2000. Continued growth in demand in this area is expected.


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• GIS advisory services - Demand for SMO advisory services to various government departments and the private sectoron the setting up of GIS systems, the application of digital map data, and the processing of tenders for GIS projects, areanticipated to continue to grow at a substantial rate. This growth will be driven by the increasing use of GIS in the publicand private sectors for strategic planning purposes.

• GPS positioning services – Demand will also grow for the broadcasting of accurate location data throughout theterritory from SMO’s GPS reference stations, supporting location fixing and tracking to metre or sub-metre accuracy for avariety of applications (e.g., fleet management, in-car navigation)

Expected demand for SMO’s products

Demand for SMO’s map products, and in particular its digital map products, is growing faster than demand for its services. SMO’smap products include lot index plans, land boundary plans, survey record plans, topographic maps and street maps of differentscales, as well as special maps like guidebooks, countryside maps and geological maps. These are available in paper, film ordigital formats.

There are two major customer categories, namely, the end users and value-added resellers:

• End users are further classified into corporate users, who use the mapping data for their day-to-day operations, businessplans and market studies; and individual users, who want the mapping information for their private (e.g., propertytransaction) or leisure purposes.

• Value-added Resellers (VARs) are those who add new information to SMO’s digital data products, and then sell them toend users.

Corporate users can be further categorised into three segments, namely Government, private sector technical professionals andprivate sector business professionals. Government departments have been SMO’s major customer group in terms of “quantitysales” of map products (at zero price). However, the actual demand from the technical professional segments should be muchhigher than the apparent sales quantities as many civil engineering consultants, architects, land surveyors and building contractors


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for Government projects obtain the map products from their Government clients, who provide them for free. The businessprofessional market, which traditionally comprises property developers and real estate brokering and management agents, isgrowing rapidly to include new users from various businesses like retail, logistics and marketing.

Corporate customers have recently been substituting paper maps with digital map products. As a result, demand for topographicand thematic paper maps from government departments (the biggest customer segment) has been declining. Guidebook products,which target the general public, have experienced slight erosion in sales as publications of private publishers are gaining marketshare. The private publishers are better positioned as they offer more competitive pricing through advertisement. They also havegreater flexibility in the design of map content, enabling them to cater for the needs of the readers. As a result, demand for SMO’sprinting and reprographic services has declined in the last few years.

On the other hand, demand for digital map products has witnessed exponential growth from both the Government and the privatesector, and notably, the technical professional market has been the most advanced segment in using these digital mappingproducts. For example, digital land and geographic data supplied to government departments increased by an average of 51% perannum over the last three years to reach 184,000 sheets in 1999/2000. For commercial and private customers, the number ofdigital maps provided increased from about 13,000 in 1998/99 to around 49,000 in 1999/2000, an increase of 282%.

SMO has been selling its digital mapping products to a number of VARs, who then add specific information to the basic maps tocreate new products. The VAR market and resulting demand for SMO products have been growing with the increasing applicationsof GIS in different business and private applications. SMO has also recently embarked on a number of joint venture/ partnershiparrangements with commercial organisations to produce value-added GIS products. As a relatively new service segment for SMO,this involves integrating SMO’s digital mapping information with other proprietary information. SMO has entered into partnershipagreement with Centaline Property Agency Ltd. and Telecoms Directories Ltd.


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Opportunities for SMC

The fast developing market for SMO's services and products present immense opportunities. On the one hand, the continuingdemand for SMO’s core services will continue to grow slowly. On the other, the explosive growth in spatial data reliant applicationsis creating new, private sector opportunities to be pursued. From this, four broad opportunities have been selected as the focus forSMC:

• Spatial data coordinator - At the moment, the Land Information Centre (LIC) of SMO is acting as the clearinghouse forgeospatial data collected by different departments under the Works Bureau and the Planning and Lands Bureau. The LICvalidates the metadata submitted, consolidates the catalogues, allows public access to the geospatial data and ensuresthe data are being updated regularly. Simultaneously, private sector companies have sought to identify a body which couldact as a central point for the maintenance and upkeep of their mapping databases while providing an avenue for anexchange of data supplied by civil engineering consultants on pre-built and as-built work designs. The most obviousopportunity is that SMC expand the role of the LIC to include these organisations. While this would require SMO to includenew data in their database, including data on demographics, infrastructure location, operations, and other commerciallysensitive data, few are better placed to fulfil this role than a wholly owned government corporation. SMC could become thecoordinator and, eventually, the marketer of the centralised geospatial data, enabling private sector companies to haveaccess to a completely updated map base while avoiding costly and repetitive software, hardware, and operations.

• Provider of electronic- and mobile-commerce based maps – Currently, e-commerce businesses supplying applicationsusing spatial data purchase SMO’s digital data and develop their own systems. This is true even for organisations workingdirectly with SMO, such as Centaline Property Agency Ltd. and Telecom Directories Ltd. While this approach provides asource of revenue for SMO, it is inefficient from the perspective of service development. A better approach would be forSMC to develop standard interface applications enabling e-commerce businesses to access a single, up-to-date mapdatabase hosted at SMC. This opportunity builds upon the proposed role of SMC as a spatial data coordinator by allowingbusinesses to gain access to what might normally be a prohibitively expensive application. Through this opportunity SMCwould both cement its long-term role as the steward of spatial data and gain long-term stability in its revenue streams.

• Positioning infrastructure provider - SMC would further leverage its existing assets and skills by becoming the providerof Differential Global Positioning Systems (DGPS). This would see SMO assisting in the use of DGPS by VARs and selling


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them the DGPS correction data necessary to correctly determine positions. While this would require some form of workingarrangement with telecommunications companies to be viable, interest has already been expressed by a number ofindustry players including mobile phone manufacturers, and SMC will have no shortage of interest in making such asystem functional. Once in place, this system would deliver locating capabilities to VARs developing in-car navigationsystems, WAP location applications, and other location-based services.

• Provider of GIS consultancy services – Pursuit of the opportunities identified in both the Government and the privatesector would logically place SMO in an advantageous position for providing consultancy services in the growing GISmarket. These services may include GIS Development Strategy planning, GIS system implementation, Geo-spatial dataconversion and partnering with private companies to produce value-added GIS products.

Protecting SMC’s intellectual property

The end market for SMC’s products and services, particularly in the area of digital mapping data, is growing substantially, butSMC’s revenues will depend on its ability to preserve its ownership of the core data. Although SMO has copyrighted the data(through the Government) to date, the data has often been treated as a free good, for example given to government sub-contractors and consultants.

On-selling of this core data through VARs (either within or external to the Government) raises more complicated issues. The abilityfor SMC to control the distribution of its data, and put in place arrangements by which it shares in the revenues, will be a key factorin ensuring the value of SMC’s assets are optimised.


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Government will be considering policy issues concerning the balance between open access to data (which may in some casesserve community interests, but could in others deter essential investments) and appropriate protection of intellectual property rights.These issues go beyond the financial viability of the Corporation as the primary objective of the corporatisation of SMO is to ensurethat its information and expertise are leveraged to the maximum value and benefit for the community, the private sector and theGovernment. Corporatisation is not primarily driven by financial return, but the need to give SMO the commercial and managerialflexibility through institutional change to leverage its assets for the community’s benefit. Box 6 on the next page sets out someexamples of how these issues are being addressed by other governments – with varying degrees of openness.


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Box 6 – Stewardship and protection of intellectual property in other survey and mapping organisations

Core spatial data is usually stewarded by national survey and mapping agencies (NSMAs) and owned by governments. The rights over possession and useof digital data are a matter of concern to many governments because of the ease with which data can be shared or dispersed and value undermined. Thepolicies adopted to protect intellectual property in five countries are listed below:

• Malaysia – In order to prevent illegal transmission of digital spatial data by users to third party and to protect the interest of the Department of Surveyand Mapping (DSMM), the Fees and Royalties (Survey Data and Digital Mapping) Order 1997 was introduced in 1997. The Order provides copyrightprotection for all forms of digital survey and mapping data as well as regulating the fees and royalties chargeable by the DSMM. Currently the data inNaLIS (National Infrastructure for Land Information) can be accessed only by public agencies for the purpose of planning development and control ofland resources.

• Singapore – Spatial data is copyrighted and owned by the steward Government agencies, and only data for sale is available to private sector. When asale is contracted, a non-transferable and non-exclusive license to use the Land Base Data is granted. The license is granted solely for the specificedition of the data. Duplication of the digitised data without prior approval from the Government is strictly prohibited. Parties interested in reproducingthe digitised data may purchase the right to reproduce the data into hardcopy or digital form. Any reproduction of the digitised data in hardcopy will bebased on the Fees (Reproduction of Maps) Order 1997 or as revised from time to time. In the case of derivative products, royalty fees are paid asregulated by the Order.

• Japan – At present, little spatial data is in public domain. The core data is published by the Geographic Survey Institute (GSI). Core data is intended tobe used by government administrators and university researchers, and access is strictly restricted. Some spatial data is available for sale to privatecompanies and they have to register the objective and scope of the use of the spatial data with GSI.

• Australia – The Crown owns copyright of Government-held information in right of the Australian Commonwealth and States. The Government assignsagencies as the custodians of the data. Spatial data is transferable from a custodian, between all levels of Government and private sectors. For non-commercial environmental management purposes data will be provided at cost of transfer; data provided for other applications is transferred at a priceand under conditions determined by the custodians.

• New Zealand – All the spatial information held by Land Information New Zealand (LINZ) is subject to Crown copyright. In administering Crowncopyright, LINZ may require external users to acknowledge the source of the information and may, by means of a license, impose other conditions. Dueto the difficulties in administering copyright payments of digital spatial data, the copyright fees are being abolished, but the Crown will continue to retainthe copyright for the information, and require its acknowledgement to protect the authoritative status of the information and to manage liability issues.


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Globalisation, developments in technology, and growing awareness of the business applications of spatialdata are leading to rapid expansion and a change in demand for SMO's information assets. These newapplications, including GIS, internet- and WAP-based applications, and other location-based applications,are placing an increasingly high value upon accurate spatial information and locating infrastructure.

In the near term, Government will continue to provide the mainstay demand SMC’s products andservices, as new applications for spatial data emerge and play a crucial role in assisting Government indelivering its core services and taking forward its policy agenda to support Hong Kong’s continued growthand success. Significant new opportunities for SMC will come from the private sector, effectively shifting the balance ofrevenue and reducing reliance on income from Government in the longer term. This growth in privatesector customers will contribute towards Hong Kong’s economic expansion while providing new productsand services to the community.

Amidst this changing environment, SMC intends to focus on four main opportunities:

• Fulfilling the role of spatial data co-ordinator

• Providing mapping base for e- and m-commerce

• Positioning infrastructure provider

• Providing GIS consulting services.

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Section 4: Benefits of corporatisation

Market driven reform

As earlier sections of the report have explained, factors such as globalisation, technological change and the development of newapplications for spatial data are already driving rapid growth and change in the demand for SMO’s products and services. Thesedevelopments will not simply lead to more demand for existing products and services. They will create new markets with newcustomer segments for new and tailored services, and they will create demand for a more outward looking, agile approach if theopportunities are to be seized and new demands met.

Effective leveraging of these developments is essential not just for the continued success of SMO and the professionaldevelopment of its staff, but also more broadly for the achievement of the vision of Hong Kong as Asia’s world city. Delivery ofGovernment’s current services and future initiatives, effective exploitation of the digital economy by the private sector, and thus thecommunity’s well-being, all depend on the effective leveraging of SMO’s data and services. Yet there are, as explained overleaf,significant constraints on SMO’s ability to do this as a government department.


• Market driven basis of corporatisation – in effect the market is changing and expandingand SMO must be able to respond to and lead developments

• Constraints which prevent SMO from responding fully as a government department

• Benefits to SMO as a Corporation and to SMO’s staff as they join the Corporation

• Broader benefits of corporatisation to the Government, the private sector and thecommunity at large.

Section 4 – Benefits of corporatisation

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Limitations as a vote-funded government department

Well aware of current market developments, SMO has been proactively pursuing a number of commercial opportunities. However,while some of these efforts have been successful, they have highlighted barriers which will frustrate developments if SMO remainsa government department. These barriers include:

• Long lead time for decision making: because SMO does not have ultimate financial authority – it forms part of LandsDepartment and Lands Department itself often needs agreement from Planning and Lands Bureau and/or the “centre” suchas Finance Bureau and Civil Service Bureau. These decision making structures, designed for departments operating in arelatively static environment, are ill suited to an organisation operating in a fast moving commercial market.

• Complexity in establishing private sector partnerships: effective exploitation of digital spatial data will frequently involveentering into innovative partnerships with the private sector, yet as a government department SMO cannot do thisindependently, and must operate through Government. This makes the process much more complex and slower (in itself asignificant drawback in a fast moving market) and brings with it limitations, for example on confidentiality of businessarrangements and exclusivity of data, which may block business deals and reduce value, as compared to what would bepossible under commercial operations.

• Investment limitations: in order to exploit digitised spatial data to the full, SMO will need to be able to make investmentswhich are well justified on business grounds (in terms of economic returns) but which may, for good reason, not get a highpriority when judged by Government against other public policy priorities including pressing social needs, in the ResourceAllocation Exercise.

• Terms and conditions for staff not tailored to the market: standard civil service terms are set to reflect the terms onoffer for equivalent jobs in the private sector while also ensuring the civil service has the ability to attract, recruit and retainsuitable staff. However, in meeting the new service demands, SMO will operate in a specialised area, with requirements fora specific set of skills. SMO needs to be able to design packages that are appropriate to the employment market in which itoperates.


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• Culture and staffing focused on technical excellence: rather than meeting customer needs. As part of LandsDepartment, SMO’s staffing and management effort is designed around the need to deliver existing services to a hightechnical standard within the confines of government rules and regulations, rather than responding proactively to marketdemands and expanding the effective use of spatial data in Hong Kong.

The combined impact of the rapid growth and change in the market for SMO’s products and services, combined with theselimitations which will continue whilst SMO is a government department, have led Government to conclude that SMO must becorporatised. Only through flexibility and greater control over its newly formed commercial agenda, can SMO make full use of itsassets and take full advantage of the emerging commercial applications of spatial data. This in turn will bring benefits to SMO, itsstaff, the Government, the private sector and the community, as described below.

Benefits of corporatisation for SMO

In essence corporatisation will provide SMO with the flexibility to pursue the emerging market opportunities by giving it:

• Agility to develop new services for new customers at the speed the market and applications for spatial data are emerging.

• Authority to enter into business partnerships to develop up-market products to meet changing demands.

• Flexibility to manage resources to best effect and to respond to changing demands by applying the revenue received.

• Freedom to invest its resources in research and development on the basis of commercial judgements about futurereturns to produce more value-added services.

• Greater flexibility to retain, develop and recruit staff with the necessary expertise not only in its core survey and spatialdata services but also essential commercial disciplines such as commercial management, marketing and research anddevelopment.

• Greater self-sufficiency in support services and visibility of full costs and benefits, so as to drive improved operationalefficiency.


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Benefits of corporatisation for SMO staff

Corporatisation also brings reassurance and new opportunities for staff:

• All SMO staff may either maintain their current civil servant status, or have the opportunity to take voluntary retirement.They may subsequently transfer to the new Corporation. There will be no forced redundancy of staff when SMC iscreated.

• For those who transfer to comparable jobs in the new Corporation, there will be an arrangement that they will notreceive a less favourable salary on conversion. While the remuneration package for Corporation staff will be marketbased, they will be offered a comparable job in the Corporation at a pay level equivalent to the dollar value of the civilservice pay point at the time of conversion.

• Because SMC will be able to mobilise quickly to move into the new market opportunities, corporatisation will improvethe development and career opportunities for staff - giving them greater exposure to leading edge work. This will bothenrich their current working environment and provide greater opportunities for career development within SMC andindeed in the private sector.

• Greater flexibility to reward good performance for staff – SMC’s new terms and conditions will include a performancerelated element.

Broader benefits for the Government

Given the importance of SMO’s products and services to the Government’s programmes, there will be a broad range of benefits forthe Government from corporatisation by improving SMO’s ability to leverage its spatial data:

• Enhanced support for the broad range of the Government’s policy objectives: which require the effectiveexploitation of spatial data, including sustainable development, environmental development, transport, infrastructure,and the development of Hong Kong as a leader in the digital global economy.


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• Improved efficiency and service: Corporatisation will be consistent with the Government’s broader efforts toimprove the management and delivery of public services, as SMC will have greater flexibility to optimise thedeployment of its resources to deliver improved service and value for money. The major efficiency gains would comefrom rationalisation of support services, streamlining of procedures and using of advanced technology, thus resultingin savings in administration overheads as well as increase in productivity. Efficiency gains is expected to be 2% peryear for the first two years of operations and 1% per year for the subsequent three years.

Broader benefits for the private sector

Corporatisation is also very positive from the private sector’s perspective:

• Enabling private sector exploitation of opportunities: in the knowledge based economy, making full use of thepotential of developments in digital technology. Effective leveraging SMO’s spatial data has a vital part to play inenabling the private sector to seize these opportunities quickly and effectively, so corporatisation will facilitate theprivate sector’s development in this area.

• Improving service and efficiency: As increasingly important consumers of SMO’s products and services, theprivate sector will benefit from improvements in service and efficiency which will be enabled by corporatisation.

• Opportunities for innovative partnerships: Partnerships with the private sector will become an increasinglyimportant part of SMO’s mode of operation, and this will create opportunities for the private sector to work alongsidethe public sector in new ways.


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Broader benefits for the community at large

The benefits to the community include, from a different perspective, the benefits set out earlier:

• In terms of employment and prosperity, the community will gain from the effective exploitation of the value of SMO’sspatial data.

• Because SMC will be able to support Government’s core services and policy initiatives more effectively, corporatisationwill contribute to improvements in the community’s quality of life.

• As consumers, the community will gain from a growing array of new services, reliant on spatial data, and provided by theprivate sector through a commercial arrangement with SMC.


Corporatising SMO will deliver important benefits for the main stakeholders:

• SMO itself will gain the essential agility and flexibility to respond to a fast changing market, andmaximise the value of its spatial data and skills.

• Staff may remain as civil servants or join SMC on Corporation terms, meanwhile gaining access toenhanced skills, experience and career opportunities.

• Government will gain improved support for the services and initiatives dependent on SMO’sproducts and services, as well as through a reduced financial contribution.

• The private sector will gain from the economic impact of effective exploitation of spatial data,improved service and efficiency from SMO, and new opportunities for partnership with the publicsector.

• The community at large will gain in terms of prosperity and quality of life – supported byimprovements in the breadth and quality of both public and private sector services.

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Section 5: Initial operations of the Corporation

Target customer segment – Government

The most important initial customer segment for SMC will be the Government. This includes all government departments whichuse SMO’s products and services currently or may do so in future. This target segment thus consists of 15 policy bureaux andmore than 70 government departments and agencies with a total workforce of about 190,000. Examples of major customersinclude Lands Department, Environmental Protection Department, Highways Department, and Transport Department.

Here, SMO is developing a Service Level Agreement (SLA) to cover all the services it provides. The service level agreement isessential for both SMC and Government. For SMC, it provides a sound basis for manpower and budgetary planning, aspecification of its services and products as well as the expected quality, the volume of services required for services, and therevenue it expects. For Government, the SLA ensures that levels of support provided today will be provided after corporatisation,essentially providing Government customers with full transparency in what services are being consumed and how much theGovernment is going to pay for all the services.

This section sets out:

• SMC’s target customer segments in Government and amongst technical and businessprofessionals in the private sector.

• SMC’s initial services and products for the start up of the Corporation.

• The revenue that these products and services will generate.

• The planned organisational structure of the Corporation.

Section 5 – Initial operations of the Corporation

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In view of the public nature of the services provided to these customers, initial prices for SMC products and services are assumedto be at cost. Over time, however, should SMC achieve efficiency gains above and beyond those anticipated for Government, theCorporation would enjoy the surplus on these services.

In addition to specific services and products, the SLA will also cover the 241 staff seconded to the various other governmentdepartments. The SLA will therefore form the basis of longer term contractual arrangements associated with secondment, helpingto spell out the roles and duties of seconded staff.

In terms of Government, the initial operations are expected to broadly follow existing operations, and hence apart from thecompletion of existing projects, no significant change is planned in the volume of services consumed or the number of staffdeployed on secondment.

Target customer segment – private sector technical professionals

Technical professionals in the private sector represent the next important customer segment for SMC. These include utilities,infrastructure providers, railways, and technical consultants. This segment is currently an active buyer of SMC’s products andservices and is anticipated to continue to be a major customer segment moving forward. Growth in the demand from this segmentis typically tied to either the delivery of their services or in the development of their businesses, where spatial information plays animportant role.

The technical professional segment includes about 15 major companies in Hong Kong providing services in transport,telecommunication and energy areas. Examples include MTRC, KCRC, KMB, CLP, and HKCG. The segment also includestelecommunications, civil engineering, architectural, surveying and construction related firms.

While MTRC and KCRC have historically had a close link with the Government, they both operate under prudent commercialprinciples. They need to earn a satisfactory rate of return while taking into consideration the transport policy and needs of HongKong. The energy, telecommunication and other companies are private companies and are driven by purely commercial focus.


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The pressures for commercial success within these organisations create a continuous search to reduce costs and enhanceservices and efficiency. Pricing for SMC’s products and services for these companies must be market based or, in the absence ofmarket competition, be value-based.

Target customer segment – private sector business professionals

Business professionals represent the third major segment for SMC’s products and services. As discussed earlier in this document,digital maps have been sold to a wide variety of commercial customers applying them in very different and useful ways. Thisinnovation is in its infancy, and technological advancements will only accelerate the number and variety of spatial data basedapplications. The explosion of new uses will continue to increase the demand for products and services from SMC from thebusiness professional sector.

This sector represents the majority of the 500,000 companies registered in Hong Kong. Digital maps have been purchased thus farby about 300 companies. Prospective customers in this segment span a wide range of industries and services, such as:

• Transportation and logistics• Retail• Import and export trading• Services• Insurance• Real estate• Financial services• Hospitality and leisure• Manufacturing• Academic institutions.


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The companies which have purchased digital maps thus far include market research, tobacco products, real estate and transport.Again the commercial profit drive indicates that the pricing for products and services from SMC will need to be market based, orwhere this does not apply, value-based.

Specific services for Government

At the inception of the Corporation, SMC will continue to provide the same services at the same quality and volume as today to theLands Department and the various other government departments covered by the SLA with the Government. Services under theSLA will therefore embrace all the products and services to Government customers described earlier in this document includingdigital and paper maps, existing advisory services, services on projects as well as seconded staff.

The main services to Lands Department will include defining lot boundaries and advising on all related matters. This involvescarrying out field survey, including the preparation of survey record plans and dimensional plans. A dimensioned survey will needto be conducted in accordance with the latest Land Boundary Survey Regulation. This also involves maintaining proper landboundary records and updating the information in Cadastral Information System. Professional advice is provided on land boundarymatters in respect of land acquisition, land disposal, clarification of land status for resolving boundary disputes, discrepanciesbetween registered areas and physical occupation of land.

To provide digital maps, SMC needs to continue to carry out various surveys and collect information and update its digital mapdatabases. The digital map databases contain topographic maps in scale of 1:1,000, 1:5,000, 1:10,000 and 1:20,000 and landboundary maps of scale 1:1,000. These maps are provided in the form of computer tape to customers for their use.

In supporting projects, SMC will need to supply land status information for affected land and to conduct research via historicalphotography and plan records to facilitate settlement of claims, compensation evaluation, preparation of zonal compensation plans,etc. SMC also needs to check various plans such as the scheme plan, the resumption plan and the clearance plan prepared byproject consultants. It will also advise on various land boundary matters with respect to land acquisition, land disposals, clarificationof land status, etc.


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For the community, SMC needs to establish and maintain a proper geodetic network. This involves carrying out regularmaintenance work to ensure the validity of geodetic control point network and setting of new control points.

SMC will also continue to second around 240 staff to departments such as Planning Department, Civil Engineering Department,Drainage Services Department, Highways Department, Marine Department, Water Supplies Department and the Hong Kong Police.

Specific services for the private sector

Products and services SMC will provide to private sector customers include:

• Hard copy maps and photographs which include maps in different scales, thematic maps, street guides, aerial photographs,etc.

• Digital maps in various scales

• Digital maps on the internet developed with business partners


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Volume of products and services

The indicative volumes for products and services to Government under the SLA are as follows.

First Year Government Volumes for SMC

Product/Service VolumeDigital maps 185,000Colour maps 41,000Reprographic service 154,000 printsNumber of current projects 5Number of seconded staff 241

The indicative volume of sales of products to public and private sector customers are as follows.

First Year Private Sector Volumes for SMC

Paper Products VolumePublications and maps 55,000Print and miscellaneous 95,000

Digital Products VolumeNo. of sheets 50,000

In addition, under the SLA, SMC is required to update the basic map sheets, maintain the existing geodetic network and maintainthe land records. It will also carry out survey and mapping services and provide advice on land boundary matters to support theLands Department in land administration work.


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Revenue estimates

While the opportunities for SMC are both attractive and growing, initial operations will largely rely upon services provided today.The opportunities are to be pursued over the coming years and, for planning purposes, very conservative assumptions have beenmade about revenues to be generated in the early years. If revenues were higher, they would either be invested in serviceimprovements or returned to Government.

For existing paper and digital products, it is has been assumed that the current fee levels will apply, for example:

• Colour topographic maps will range from $10 to $55 each depending on the scale and size

• Fees for standard survey plans range from $45 to $850 depending on material and process

• Topographic maps in digital format range from $250 to $535 per sheet depending on scale

The fees for various products on sale to commercial and public customers are summarised in Annex D.

The revenue from Government under the SLA has been forecast based on the current full cost of operation, while taking intoaccount planned completion of existing projects and expected efficiency gains.

The commercial and other revenues have been projected based on market potential of selected products, adopting a conservativeapproach. These projections reflect an extremely conservative view of SMC’s potential and viability. The projected revenues fromvarious sources are depicted on the diagram overleaf. These revenue figures have been used in the financial projections set out inSection 7 of this document.


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Projected Revenue of SMC


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The commercial and other revenue set out above comprises the following conservative elements:

• New projects: There are many infrastructure projects to be implemented over the coming years such as further extensionof the railway lines (e.g. Island Line extension and Southern Loop extension into Tsim Sha Tsui), urban renewal, new towndevelopment, Central Kowloon route, etc. As with similar projects now underway, these new projects will also require surveyand mapping services and will therefore provide revenue for the future Corporation.

• Maps and photographs: This area includes all the existing maps and photographs provided to commercial and publiccustomers. In addition, new aerial photographs will lead to further revenue.

• Digital data: This area includes the existing digital maps on sale to commercial and public customers. It is also expectedthat there will be wider use of digital data, such as using data within a spatial address databases and providing value-addedsatellite imagery functions, which would provide further revenue.

• GIS consultancy and advise: Consultancy and advisory services in GIS and GPS are considered to be growth areas. Asmore and more organisations find that GIS and GPS can enhance their services, there will be more applications developedand more business supporting implementation.

• VAR/partnership agreements: SMO has already taken the lead in introducing new products through teaming up with VARsand business partners. This will be a growth area once SMO has greater flexibility and authority in entering into suchagreements. Hand held and mobile technologies will be an important driver for future growth in such partnerships – wherethere is little case for SMO investing in broader communications infrastructure, but it has data that will be very valuable toprivate sector service providers which already have the infrastructure. In-car navigation and transport mapping are likelyapplication areas.

• Others: This will include revenue from multi-media special products delivered to sectors such as property data,environmental data and 3D modelling.


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The structure of the Corporation

The current staff of SMO represent a vital contributor to SMC’s success and, as Section 6 explains, retaining staff will be vital.However, the Corporation will also need to develop new skills and organise in new ways if it is to be able to exploit the opportunitiesahead. It needs to become a corporate provider of survey and mapping services, able to shape and exploit the full potential of itsinformation and expertise in a commercial environment. This will require SMC to develop commercial and market managementcapacity and to become self-sufficient in a number of areas where SMO currently relies on the central support services withinGovernment.

SMC will need to retain its ability to deliver high quality survey and mapping services SMO delivers today, and combine this with thecapacity to take on new areas of activity and manage the business. Some of the key areas where SMC will need to develop itsfocus and capacity include:

• Entrepeneurship - Moving from a reactive to a proactive role in the identification and exploitation of the rapidlydeveloping market for geographical information systems – facilitating the market’s development in Hong Kong.

• Research & development - Lifting research and development capacity to keep pace with the rapid developments ingeographic information systems and their business and community applications.

• Marketing - Building market awareness of SMC’s services through planned and targeted marketing activities.

• Customer service - Achieving greater customer focus as SMC serves a broader range of customers across the publicand the private sectors.

• Operations management – Moving towards greater autonomy for separate business units within SMC to give them theflexibility to manage resources to best effect and tailor their services to the rapidly evolving needs of their customers.

• Commercial management - Building commercial management expertise at all levels.

• Business administration - Establishing self-contained financial management and human resources services.


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Therefore, in addition to retaining current staff there will be a need for a new chief executive and around 40 new staff including keypersonnel with the required expertise in commercial financial and human resources management, marketing and sales etc, andtheir support staff.

In order to carry out initial operations effectively, SMC intends to adopt a new organisation structure. The detail of this structure willneed to be revisited by the new chief executive, and the structure will need to evolve as SMC’s market and services develop.However, the broad principles of the initial corporate structure needed to meet the requirements set out above have been agreed.There will be two divisions:

• Central and Spatial Services Division: This will include all the new functions necessary to exploit the new markets andto be sufficient in management and support functions.

• Survey Operations Division: This will include the current survey operations, together with some current headquartersfunctions which support surveying operations.

The outline of the structure is set out in the diagram overleaf:


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SMC Organisational Structure

Finance & ProcurementDepartment

Human Resources& Administration

Department

Spatial Service Centre

Spatial Data Centre

Central & Spatial Services Division

Survey SupportServices Department

Regional Operations (North)Department

Regional Operations (South)Department

Projects Department

Survey Operations Division

CEO


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The paragraphs below describe the elements to each division and its constituent departments in more detail.

Central and Spatial Services Division

This division will consist of four departments, namely Finance and Procurement Department, Human Resources and AdministrationDepartment, Spatial Service Centre and Spatial Data Centre. The functions of the departments are described below.

Finance and Procurement Department: Finance is considered a very important area as it will measure and monitorfinancial performance of the Corporation as well as contribute significantly in all business decisions. This department, tobe headed by a Financial Controller, will provide the necessary financial planning and financial management services tofacilitate effective allocation of resources and measurement and monitoring of financial performance. It will also takecare of all procurement of equipment, materials and services. The financial activities will cover financial evaluations ofbusiness strategy, financial planning and modelling, budgeting, maintaining proper accounting systems and records,internal and external audit, management of cost and fixed asset, taxation, treasury management, credit control and so on.Procurement will cover purchase of goods such as equipment as well as services, selection and control of suppliers,stock & stores control, procurement of professional and consultancy services.

Human Resources and Administration Department: Human resources is another important area to be strengthened.This is because suitable human resources policies and procedures are required to cultivate a workforce that can deliverall the required improvements as well as new products and services. The department, to be headed by a professionalhuman resources manager, will look after all the human resources functions and administration work of the Corporation.It is responsible for devising and implementing the Corporation’s human resources policies regarding manpower planning,recruitment, remuneration, performance appraisal, staff development and training, employee relations and occupationalsafety. It will also perform central grade management and personnel functions for staff seconded to work in governmentdepartments. On administration, it will cover all work related to facility and office management, transport provision, fleetdeployment and maintenance, distribution of document, etc.


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Spatial Service Centre: This centre will be the most significant in enabling the Corporation to develop products andservices and to respond to changing market needs. The staff of this centre will be market-focused and customer-orientated. The role of the Spatial Service Centre is to provide a central customer-orientated business unit which willproactively review existing products and services as well as explore potential opportunities in the market, identify newmarkets and be able to follow through promptly with the development of new products and services. Experiencedmarketing personnel will work with technical staff expert in surveying, mapping and IT to develop improved solutions tomeet market needs and create new opportunities. The activities of this centre will include research and development,marketing and sales as well as provision of consultancy services.

Spatial Data Centre: This centre will provide the service function for all the data management and production activitiesof the Spatial Services Centre as well as providing the service function for all the technology systems of the Corporation.Data management will cover all the databases such as geo-reference database and digital mapping database and all thecomputer systems such as Land Information System and Data Dissemination System. A market led environment isessential to provide the responses that customers require.

Survey Operations Division

This division will consist of four departments:

Survey Support Services Department: This department will provide the necessary technical support services to surveyoperations such as technical and operational instructions, government advice and liaison, emergency surveyarrangements, geographic place naming, legislation-related services, geodetic survey and service level agreements.

Regional Operations (South) Department: This department will include the existing HK and Kln District Survey Offices(DSOs) and the Is, KT and TW DSOs that are currently included with the New Territories.

Regional Operations (North) Department: This department will include the other 6 of the existing New TerritoriesDSOs.


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Projects Department: A dedicated projects department to support projects, which require a different mode of operationalstructure and management, as distinct from typical mapping and surveying operations.


Given that it will take some time to develop new services and revenue streams, the prudent approach isto base the business plan for the initial operation around current services. The initial services to beprovided from SMC are therefore based broadly on those provided today. The majority of these servicesare to be committed through a Service Level Agreement (SLA) with the Government to cover all theproducts and services to Government customers. The SLA will therefore represent a stable source ofbusiness for the future Corporation in the planning period.

Private sector customers are also assumed to take up existing services. With corporatisation, SMC willbe able to develop all the commercial capabilities to achieve a considerable growth in revenue fromcommercial and private customers, but again a conservative approach is being taken to estimating thescale of such revenues in the early years.

The resulting picture is one of a prudent approach to corporatising SMO. One which will ensure viabilitywhile providing the room for commercial activities to flourish.

SMC needs to adopt a new structure which will strengthen its capabilities in a number of areas so as tomake it self-sufficient and to respond promptly to emerging needs of customers – thus laying thefoundation for its future growth and success.

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Section 6: Staffing arrangments

Importance of staff to the future success of SMC

The two most important assets SMO will take with it as it moves to corporate status are the information it holds (already discussedearlier in this document) and the experienced staff who bring hands on expertise in the survey and mapping business in Hong Kong.It is therefore vital to the success of the Corporation that these staff are retained and motivated to contribute to the full in the newCorporation. Both for this reason, and to ensure that the corporatisation proposal has the full support of staff , very careful thoughthas been given to the terms to be offered to staff. Also, it is necessary to put in place appropriate measures to address theconcerns of staff as regards job security and career advancement prospects.

SMC’s human resources strategy is to consistently provide programmes and services that support the human resources needs ofSMC, maintain the highest standards of integrity and responsibility; add value to SMC’s performance, programmes, and services,and support SMC’s strategic business plans. This will be achieved by seeking to attract, retain and reward talented employees byproviding challenging work roles, professional development opportunities and competitive compensation and benefits.

This section sets out:

• The importance of staff to the future Corporation.

• Human resources philosophy of SMC.

• The proposal on staffing arrangements.

• The approach in setting rewards.

• Main elements of the proposed remuneration package.

• Areas to develop in order to seize opportunities ahead.

Section 6: Staffing arrangement

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Staffing proposals

The key elements of the proposals on staffing are that:

• The Government has assured staff that corporatisation of SMO will not lead to any forced redundancy.

• The Government proposes to offer all SMO departmental grades staff two options: to retain their civil servant status, termsand conditions, and be seconded to the Corporation; or to retire voluntarily with compensation similar to the service-widevoluntary retirement package introduced in 2000. The compensation will include a commuted pension gratuity and amonthly pension immediately payable after the officer’s voluntary retirement as well as a special lump-sum paymentcalculated on the basis of one month’s salary for every two complete years of service plus nine months’ salary, up to amaximum equivalent to 20 months’ salary of the officer. Retired civil servants working in the Corporation would not havethe normal suspension of monthly pension applied to them. Existing general grades staff in SMO may be retained andseconded to SMC or posted within the civil service as required by their respective Heads of Grade.

• For those staff who choose to retire voluntarily, they will be offered comparable jobs by the Corporation at a pay levelequivalent to the dollar value of their civil service pay point at the time of conversion. They will then be subject to thecorporation package after conversion.

• The choice of whether to remain as a civil servant or to retire, and thereafter to take up employment with the Corporation,will entirely be a personal decision for all serving departmental grade staff. Those staff choosing to retain civil servantstatus will be accommodated on the civil service establishment, and be eligible for promotion on an equitable basis withSMC staff, as the case may be, until they leave the service in the normal manner.

A market driven approach to setting rewards

In devising the proposed SMC employment package, a market-driven approach has been used to ensure the package is sufficientlyattractive to recruit, motivate and retain suitable personnel from within SMO and from outside Government. The Government hastherefore sought expert advice on the market level of rewards and the structure and level of the remuneration for employment bySMC. The package has been designed to offer pay and benefits at the median level of the market for comparable employment. The


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following paragraphs describe the main elements of the package, while the proposed staffing structure and employment packagefor the Corporation are at Annex E.

Remuneration package

The package which will be offered to staff employed by SMC will include a salary, performance rewards and, for most staff, cashallowances for housing and other forms of employment benefits in kind (e.g. medical insurance, provident fund). A 15-band paystructure will be put in place, in line with that offered by other public corporations. The remuneration package for the CorporationChief Executive Officer will be determined by the Government and the Corporation’s Board of Directors. The table overleaf setsout the salary offered for Corporation staff which is targeted at the market median to maintain competitiveness.


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Proposed Salaries of SMC

Proposed Salary Range (Monthly Salary HK$)Type

ProposedBands Proposed Min Proposed Median Proposed Max

Market Median HK$per month

15 121,480 139,700 157,920 139,728TopManagement 14 109,130 125,500 141,870 125,562

13 83,830 96,400 108,980 96,374

12 76,780 88,300 99,810 88,335Senior

Management11 70,870 81,500 92,130 81,456

10 50,720 63,400 76,080 63,442

9 45,040 56,300 67,560 56,333

Management/ Professional

8 35,690 46,400 57,100 46,431

7 29,000 37,700 46,400 37,748

6 23,080 30,000 36,930 29,916

5 19,310 25,100 30,900 25,079Technical

4 15,170 20,100 25,030 20,072

3 9,210 12,200 15,200 12,167

2 7,700 10,200 12,710 10,139General staff

1 6,420 8,500 10,590 8,504


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A new incentive scheme based on performance will be introduced, with target incentives ranging from 1/2 month’s salary for Band 1to 2 months’ salary for Band 15. In addition, a cash housing allowance will be paid for Corporation staff at or above technical level.The cash housing allowance to be paid by SMC is as follows:

Proposed Housing Allowance of SMC

Type Bands Monthlyallowance

Top Management 14 – 15 $25,000

Senior Management 11 – 13 $15,000

Management /Professional

8 – 10 $10,000

Technical 6 – 7 $5,000

4 – 5 $3,000

General 1 – 3 -

Seizing the opportunities ahead

Retaining the expertise and knowledge of SMO’s staff is vital, but will not be sufficient on its own to equip SMC to exploit theopportunities ahead. The Corporation needs to become a corporate provider of survey and mapping services able to shape andexploit the full potential of its information and expertise in a commercial environment. This will require SMC to develop commercial


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and market management capacity and to become self-sufficient in a number of areas where SMO currently relies on the centralsupport services within Government.

SMC will need all the current staff of SMO. The existing staffing level of SMO is therefore assumed to be maintained save forproject-specific tasks. It is expected that any manpower savings through enhanced productivity, streamlining of procedures andwork processes would be gainfully redeployed to support new business or expansion in existing activities. In addition, there will bea need for the new Chief Executive Officer and around 40 new staff including key personnel with the required expertise incommercial, financial and human resources management, marketing and sales etc., and their support staff.


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SMO’s staff, who have deep experience and expertise in the survey and mapping business are essentialassets for the future Corporation. To ensure the success of the Corporation, the arrangement forretaining and motivating staff has been carefully considered.

The Government has assured staff that corporatisation will not lead to any forced redundancy. Twooptions will be offered to departmental staff: to retain their civil servant status and be seconded to SMC orto retire voluntarily and take up employment with SMC. Staff who choose to transfer to SMC on newterms will be offered a comparable job at salary level equivalent to the dollar value of their civil servicepay point at the time of conversion. The choice of whether to remain as a civil servant or to retire, andthereafter to take up employment with SMC will entirely be up to each staff member. Those staffchoosing to retain civil servant status will be accommodated on civil service establishment with equitablepromotion opportunities as the staff who transfer. The proposed employment package of the Corporation has been devised based on a market-drivenapproach so as to be sufficiently attractive to recruit, retain and motivate staff both from within SMO andoutside Government. It will include salary, performance related reward, cash allowance for most staffand other form of benefit in kinds.

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Section 7: Financial plans

Basis of financial projections

Financial projections for the first five years’ operations have been prepared so as to assess the financial viability of the Corporation.These are based on the analysis of services and customers in previous sections of this document and the proposed staffingarrangements described in Section 6. All the projections are prepared on a constant dollar basis – i.e. ignoring inflation.

It is important to recognise the nature of these projections. While the assumptions for the financial projections have been carefullydefined and are prudent, it is not possible to eliminate uncertainties completely. For instance, the projections assume that SMO willbe corporatised in the current year, and be given the required commercial freedom so as to build up its commercial capability.Given that the industry is changing at a fast pace, significant delay in corporatisation, or limitations on the commercial flexibility ofthe Corporation, could undermine the projections and the financial viability of the Corporation.


• Basis of financial projections

• Financial overview for the Corporation for the first five years of operation

• Proforma financial statements

• Results of sensitivity tests

• Financial targets for the Corporation

• Proposed pricing mechanisms

Section 7 – Financial plans

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Financial overview

RevenueRevenue from Government under the SLA is forecast to decline marginally over time from $805 million in Year 1 to $719 million inYear 5 of operation. This decline reflects both the completion of existing projects and efficiency savings. Commercial and otherrevenue, on the other hand, is conservatively forecast to grow from $66 million in Year 1 to $211 million in Year 5. The resultingtotal revenue for SMC is thus projected to increase from $871 million in Year 1 to $930 million in Year 5 (on a constant dollar basis).Commercial and other revenue is estimated based on a conservative approach so as to provide a prudent picture of theCorporation’s financial performance. As explained in Section 5, major increase in commercial and other revenue will be derivedfrom the following sources:

• New infrastructure projects such as railway development and urban renewal will continue to require surveying andmapping products and services and hence will provide new revenue.

• As GIS is being increasingly applied to operations of commercial and public sector, consultancy and advisory services inthis area and hence the revenue will increase.

• Products developed through partnering with private sector will continue to grow and therefore also give rise to revenue.

ExpenditureExpenditures for SMC are forecast to slightly decline over the 5-year planning horizon, from $848 million in Year 1 to $837 million inYear 5. These forecasts include the provision for all the current staff of SMO. It is assumed that 50% of SMO staff will opt forvoluntary retirement and join the Corporation under the proposed package over a period of two years. The other 50% are assumedto retain their status as civil servants and be seconded to the Corporation. The forecasts have also included efficiency savings.

ProfitabilityOn this basis the future Corporation is estimated to be profitable throughout the planning period. Owing to growth in commercialand other revenue and more efficient operations in line with the transformation to a corporation, profit before tax will increase from$23 million in Year 1 to $93 million in Year 5. Net profit margin is projected to increase from 2.2% in Year 1 to 8.4% in Year 5.


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InvestmentIn order to develop new commercial revenue SMC will need to invest in information technology. Total capital expenditure over thefive-year period is estimated to be $202 million. It is assumed that SMO would work with suitable private sectortelecommunications partners, so that significant investment in telecommunication networks would not be required.

Assets, working capital and dividendsAt the inception of the Corporation, the Government will vest all the existing assets used by SMO to the Corporation asGovernment’s equity capital in the Corporation. The net book value of these assets is estimated to be $58.5 million. To provideworking capital at the beginning, it is also projected that, subject to the necessary approval to be obtained, a loan of $10 million willbe sought from the Government.

Because of the consistent profitability, the future Corporation will be able to finance its capital expenditure by internal generatedfunds and the loan from Government will be fully repaid by end of Year 2. In addition, the Corporation will be able to distribute 50%of profit after tax as dividends to the Government while retaining the other 50% for its future development. Retained profit isprojected to reach $143 million at the end of the fifth year. Based on the financial projections, SMO will therefore be a viablebusiness.

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Proforma financial statements

The projected profit and loss account and balance sheet for the first five years of operations (at a constant price level based on2000/01) are shown below followed by explanatory notes.

Projected Profit & Loss Account (Year 1 to Year 5)(Constant HK$ million)

Note Year 1 Year 2 Year 3 Year 4 Year 5Revenue

Revenue from Service Level Agreement (1) 804.9 765.4 745.4 726.5 719.0Commercial and other revenue (2) 65.7 144.7 169.7 184.9 211.3

Total revenue 870.6 910.1 915.1 911.4 930.3

Expenditure (3) (848.0) (844.8) (839.1) (829.0) (836.9)

Profit before taxation (4) 22.6 65.3 76.0 82.4 93.4

Profit tax (5) (3.6) (10.4) (12.2) (13.2) (15.0)

Profit after taxation 19.0 54.9 63.8 69.2 78.4

Proposed dividends (6) (9.5) (27.5) (31.9) (34.6) (39.2)

Retained profit for the year (7) 9.5 27.4 31.9 34.6 39.2

Net profit margin (8) 2.2% 6.0% 7.0% 7.6% 8.4%


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Projected Balance Sheet (Year 1 to Year 5)(Constant HK$ million)

Note Year 1 Year 2 Year 3 Year 4 Year 5Fixed assets (9) 83.9 101.0 89.7 76.9 66.1Current assets

Stock (10) 1.0 1.0 1.0 1.0 1.0Debtors and prepayment (11) 5.5 12.0 14.0 15.0 17.0Cash and bank balance (12) 4.1 16.7 62.7 112.4 165.8

10.6 29.7 77.7 128.4 183.8

Current liabilitiesCreditors (13) (7.0) (7.8) (8.2) (8.8) (9.6)Proposed dividend (14) (9.5) (27.5) (31.9) (34.6) (39.2)

(16.5) (35.3) (40.1) (43.4) (48.8)

Net current assets (5.9) (5.6) 37.6 85.0 135.0

Total net assets 78.0 95.4 127.3 161.9 201.1

Financed by:Share capital (15) 58.5 58.5 58.5 58.5 58.5Retained profit (16) 9.5 36.9 68.8 103.4 142.6

Capital and reserve 68.0 95.4 127.3 161.9 201.1Government loan (17) 10.0 0 0 0 0

78.0 95.4 127.3 161.9 201.1


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Note 1Revenue from Service Level Agreement represents revenue derived from continuing current services and products provided toLands Department, various government departments and current projects. The revenue in Year 1 is projected based on current fullcost of operation. Because of planned completion of current projects and expected efficiency savings, revenue from the SLA woulddecrease from $805 million in Year 1 to $719 million in Year 5. The decrease in revenue from the SLA due to project completionwill be balanced by new projects which will be dealt with outside the SLA (see note 2).

Note 2Commercial and other revenue is estimated based on a conservative approach while taking into consideration the market potentialfor the Corporation’s products and services. It comprises a number of sources and the components are shown in the table belowfollowed by explanatory notes on each of the category.

(Constant HK$ million)Year 1 Year 2 Year 3 Year 4 Year 5

Commercial and Other RevenueNew Projects 38.1 89.0 87.1 81.2 87.3Maps and Photographs 9.2 10.0 10.8 11.6 12.0Digital Data 7.5 9.5 12.0 14.6 16.5GIS Consultancy and Advisory Services 7.0 23.0 34.0 35.0 36.0VAR/partnership Agreement 2.8 10.4 19.5 32.5 45.5Others 1.1 2.8 6.3 10.0 14.0

65.7 144.7 169.7 184.9 211.3


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Note 2 - New projectsIt is expected that corporatisation will provide the drive for SMO to provide more competitive project services. The revenue fromnew projects is estimated based on the number of projects identified and the estimated resources to deliver the required projectservices. A list of the planned and potential projects are shown in the table below. In line with conservative approach, only 50% ofthe total revenue from potential projects is included in the revenue projection.


Planned projectsRailway development - 48.5 48.5 48.5 48.5School improvement programme phases V to VIII 1.8 1.8 2.1 - -Slope safety 1.7 1.7 1.7 1.7 -Planning of Liquefied Petroleum Gas filling facilities 1.1 3.4 3.4 3.4 -Sub-total for planned projects 4.6 55.4 55.7 53.6 48.5

Potential projectsUrban Renewal AuthorityHung Shui Kiu new town developmentKwun Tung and Fanling new town developmentRoute 10 land acquisition and clearanceDrainage master plan in northern New Territories 67.0 67.2 62.8 55.3 77.7Wan Chai development phase IICentral Kowloon routeWidening of Gascoigne Road flyoverWest Kowloon drainage improvement50% of total revenue from potential projects 33.5 33.6 31.4 27.6 38.8

Total 38.1 89.0 87.1 81.2 87.3


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Note 2 - Maps and photographs

This category covers current hard copy maps and photographs such as topographic maps, thematic maps, aerial photographs,street guide, etc. With more products to be introduced and increase in volume of sales, the revenue from this category is expectedto grow moderately as shown in the table below.


Current map products 2.3 2.3 2.3 2.3 2.3Reprographics and cadastral information 5.4 5.6 5.8 6.0 6.0Aerial photographs 1.2 1.8 2.4 3.0 3.4Copyright 0.3 0.3 0.3 0.3 0.3

Total 9.2 10.0 10.8 11.6 12.0


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Note 2 - Digital dataComponents within this category are shown in the following table. It is expected that the volume of sales of existing digital data anddigital photos will increase as these become more widely used. In addition, the revenue from the spatial address database isexpected to increase as such data would be used in many future GIS applications.


Existing digital data 4.0 5.0 6.0 7.0 8.0Spatial address database 1.5 2.0 2.5 3.1 4.0Satellite imagery 1.0 1.0 1.0 1.0 1.0Digital photos 1.0 1.5 2.5 3.5 3.5

Total 7.5 9.5 12.0 14.6 16.5

Note 2 - GIS consultancy and advisory servicesWith more organisations examining the applications of GIS and implementing GIS and related systems, SMC will be in a goodposition to provide consultancy services on GIS application. Through its training school, SMC will also be able to offer anincreasing level of training in relation to GIS. It is expected that most of the revenue will be from government departments andpublic corporations. Both the number of consultancy assignment as well as the complexity of the assignment are expected toincrease over time, thereby leading to higher revenue.


GIS training 2.0 3.0 4.0 5.0 6.0Consultancy and advisory services 5.0 20.0 30.0 30.0 30.0

Total 7.0 23.0 34.0 35.0 36.0


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Note 2 - VAR/Partnership agreementThis category covers VAR/partnership agreements for existing products such as Centamap and new VAR/partnership agreements.These relate to the exploitation of the business applications of digital data through partnerships and other arrangements with theprivate sector. Given the scale of the opportunities, this is expected to be a major area of revenue growth. The breakdown isshown in the table below.


Handheld and mobile technologies (WAP/3G) 1.0 2.5 5.0 10.0 20.0Property, tourist information and directories 1.8 2.9 7.5 7.5 7.5In-car navigation - 2.0 4.0 9.0 12.0Transport map base - 3.0 3.0 6.0 6.0

Total 2.8 10.4 19.5 32.5 45.5

In particular, revenue from handheld and mobile technologies is expected to increase significantly over the planning horizon,around doubling each and every year. Currently only a small portion of mobile phones in HK are web-enabled. With existingmobile phone users upgrading their mobile phones to WAP or 3G phones, and location specific applications such as map queriesover WAP becoming increasingly common, revenue will increase.

In-car navigation is also identified as an area of growth based on international experience. Some car manufacturers have alreadyexpressed interest in developing this product locally.

Currently, use of transport map base is very limited because of technological constraint. Research underway coupled withtechnological advancement are expected to provide commercial solution to this area in two years’ time and hence more revenuewill be derived from this application.


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Note 2 - OthersThis category includes revenue from product and services such as multi-media special products, positioning services/GPS trackingand GIS databank services. It also includes interest income generated by the cash balance accumulated by SMC.


Multimedia special products 1.0 1.3 1.7 2.1 2.5Positioning services/GPS tracking - 1.0 1.0 1.0 1.0GIS databank services - - 1.6 2.5 3.5Interest 0.1 0.5 2.0 4.4 7.0

Total 1.1 2.8 6.3 10.0 14.0

Note 3In line with the staffing arrangement described in Section 6, the projections have accommodated all the current staff of SMO. It isassumed that 50% of SMO staff will opt for voluntary retirement and join the Corporation under the proposed package evenly overa period of two years. The other 50% is assumed to retain their status as civil servants and be seconded to the Corporation. Inaddition, provision has been made for 41 additional staff so as to strengthen resources in marketing, finance and human resourcesareas. Provision has also been made for contract resources to deliver services for new projects.

Note 4Profit before tax is the excess of projected revenue over projected expenditure. Owing to growth in commercial and other revenueand more efficient operations in line with the transformation to a corporation, profit before tax will increase from $23 million in Year1 to $93 million in Year 5.


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Note 5Profit tax is assumed to remain at 16% on profit before tax throughout the planning period.

Note 6It is assumed that 50% of profit after tax will be proposed as dividends to the Government as sole shareholder of the Corporation.Also see note (14).

Note 7Retained profit for the year is the amount of after tax profit reduced by the proposed dividends for the year.

Note 8Net profit margin is the ratio of profit after tax over total revenue and is an indicator on the efficiency of operations. Owing to growthin commercial revenue and efficiency improvement associated with the transformation to a corporation, net profit margin willincrease from 2.2% in Year 1 to 8.4% in Year 5.

Note 9At the inception of the Corporation, fixed assets represent the net book value of all existing assets which include furniture,equipment, vehicles and computer systems. Thereafter, fixed assets will be increased by the amount of capital expenditureinvested by the Corporation to develop commercial revenue. Projected annual capital expenditure is shown in the table overleaf. Itis expected that there will be more investment in the first two years so as to gear up the capability of the Corporation for exploringcommercial opportunities. Thereafter, investment will be relatively stable, mainly for replacement and enhancement of computersystems. Planned capital expenditure has included a number of computer projects such as enhancements of the computerisedLand Information System, data dissemination system, and land boundary survey CAD system.


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Projected Annual Capital Expenditure of SMC

Year 1 Year 2 Year 3 Year 4 Year 5$56 million $56 million $30 million $30 million $30 million

These assets will be depreciated on a straight-line basis at the following rates per annum calculated to write off the cost of eachasset over its estimated useful life.

Computer equipment and system 20% per annumFurniture 10% per annum

Note 10Stock represents the value of stationery and materials used for the daily operations and is assumed to be $1 million throughout theplanning period.

Note 11Debtors are the outstanding amount to be received from customers and is assumed to be 1/12 of the amount of the annualcommercial revenue (i.e. one month’s commercial revenue).

Note 12Surplus cash generated is assumed to be maintained with banks by the Corporation and is assumed to generate interest at 5% perannum on the average cash balance.

Note 13Creditors are the amount to be payable to suppliers and are assumed as 1/12 of annual operating cost (i.e. one month’s cost).


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Note 14Proposed dividends are assumed as 50% of profit after tax and are assumed to be paid to shareholder in the year following theproposed amount is approved.

Note 15At the formation of the Corporation, the Government will vest all existing assets used by SMO to the Corporation which includefurniture, equipment, vehicles and computer systems as Government’s equity capital in the Corporation. The net book value of theassets is estimated to be $58.5 million.

Note 16It is assumed that 50% of profit after tax will be retained by the Corporation for its future development.

Note 17To help establishing the Corporation, it is assumed that subject to the necessary approval to be obtained, a loan of $10 million willbe sought from the Government to serve as working capital. The loan is estimated to be repaid in full by end of Year 2.


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Sensitivity test

While all the existing staff of SMO have been accommodated in the preparation of financial projections, changes in the percentageof staff who will opt for voluntary retirement and join the Corporation would have impact on the financial position because the costto SMO of the proposed package is different from the cost of seconded civil servants. For this reason, a sensitivity test assuming20% of staff will transfer to the future Corporation has been carried out to see whether the financial position of the Corporation willbe affected significantly. The results show that the future Corporation will still be profitable throughout the whole planning periodwith profit before tax of $6 million in Year 1 increasing to $61 million in Year 5 (i.e. lower profit than under the financial projectionsabove). Retained profit will reach $85 million by end of Year 5. To fund its initial investment, a loan of $25 million will be requiredfrom Government (i.e. a larger loan, reflecting lower profitability) which is projected to be repaid fully by end of Year 3. Thus, theCorporation will still be viable under such a scenario.

Financial targets

SMC will be charged with operating under prudent commercial principles which require that, taking from one year with another, itsrevenue is at least sufficient to cover its expenditures. In addition, the Corporation will need to improve its productivity andefficiency over time so that services and products are delivered to customers more cost-effectively.

In line with this, the revenue from Service Level Agreement has included savings from Enhanced Productivity Programme andexpected efficiency savings on the basis that corporatisation will provide the necessary commercial freedom.

Pricing mechanisms

The financial projections discussed thus far have been prepared at 2000/01 price levels and have incorporated expected efficiencysavings over the planning period. While on this basis it has been demonstrated that SMC will be profitable, it is therefore essentialthat the future Corporation is able to adjust its prices to reflect inflation and other changes in operating costs.


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The SLA is intended to be a long-term agreement covering the whole planning horizon. Notwithstanding this, it is consideredappropriate to have an interim review, say in the third year, to take into account changes in operating and economic environment.

For the commercial revenue, SMC should be given the commercial freedom to adjust its prices to cater for market demands andthe cost of provision of products and services. This would mean that SMC will have the autonomy to set its pricing structure andadjustments like any other commercial company, taking into account market conditions. SMC’s services do not raise significantlivelihood issues for the public.


Using prudent and conservative estimates, the scale of the commercial opportunities means that SMCwill generate a profit after tax of $19 million in the Year 1 of operation, growing to $78 million in Year 5.

Total after tax profit will accumulate to $285 million by Year 5. Half of this profit will be retained by SMC,accumulating to $143 million in Year 5. The remaining half will be paid out as dividends to theGovernment as shareholder of the Corporation. This includes the impact of efficiency improvementsenabled by corporatisation. Based on the financial projections, SMC will therefore be a viable business.Sensitivity test shows this picture to be robust.

The continued viability of the Corporation will require sensible review mechanisms for the SLA coveringservices to the Government, and commercial freedom to adjust the prices of products and services forthe private sector so as to cater for market demands and change in cost of operations.


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Section 8: Next steps

SMO intends to move forward to corporatisation on the basis of the proposals set out earlier in this document. This will broadlyinvolve action in the following areas:

Building support for corporatisation

The most immediate priority, SMO will need to take a number of steps to communicate its corporatisation plans and build supportfrom legislators, staff and the public. These steps will include:

• Consultation with staff, LegCo and relevant industry stakeholders.

• Briefings for the media.

• ExCo’s approval on the detailed proposals, amended in the light of comments.

Developing the overall corporate framework

SMO is currently part of the Lands Department. In order for SMO to move towards corporatisation, SMO will pursue:

• New legislation governing the operations of the future Corporation and related legislative changes submitted to LegCo.

• Creation of a non-statutory advisory board set up to advise Government on matters pertaining to establishment of SMC.

• Discussions with customer departments and relevant bureaux to define services and finalise the SLA.

• Formulation of operating budgets for the Corporation.

• Agreement with the Government on financial details (e.g. provision of Government loan and financial targets),performance measures and standards under the SLA and mechanism for monitoring the performance of the corporation.

• Finalisation of additional operational arrangements (e.g. tenancy, banking, business registration)


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Staffing the new Corporation

Ensuring SMC has access to resources with the essential capabilities represents another major area of effort to be undertaken bySMO, including:

• Finalisation of the remuneration package for the Corporation, including benefits such as medical cover, compensationinsurance, service provider for Mandatory Provident Fund, etc.

• Formal offer to staff to elect voluntary retirement and transfer.

• Recruitment and appointment of the chief executive officer.

• Recruitment and appointment of new personnel (for functions of Finance, Human Resources and Marketing).

Executing commercial operations

SMO intends to move immediately its current operations, to the extent possible, onto a commercial basis. This will include:

• Marketing and customer relationship programme to be launched.

• Commercial management practices with clear financial measurements will be established.

• Partnership arrangements with private sector will be explored on an ongoing basis.


96

Detailed operational planning

Finally, SMO will commence detailed operational planning to ensure a smooth transition to the new SMC. This planning will include:

• Establishment of new financial management arrangements (e.g. accrual accounting)

• Development of performance measurement and monitoring systems.

• Identification of employee performance based incentive scheme.

• Detailed planning of new operations/positions.

• Development of required new policies and procedures.

• Training requirements for immediate future.

SMO intends to allocate dedicated resources to these tasks during the coming twelve months.

Annex A

Products and services of SMO

Annex A – Products and services of SMO

Annex A – Products and services of SMO1

This annex lists the products and services of SMO.

Digital Data

• Digital Topographic Map Database – in scales 1:1,000 (base map series), 1:5,000, 1:10,000 and 1:20,000 together with datadictionary.

• Digital Land Boundary Database – C1000 in 1:1,000 scale together with data dictionary.

• Geo-reference Database – G1000 in 1:1,000 scale together with data dictionary.

Paper Map Products

• Large Scale (Basic) Plans – Black and White in a scale of 1:1,000 (H1C).

• Medium Scale (Derived) Plans – Black and White in scales of 1:5,000 (HP5C), 1:10,000 (SM10C) and 1:15,000 (SM15D)with the latter two being street maps.

• Medium Scale (Derived) Plans – Coloured street maps in a scale of 1:15,000 (SM15DP KLN 1& 2 and SM15DP HK 1& 2).

• Topographic Maps – Coloured in scales of 1:20,000 (HM20C), 1:50,000 (HM50CL), 1:50,000 without hill shading andHKSAR boundary (HM50CP), 1:100,000 (HM100CL), 1:200,000 (HM200CL) and 1:300,000 (Hong Kong in its regionalsetting – HM300C).

• Special Maps – Hong Kong Guide (Streets and Places), Hong Kong Official Guide Map, Countryside Series of Maps, EndMaps for Hong Kong Annual Report, Hong Kong Geological Map (1:20,000 – HGM20 and 20S), Hong Kong GeologicalSurvey (1:5,000 – HGP5, 5A & 5B), Ordinance Plans for Hong Kong Airport (Control of Obstructions – AHRP), LandUtilisation in Kowloon and Hong Kong Island (1:30,000 – LUM), Hong Kong Helicopter Flying Charts (1:50,000 – L7810-HFC), Hong Kong SAR (HM100SAR) and Hong Kong SAR (HM200SAR).

Annex A – Products and services of SMO

Annex A – Products and services of SMO2

• Aerial Photographs in Black and White and Colour.

Survey and Mapping Services

• Consultancy services to other Government Departments on Geographic Information System.

• Training in surveying, cartography and digital data systems.

• District cadastral, topographic and geodetic surveys.

• District land record and basic mapping maintenance.

• Survey and cartographic support to District Land Offices and Government Departments at District level.

• Survey support on special projects (School Improvement Programme, River Training Programme, West Rail Phase I, AirportCore Programme and Task Force (Black Spot)).

• Production of aeronautical charts.

• Establishment and maintenance of geodetic reference points.

Annex B

Government use of SMO data

Annex B – Government use of SMO data

Annex B – Government use of SMO data1

The spatial data and other information possessed by SMO are very useful in a wide variety of areas. Examples of policy objectivesand initiatives supported by current or potential applications are listed below:

1. Area: Central Policy Planning

Policy Objective and InitiativeTo design and develop Hong Kong into an advanced international city through effective land use planning, adequate land supply,quality building and maintenance standards, and timely urban renewal.

ApplicationIntegrated information systems for central policy planning

DescriptionsCentralised Geographic Information System (GIS) integratingvarious GIS applications in respective policy areas like townplanning, housing, welfare, health, education, environmentcapturing all demographic and planning data in the above areasfor use by the Chief Executive’s Office, Chief Secretary’s Office,Financial Secretary’s Office and Central Policy Unit for makingstrategic policy decisions.

BenefitsInstant availability of comprehensive strategic information tofacilitate quality policy decisions.



2. Area: Constitutional Arrangements

Policy Objectives and Initiatives

− To ensure that the electoral arrangements are open, fair, honest, acceptable to the community and comply fully with the Basic

Law.

− To ensure continual development of the electoral systems.

Application

Information system for election and polling

Descriptions

GIS supported by interface with district boundary and

demographic data for:

− Reviewing practical arrangements for elections.

− Delineating electoral boundaries.

− Identifying suitable locations for polling stations.

Benefits

− More effective planning of the practical arrangements of

elections.

− More efficient polling arrangements.



3. Area: Law and Order, Rescue and Emergency Operations

Policy Objectives and Initiatives− To enhance the effectiveness and efficiency of police work by applying modern information technology.− To enhance the rescue capabilities of fire and ambulance personnel.− To reduce fire risks in composite buildings.

Applications− Information system for crime prevention and detection− Information system for rescue and emergency operations

Descriptions1. GIS supported by Global Positing System (GPS) and interface with

building database with full address datasets for:− Deployment of police vehicles and policemen for beat patrol and

emergency response.− Planning operations for crime prevention and detection.

2. GIS supported by GPS and interface with demographic and buildingdatabase with full address datasets for:− Strategic planning of the provision of fire and ambulance stations.− Deployment of fire engines, rescue vehicles and ambulances.− Identifying locations of fire hose and water supply outlets for fire

fighting purpose.− Showing locations of dangerous goods stores and potentially

hazardous installations for fire prevention and fire fightingpurposes.

− Planning crowd control for major events or evacuation underemergency situations.

− Linkage to Government Emergency Monitoring and SupportCentre.

Benefits− Instant availability of the location of patrolling vehicles and

policemen to respond to emergencies.− More efficient and effective deployment of resources for crime

prevention and detection.− More efficient and effective deployment of fire fighting and

rescue vehicles, ambulances and personnel.− Reduce response time to fire and emergencies to better protect

people’s lives.− Enable more efficient and effective planning for control of crowd

dispersion for major events and evacuation operations in caseof emergency.

− Facilitate more effective co-ordination of rescue operations fornatural disasters and major incidents.



4. Area: Landslip Risk Management

Policy Objective and InitiativeTo meet Hong Kong’s needs for the highest standards of slope safety by enhancing the safety of existing slopes, promoting propermaintenance of slopes, and providing public education, publicity and information services on slope safety.

ApplicationInformation system for slope maintenance, and landslip risk assessment and management

Descriptions− GIS for identifying and locating slopes of all nature and risk

categories, and featuring their surrounding environment,topography and building.

− 3-dimensional (3-D) intelligence on the details and profile ofeach slope.

− Aerial photographic and photogrammetric databases tomonitor changes in slope conditions for taking necessarypreventive and remedial actions.

Benefits− More effective surveillance of the conditions of all natural and

man-made slopes, particularly those susceptible to landsliprisks.

− Enable detection of illegal structures and unauthorisedcultivation that may impair slope stability.

− Facilitate better planning and more effective monitoring ofslope remedial works.

− Enhance public awareness of slope maintenanceresponsibilities and conditions of slopes for which individualowners are responsible.



5. Area: Environmental Protection

Policy Objectives and Initiatives− To reduce waste and to improve waste management.− To conserve natural heritage and resources.− To promote sustainable development of agriculture and fisheries.− To improve our living environment, and reduce pollution and waste.

Applications− Information system for waste management− Information system for environmental and ecological conservation− Information system for environmental impact assessment

Descriptions

1. GIS for strategic and operational planning with demographicand building data interface for:− Defining and delineating service catchment areas for

waste collection and collection routing.− Identifying landfill sites, off-site sorting facilities to

separate construction and waste demolition from publicfills and sites for bulk waste reduction facilities.

2. Aerial photographic records of possible sites identified andtheir surrounding environment.

Benefits

− Facilitate strategic and operational planning of wastemanagement.

− More effective deployment of refuse collection fleet.



5. Area: Environmental Protection (Continued)

Description (Continued)

3. GIS for strategic and operational planning for:− Enhancing conservation in Mai Po and other target

conservation areas, and marine parks.− Landscape protection, afforestation and re-afforestation

work.− Wildlife protection.− Management and control of country and marine parks.

4. Aerial photographic data to monitor ecological changes.

5. Processing and analysing remote sensing data for detectinglandscape and ecological changes.

6. GIS and 3-D modelling applications to assess the noise andair pollution levels and environmental impact of potentiallyhazardous facilities installations and establishments,supported by interface with demographic, building,conservation and land use databases.

Benefits (Continued)

− Facilitate the formulation of effective environmental andecological conservation strategy.

− More timely and effective detection of landscape andecological changes.

− Early warning of the advent of red-tide for necessaryprecautionary measures.

− More effective management of country and marine parks andbetter utilisation of managing resources.

− More comprehensive and accurate assessment of theenvironmental impact on the surrounding environment andaffected community.



6. Area: Land Use Planning

Policy Objectives and Initiatives− To ensure that our land use planning meets the long-term development needs of Hong Kong.− To expedite urban renewal.

Applications− Information system for land use planning

DescriptionsLand use based GIS supported by interface with demographic,housing, transport, community facility databases for:

− Capturing all landscape information of the territory.− Territorial land use planning.− Planning for strategic growth area.

Benefits− Provide more effective evaluation tools for spatial analysis

for assessing development sustainability to facilitate macroterritorial planning.

− Expedite urban renewal.



7. Area: Land Administration and Surveying

Policy Objectives and Initiatives− To ensure an adequate supply of land.− To improve efficiency for surveying and mapping.

Applications− Land information system.− Geodetic network for land and engineering surveys.− Active satellite survey infrastructure.

Descriptions− GIS with land parcel and utilities information used for land

resumption, land disposal and land use control.− Geodetic data to support all kinds of engineering surveys.− Maintain and operate an active control system to provide

satellite positioning reference data.

Benefits− Facilitate land acquisition for project development, land

development and construction.− Facilitate urban renewal.− Enhance efficiency in land administration work and reduce

property disputes.− Enhance and intensify the network for more efficient land

and engineering surveys.



8. Area: Public Works

Policy Objective and InitiativeTo ensure the effective planning, management and implementation of the Public Works Programme.

ApplicationInformation system for public works

DescriptionsGIS, with 3-D modelling, and information of various infrastructuredevelopment projects embracing highways, drainages, watersupplies etc.

BenefitsMore effective and better co-ordination of various public worksprojects.

9. Area: Transport

Policy Objectives and Initiatives− To better plan for and implement the expansion and improvement of our transport infrastructure network, with emphasis on railway

development.− To improve the quality and co-ordination of public transport services.

ApplicationInformation system for transport optimisation and management

DescriptionsGIS, with details of road centreline, traffic directions, prohibition ofuse, boarding and alighting, parking etc., supported by GPS anddemographic database interface for:− Supporting car navigation and road pricing studies.− Strategic planning for transport infrastructure and assessing

demand for road public transport.− Comprehensive intelligent transport management to define

service catchment for road public transport and their routing.

Benefits− Facilitate comprehensive strategic planning for transport

infrastructure and public transport facilities with regard to thepopulation spread and their transport needs.

− Enable real time surveillance of road traffic conditions forregulation of traffic flow and deployment of public transport fleet incase of serious traffic congestion and emergencies.

− Availability of necessary infrastructure to support car navigation.



10. Area: Building Safety and Maintenance

Policy Objectives and Initiatives− To speed up action on removal of risks posed by illegal rooftop structures and to step up enforcement action against

unauthorised building works.− To promote timely maintenance of buildings to prevent premature ageing, and to improve the framework for the management

and maintenance of new buildings.− To ensure that buildings in Hong Kong are safe, and to reduce fire risks in composite buildings.− To enhance the rescue capabilities of fire and ambulance personnel.

Applications− Information system for monitoring illegal structures, unauthorised extensions and control of sign boards− Comprehensive information system on buildings in the territory

Descriptions− GIS for identifying and locating high risk buildings.− 3-D intelligence and images to show specific locations and

conditions of unauthorised structures and works inindividual buildings.

− Aerial photographic records to control illegal rooftopstructures.

− GIS for identifying the locations of all the buildings in theterritory, with full topographical features of the surroundingareas and interface with demographic database.

− 3-D intelligence showing the locations and details ofresidential units, commercial and industrial premises andother key building features such as emergency exits anddangerous goods storage, if any.

Benefits− Instant availability of comprehensive information on all

buildings in the territory on maps with 3-D intelligence ofspecific buildings, location, spread and profile of targetbuildings with high-risk unauthorised building works andstructures.

− Facilitate speedy clearance of unauthorised works andstructures, and monitoring of the progress of such clearanceactions.

− Facilitate risk assessments, rescue operations in the event ofnatural disasters and emergencies.

− More effective control over new unauthorised works and thesiting, design, and installation of signboards to ensurebuilding and public safety.

− Enable more effective monitoring of building maintenance toprevent premature ageing to ensure building safety.



11. Area: Education

Policy Objective and InitiativeTo provide a quality learning environment by providing more new schools and improving school facilities.

ApplicationInformation system for education planning and administration

DescriptionsGIS, supported by interface with demographic and transportdatabase, for:− Planning of new schools and improvement facilities.− Supporting school place allocation.

Benefits− More effective long-term planning for identification of sites for

new schools and provision of adequate school places tomeet the community needs.

− Enhance quality of the school environment.− More efficient allocation of school places close to where

students live.

12. Area: Health and Welfare

Policy Objectives and Initiatives− To build a caring community by developing and providing effective and quality services for those in need.− To ensure adequate provision of medical service to cater for the growing and ageing population.

Application− Information system for welfare and health services.

DescriptionsGIS, supported by interface with demographic data for:− Assessing the demand for various medical, health and

welfare services.− Identifying suitable locations for the provision for the above

services and defining their service catchment.

BenefitsMore effective planning of the provision of community facilitiesand services.

Annex C

International case studies

Annex C – International case studies

Annex C – International case studies1

This annex describes government policy and applications of spatial data in five countries in the Asia Pacific, namely Malaysia,Singapore, Australia, New Zealand, and Japan.

Spatial data have long been used by government, research institutions and technical professionals in planning and operations. Newapplications in GIS are emerging and becoming increasingly popular in commercial sectors. In response to the growing importanceof geo-spatial information, many countries are setting up the national spatial data infrastructures to facilitate the sharing and use ofthe spatial data among all levels of government, private sectors, research institutions, and the general public. An advanced spatialdata infrastructure will further enhance the use of spatial information and growth of the spatial information industry.

The international case studies focus on the following two subjects:

• Long term initiatives on national spatial data infrastructure, and

• Applications of spatial data in these countries, including the existing and potential use of spatial information both in publicand private sectors.

Major findings from the studies of these countries are:

• Although the national spatial data infrastructures are at different stage of development in these countries, they all act as acentral depository of the spatial information that incorporates base data sets, such as the cadastral and topographicdatabases and other location based information.

• The private sector is taking a more active role in implementing and promoting the national spatial data infrastructure, asthey are increasingly utilising the spatial data to develop value added products and services or applying spatial data tofacilitate business operation and decision making.

• Spatial information has been widely used in different applications ranging from utilities’ network planning to roadmaintenance, transport management, property development and management, and environmental assessment, etc

• GIS technologies allow digitised spatial data to be incorporated with demographic, social, economic, environmental andbusiness-related information. This has in turn led to many emerging innovative commercial applications of spatialinformation across different sectors.


Annex C – International case studies (Malaysia)2

Malaysia

Digital Data Infrastructure Initiatives – National Infrastructure for Land Information System (NaLIS)

In a concerted effort to integrate and synergise the stand-alone information systems implemented by various land related agencies,the National Infrastructure for Land Information System (NaLIS) is being established in Malaysia to better facilitate the availabilityand access to spatial data for all levels of government, the commercial sector, the non-profit sector, academia and citizens ingeneral.

The NaLIS activities are comprised of four aspects:

• Technology – the development of protocols to enable producers and users of geo-spatial data using different computersystems to share and exchange data online;

• Policies – the formulation of policies necessary to enable the data contributors and users to share and exchange geo-spatial data;

• Standards – the development of standards necessary to ensure that the geo-spatial data produced by the datacontributors can be shared when using different systems;

• Human resources – the development of manpower for handling and using geo-spatial data.

Data available in the NaLIS consist of:

• Land survey and mapping data;• Land ownership and dealings data;• Land valuation data;• Property assessment and building regulations information;• Agricultural land use regulation information;• Geological survey data;• Water resources management information;


Annex C – International case studies (Malaysia)3

• Forest management information;• Infrastructures management information; and• Census information.

Applications of Spatial Information These digital databases have historically been used for planning development and control of land resources. Now they arebecoming a much sought-after data source by private companies as well due to increasing use of GIS in commercial applications.The government is also encouraging the private sectors to participate in the development of NaLIS, value adding products andservices, and the dissemination of data and information and the promotion of NaLIS.

One example of spatial data application is the Straits of Malacca Environmental Information System. The system is developed by aregional programme to provide the basic framework for the operation of different pollutant trajectory and impact assessment models,environmental and resource database and GIS mapping. It is in the structure of a geographic information system with functionssuch as zooming, panning and querying for database. The databases in the system include base maps information (hydrology,topography, land use, state and district boundaries, location of towns, and demography) and coastal resource databases(information on the location, distribution, size and social-economic values of critical habitats).

As the value of geo-spatial data are recognised in Malaysia, more commercial applications are emerging. Here are just twoexamples:

• ZoomRealEstate.com: uses the web-based GIS technology to publish map information for property listing and show theproperty location to the customers. Users can find the desired choice of property simply by using the navigation menuand property search query wizard featured in the web site.

• GSM Coverage Map of Malaysia: provides GSM mobile phone coverage in Malaysia. Users can find the coverage of anetwork on the map by clicking the network name.


Annex C – International case studies (Singapore) 4

Singapore

Digital Data Infrastructure Initiatives – the Land Data Hub

The Land Data Hub was conceived in mid 1989 as a multi-ministry effort to establish a central repository of accurate andcomprehensive land data. The digitised land data in the hub are contributed by more than fifteen public sector agencies who ascustodians captured and maintained the data. The digitised land data available in the Land Data Hub include the survey maps (thelegal land boundary), buildings and roads information; infrastructure data such as drainage and sewerage; and the utilitiesinformation such as the electricity, gas and water network. In addition, the electronic Singapore street directory data are alsoavailable in the Land Data Hub. These digitised land data are currently used by more than 30 Government departments and morethan 10 private sector companies.

The Land Data Hub has produced the following benefits:

• It gives great convenience to subscribing agencies as the Hub is a one-stop centre for obtaining digitised land data;

• It overcomes constraints in manpower required to capture and maintain common land data, by reducing the manpowerneeded;

• It reduces overheads (manpower and software) required to resolve technical and logistic issues related to bilateralarrangements of data transformation and transfer;

• It ensures data consistency by having one custodian agency maintain the land data and subsequently share the data withother agencies via the Hub;

• It makes digitised land data readily available through data exchange/sharing programme, facilitating and speeding thecomputerisation programme of the subscribing agencies.

The vision for the future is to look beyond the consolidation and integration of land data from different data sources and focus onthe whole land information supply chain starting from the data originators to the customers and end users of the digitised land data.There are three major components in the whole integrated land information supply chain: the land data sources, the land



information (spatial) network infrastructure and the land-related or GIS applications. Figure 1 on next page shows the conceptualdiagram of the integrated land information supply chain.

Correspondingly, three strategic thrusts will propel the Land Data Hub into the future which cover the three components of theintegrated land information supply chain:

I. Build Land Base Information Layer

This will integrate commonly used digitised land data into a seamless and logical database for ease of access and to encourageand facilitate the development of value added geographical information services and products by the private sector agencies.

II. Build Land Information Network Infrastructure (LandNet)

LandNet will be Singapore's national land information infrastructure that will facilitate the integration and online delivery of spatialdata across a heterogeneous network of hardware platform, operating systems, data management systems and GIS environment.LandNet will allow government and private sectors to exchange and access to land databases online via a high speed network. Apilot trial of LandNet has been initiated in Singapore.

III. Build Integrated Land Information Services (INLIS)

INLIS is a service package, which integrates digitised land data services from the various government agencies for the benefit ofthe general public, who will be able to access timely land information via this one-stop integrated land information channel on theInternet.



Figure 1: Diagram of the Integrated Land Information Supply Chain



Fundamental to all land-related products and services is the base set of digitised land data that include cadastral (land boundary),buildings (building addresses and outlines) and road information. The basic information has been defined and integrated within theLand Data Hub. The concept of Land Base Data is shown in Figure 2. The establishment of the Land Base Data will provide areference base map for building the other useful map layers as shown in the diagram. This will ensure consistency of digitised dataacross the different map layers.

Figure 2: Concept of Land Base Data

Cadastral (Lot Boundary)

Building Layers (Address)

Roads Information (RoadCentreline + Routing

Information)

Utilities (Water, Gas, Electricity, Telephone Network)

Planning Data (Land Use Plans & DGP Plans)

Singapore Street Directory

LandBaseData



Applications of Spatial Information

In Singapore, spatial data and GIS applications are widely used in both Government and private sectors.

The Public Utilities Board is using GIS to manage the utilities, Singapore Telecom to manage the telecommunication lines and theMinistry of the Environment to manage the drainage and sewerage system. The Ministry of Law uses GIS technologies to managethe legal boundaries of land parcels and to produce the Singapore street directory. In addition, the Ministry of NationalDevelopment is developing the Integrated Land Use System (ILUS), Singapore's first large-scale GIS project, to support cityplanning, development and building control, and road planning.

Many private sector companies have been applying the digitised land data from the Land Data Hub to their GIS. For example,mobile phone companies use spatial data to monitor the quality of mobile phone signal transmission in various parts of Singapore.CD-ROMs, which incorporate digital maps with property information and buying guides, are available in the market.

With the availability of the digitised land base data and LandNet infrastructure, private sector companies can incorporate businessinformation with the digitised land data to develop useful map-based commercial products and services for their customers, andmake the products available to the public via Internet. Internet-based products and services have been developed to provide real-time traffic information online. In the pipeline, several products and services based on the digitised land data are being developed,including Virtual Map, an Internet-based application capable of performing searches for web sites based on the geographicalreferences associated with the URL of the web sites.


Annex C – International case studies (Australia) 9

Australia

Digital Data Infrastructure Initiatives – the Australian Spatial Data Infrastructure (ASDI)

The introduction of a national spatial data infrastructure is being fostered by Australia New Zealand Land Information Council(ANZLIC). ANZLIC views land and geographic information as an infrastructure, with the same rationale and characteristics as roads,communications and other infrastructure. ANZLIC believes that Australia should have the spatial data infrastructure needed tosupport economic growth and social and environmental interests, and the infrastructure should be backed by national standards,guidelines, and policies on common access to the data.

The national spatial data infrastructure, the ASDI, will be a distributed array of databases, each maintained by a recognisedcustodian and linked by administrative arrangements, standards and a distribution network so that nationally consistent data setsand new data products can be readily assembled. That array of databases is supported by a comprehensive national directory ofspatial data, the Australian Spatial Data Directory (ASDD), which is itself a distributed array of directories maintained by individualjurisdictions and interrogated through a common gateway.

The data required for a national spatial data infrastructure include topography, transportation infrastructure, utility infrastructure,flora, fauna, hydrology, climate, land use, administrative boundaries, and much more. In the past, data have generally been stored,managed and analysed in analogue map form but there is increasing amount of data that is being collected in digital form. Theflexibility of digital data has created new opportunities for the integration of separate jurisdiction data sets, in the national interest.But this capacity to integrate data sets from a wide range of sources has also increased the need for co-ordination andstandardisation.

Although the ASDI is a joint initiative of all state governments in Australia, the Federal Government has a special role to play, bothas a major user and custodian of national data sets. Some specific areas where the Federal Government is contributing to thedevelopment of the ASDI are:

• Providing support and national leadership in policy development and national co-ordination activities.• Providing a Commonwealth focal point for ASDI implementation initiatives.



• Capturing (and providing funding as necessary) national fundamental data sets required in the national interest.• Implementation and on going management of the ASDD.• Contribution to the development of national standards.• Funding research and development.• Promotion and education in relation to the ASDI.

Work has progressed well on the implementation of the ASDD. Metadata Guidelines have been developed and implemented inmany jurisdictions and agencies. Prototype directory nodes have been implemented to promote the collection of metadataaccording to ANZLIC guidelines and to test the technology for a distributed directory system. Individual jurisdictions are welladvanced in the development of their own directories, which comply with the ANZLIC Metadata Guidelines and will becomecomponents of the ASDD.

All ANZLIC jurisdictions have made commitments to the implementation of the ASDI. Several jurisdictions have already made goodprogress in the definition and development of their own spatial data infrastructures which will become major components of theASDI.


In Australia spatial information has been applying to a wide range of activities, as exemplified by the examples below:

The Shire of Melton

• It uses digital spatial data for property identification and validating existing land records. It maintains an accurate and upto date spatial information base from which property values and rates can be assessed. In addition, it maintainsdatabases on water infrastructure, including sewerage and stormwater systems, for timely facilities management (eg newconstruction and maintenance).



New South Wales Police

• It has developed a state wide GIS, the Computerised Operation Policing System, for use by regional offices. The systemmonitors and predicts changes in criminal activities on a geographical basis, which helps forward planning and hencebetter utilisation of police resources.

• In addition, the system enables accurate location of vehicle crash sites, flexible and timely transfer of intelligencebetween police units and generation of statistics to inform the community about crime incidents in their vicinity.

Sydney Electricity

• It has developed a Mapping Asset Program to collect and analyse data on the location and distribution of physical assetsincluding transmission lines, cables and substations. The system provides information for environmental impactstatements, asset replacement and maintenance schedules, cable network planning including estimation of route lengths,monitoring asset performance in areas like street lighting, and mapping sub-terrain structures to indicate optimal cablepaths.

North Sydney Health Services

• It applies spatial data to map specific diseases. It attempts to relate incidence of the diseases with other factors likeenvironmental quality, land use, general demography, hospital separation, education etc.

• In addition, the data are used for establishing the most effective site for medical screening programs for specific diseases,monitoring the demand for nursing homes and other community medical facilities, planning emergency services networksand investigating food borne disease outbreaks.



Victoria Department of School Education

• It has been using a GIS for education resource planning. The system contains data covering demographic trends,property ownership pattern, local Government development and logistical information on facility location and capacity.

Other Examples of Applications

• accurate accounting of Government assets, in the lead-up to a disposal of properties which were either redundant orcapable of yielding a higher commercial return

• formulation of plans for maintaining roads, telecommunications and power lines, and sewer and water pipes

• construction and readjustment of electoral boundaries, based on demographic trends

• administration of property tax collection systems

• responses to calls for assistance from police and emergency services.

In addition, the Government has partnered with Australia’s spatial information industry to develop an Action Agenda which aims atfacilitating the industry’s future growth. The Agenda encompasses the development, supply and use of the tools and infrastructureneeded to produce spatial information products, which will potentially be applied to a wide range of activities:

• infrastructural planning and development

• management of search and rescue operations

• environment management

• resource management like forestry and agriculture

• prediction of agricultural productivity



• identification of mineral and petroleum resources

• prediction of natural disasters

• national security

• business and strategic planning and increase of productivity

• scheduling and coordination of investment projects

• utilisation, pricing, maintenance and disposal of fixed assets


Annex C – International case studies (New Zealand)14

New Zealand

Digital Data Infrastructure Initiative

1. National Spatial Data Infrastructure (NSDI)

New Zealand does not have a specific central Government led NSDI initiative. The Government believes that issues associatedwith an NSDI are more effectively addressed comprehensively for both spatial and non-spatial data through policies for themanagement of Government held information.

The policies of Land Information New Zealand (LINZ) on NSDI are:

• The New Zealand NSDI embraces the collective spatial database activities of central, regional and local government andthe private sector, and LINZ will provide the national spatial referencing system and core land and seabed informationdatabases that are fundamental building blocks of a New Zealand NSDI.

• LINZ will work with Government control agencies (State Services Commission and the Treasury) in the development ofState sector information management principles, guidelines and practices, which are fundamental cornerstones of theNew Zealand NSDI.

• LINZ will maintain its databases in a manner that facilitates the role of the private sector in New Zealand NSDI inintegrating databases and providing value-added services.

The NSDI in a New Zealand context is a specific conceptual view of a wider information infrastructure. It embraces:

• Policies and strategies – These are the administrative framework of Government, which governs the management of datain accordance with regulatory and/or commercial principles, including the policy for Government held information.

• Technical standards – These define the technical characteristics of the data sets.



• Data – These include the spatial referencing system and a range of databases at the central, regional and local governmentlevels which are maintained for statutory or public purposes, as well as a further range of databases that are maintained on acontractual or commercial basis by the private sector. Beyond the core land and seabed information stewarded by LINZ,these databases cover a vast range of environmental, social and economic themes.

• Interagency relationships – Within central Government these are managed via control agencies, and on an agency toagency basis, with a focus on the collective effectiveness and efficiency of Government. Between central and localgovernment theses are managed through the framework provided by such mechanisms as the Resource Management andLocal Government Acts. Relationships with and within the private sector are driven by contractual and commercialimperatives.

2. Landonline

Landonline allows users to search LINZ’s emerging, integrated, national survey and title databases from users’ own computers,using a specially developed software. All of LINZ's survey and title records are available through Landonline, although only themost commonly accessed records have been converted and made available in digital format. The cadastral survey products onlineare structured data (textual and numeric data) in the form of a report, spatial views, images, data extracts and bulk survey data.


Extensive applications of spatial information in New Zealand can be illustrated by the mapping products and services (listed below)offered by Terralink New Zealand, a state owned enterprise having taken over the commercial activities previously performed bythe former Department of Lands and Survey.

• Photogrammetry: This technique gives very accurate measurement in a stereo environment. It is used to producecontour data for the forest management industry, digital elevation models for engineering projects and landbase physicalfeatures for use in GIS.



• Land cover database: It shows the type of land cover, such as planted forests, indigenous forest and pastoral land. Manyorganisations use land cover data for planning, monitoring and reporting function. For example, it helps local authoritiesin charge of resource management monitor the environment. It helps telecommunications companies plan their wirelesscommunications networks, as land cover is a major factor in determining the signal loss in radio frequency transmission.

• Land information for forest managers: It assists planning of forestry companies, eg to establish exact boundary of theplanting areas, to locate the maturing forest and get an accurate picture of future wood supply. In addition, it allows themto manage resource more effectively, eg to report and audit felled and stocked areas, to select the stock needed to fill anorder and make informed decisions about harvesting methods and roading needs, and to determine correct payments forcontractors.

• Digital cadastral database: It is a computerised spatial record of all New Zealand’s property parcels. It facilitates planning,decision making and operations of property developers, real estate agents, urban planners and potential property buyers,etc.

• National road centreline database: It gives details of New Zealand’s physical road centrelines with a spatial accuracysuitable for use with global positioning systems. It contains information about road name, local authorities, roadclassification, impedances, bridges and tunnels and geo-coded address points. Major applications like vehicle tracking,route planning and fleet management for transport and logistics companies.

• Data conversion: It is the conversion of plans and maps to digital formats, and from one digital format to another. Thedigital formats allow mapping data to be used with customers’ GIS or AM/FM computer systems, which in turn helpcustomers improve efficiency and effectiveness of their decision making.

• GIS consultancy: Applying spatial information to decision making, ie how businesses can make the best use of GIS tofacilitate their business planning and operations.


Annex C – International case studies (Japan)17

Japan

Digital Data Infrastructure Initiatives – Japanese National Spatial Data Infrastructure The starting point for the Japanese National Spatial Data Infrastructure initiative was the reaction to the Kobe earthquake ofJanuary 1995, which led to a major review of emergency management services and their related data needs. As part of the variousdevelopments, a Liaison Committee with representatives from 21 ministries and agencies was created. The Long Term Plan,released in December 1996, provides a plan of action up to the beginning of the 21st Century.

Phase I (1996-1999) – In this phase, the National Spatial Data Infrastructure was to be defined. The main tasks were:

• The definition of the National Spatial Data Infrastructure should be completed by FY1998. Metadata standardisationwould be required before that.

• Identify potential uses and users of GIS in a broad range of disciplines; identify the necessary components of theNational Spatial Data Infrastructure as a social infrastructure satisfying diverse user needs.

• Standardise data items and formats of metadata for the National Spatial Data Infrastructure, with due regard for domesticand international developments such as ISO TC211.

• Develop policies for preparation and utilisation of digital images as an element of National Spatial Data Infrastructure.

• Commence a clearinghouse pilot project and encourage Ministries with the spatial data to prepare their metadata forinclusion.

• Clarify respective roles of the central government, local governments and private sectors in the National Spatial DataInfrastructure.

• Establish a concrete plan for implementation of the National Spatial Data Infrastructure with the aim of completing initialimplementation by the end of Phase II (approximately three years after the finish of Phase I).



• Develop the institutional framework for coordinating and sharing of spatial data between national and local governmentsand the private sector.

Phase II (1999-2002) – In this phase, the National Spatial Data Infrastructure would be implemented and the use, sharing andmaintenance of the data would be promoted. The main tasks are:

• National and local governments and the private sector will carry out their respective responsibilities for implementation ofthe National Spatial Data Infrastructure, as defined in Phase I. The aim will be to promote the use of GIS throughoutJapan and to complete initial implementation by the beginning of the 21st century.

• Each organisation will collect metadata, and co-operate in the implementation of the National Spatial Data Infrastructure.

• Promote the use of GIS and the National Spatial Data Infrastructure so as to encourage collaborative efforts byGovernmental and non-Governmental organisations.

• Create systems and institutions for the effective maintenance of the National Spatial Data Infrastructure as determined inPhase I, and encourage agencies to apply those systems and institutions.

• Encourage the sharing of technical experience between national and local governments and the private sector so as topromote the implementation, use and maintenance of the National Spatial Data Infrastructure.


Currently spatial data and GIS are widely applied in Japan, examples include:

• Environmental analysis and modelling: use of vegetation index data set to detect seasonal change of greenness orrichness in chlorophyll and analyse its bio-climatic causes; monitor and control air pollution in heavily industrialised city incentral Japan; use of land data and other digital maps to assess environmental changes around the western coast of IseBay, etc.



• Disaster management and route planning: emergency transport route network; alternative routes or site selection in roaddesign planning, etc.

• Spatial analysis: GIS-facilitated study on the urban building pattern and its change along the main road.

Additional applications are being used or developed in Japan, such as:

• Lifeline management • Fire fighting and disaster prevention• Fixed asset tax • Real estate transactions• Calculation of distance, areas and asset management • Forecast of earthquake and earthquake damage• Applications in marketing • Car navigation system• Applications in presentations • Intelligent transport system• Multimedia products

Annex D

Current fees for SMO’s products and services

Annex D – Current fees for SMO’s products and services

Annex D – Current fees for SMO’s products and services1

This annex presents a summary of current fees for SMO’s products.

Paper products Price (HK$) per copy

Topographic maps $10 - $55Thematic maps (guide maps, countryside series) $45 - $75Geological maps and surveys $80 - $100Aerial photos $75 for black & white, $150 for colour, $365 for film diapositive,

$640 for transparencyCertification of true extract of any map, aerial photo $140Basic mapping sheets from land information system $1,215Standard survey plans $320 - $370 for bromide paper, $705 - $850 for film ($45 & $195

for Diazo paper & film)Lot index plans $96 - $1,216 for paper (depending on size), $660 - $1,320 for filmLand boundary plans $105

Digital map data Price (HK$)

Basic topographic map database Data charge $250 - $535 per sheet, update charge $63 - $134 persheet, license fee $25 - $54 per sheet per annum

Cadastral database (C1000) Data charge $250, update charge $63, license fee $25Geo-reference database (G1000) Data charge $190, update charge $48, license fee $19Copyright charge No. of copies x data charge of digital map x area of extract / area

of original x 4%

Annex E

Staff employment package


Annex E – Staff employment package1

Objective

Expert advice from Watson Wyatt Hong Kong Limited was sought to assist the administration in mapping out the humanresources management strategy and initiatives for the future SMC. The main objectives are to advise on: -

• an appropriate staffing structure (i.e. grading structure) after corporatization;

• the employment packages of SMC staff; and

• an appropriate human resources strategy and relevant initiatives after corporatization.

Job Evaluation System and Banding Structure

1. Competency Model and Job Evaluation System

• Through internal and external researches, a competency model that summarized the skills and capabilities requiredfrom the SMC staff to achieve the organizational objectives was developed.

• The competency model consists of 6 Core Factors, 1 Quantitative Factor and 3 Sub Factors that are function specific.(Details at Appendix A)

• The competency model was then turned into a job evaluation system by each competency with respect to importance.Each factor was then assigned a weight.

• Given the nature of work and current staffing structure of SMO, and by reference to the staff grading structure ofcorporations and public organisations, a 15-band grading structure for the SMC was recommended.



• All existing grades and ranks of SMO (21 grades; 48 ranks) were benchmarked and evaluated using the new jobevaluation system.

• Each rank was then appropriately slotted into the 15-band grading structure below, having regard to their evaluatedweighting.

Staff Type Proposed Bands

Top Management 15

14

Senior Management 13

12

11

Management/Professional 10

9

8

Technical 7

6

5

4

General 3

2

1



2. Staffing Structure

(a) Overall Structure

• The existing staffing structure of the SMO is considered appropriate for survey and mapping organisations of thisscale and service variety, and necessary to support the functions and activities of the corporation.

• It is proposed that the SMC should adopt the existing staffing structure of the SMO except for a few supportgrades which have scope for rationalisation. (Details are set out in Section 2(B) below)

• The SMC may need to engage some new staff with special expertise such as those on corporate financial andhuman resources management, marketing and sales as well as research and development.

• The proposed grading and banding structure of corporation staff is shown in the table on next page:-



BandsLand

SurveyorCarrtographer

Survey

Officer

(Land)

Survey

Officer

(Photo)

Technical

Officer

(Carto)

Technical

Officer

(Repro)

Mapping

Assistant

Land Surveying

AssistantDriver

General Services

Officer

Executive

Officer

Computer

Operator

Personal

Secretary

16

15 PGLS

14 GLS

13 CLS PEO

12

11 SLS Sr Cgr CEO

10 SEO

9 CSO(L) CTO(C) CTO(R)

8 PSO(L) PSO(Ph) PTO(C) PTO(R) EOI

7

LS Cgr

6 SSO(L) SSO(Ph) STO(C) STO(R) EOII

5ALS

Acgr

4 SO(L) SO(Ph) TO(C) TO (R)General Services

Officer IComp Op I PS I

3Senior Mapping

Assistant

Senior Land

Surveying Assistant

General Services

Officer II

Comp Op

II

2Mapping

Assistant

Land Surveying

Assistant I

Motor

Driver

General Services

Assistant I

1Land Surveying

Assistant II

General Services

Assistant II

(Note : certain ranks may need to be suitably re-titled such and EO, GLS)



(b) Rationalisation of Some Existing Grades

• For general support and map production support staff, we consider that there is scope for re-organising some oftheir existing work functions to better meet present day operational needs. We therefore propose to streamlinethe existing grading structure of the following grades :

General Services Officer

• It is proposed to form a new multi-skilled General Services Officer Grade comprising the existing general gradesstaff in the rank of Clerical Assistant, Assistant Clerical Officer, Clerical Officer, Supplies Assistant, SuppliesSupervisor I and Personal Secretary II to provide a wider range of support services including generaladministration, clerical and secretarial services.

• With multi-skilling, the general grades staff can enrich their current job responsibilities and leverage their skillsinto other related support services.

• The rank of Personal Secretary I would still remain as a separate grade in view of the sophisticated secretarialskills required of the post incumbents.

• As for the Computer Operator and Motor Driver Grades, they would also remain as two separate grades in viewof the particular skills required.

• The proposed structure for the General Services Officer Grade is shown on the following page:-



Proposed Grade Proposed Rank Title Band inSMC

SMO Equivalent Grade

General ServicesOfficer

General Services Officer I 4 Supplies Supervisor I and Clerical Officer

General Services Officer II 3 Assistant Clerical Officer and PersonalSecretary II

General Services Assistant I 2 Machine Operator, Clerical Assistant andSupplies Assistant

General Services Assistant II 1 Office Assistant

Land Surveying Assistant and Mapping Assistant

• The Tracer, Photoprinter and Photogrammetric Operator Grades could become a core map production supportgrade known as the Mapping Assistant Grade comprising two ranks namely, Senior Mapping Assistant (Band 3)and Mapping Assistant (Band 2).

• Assuming this will result in an upgrade of their skills and increase the level of responsibilities of certain posts inmap sales work, some existing Tracer posts might need to be reviewed to assess if upgrade to Senior MappingAssistant is necessary.

• The existing Chainman and Workman II Grades engaged in land surveying work can be restructured into a coreland survey support grade consisting of three ranks namely, Senior Land Surveying Assistant (Band 3 – newrank), Land Surveying Assistant I (Band 2) and Land Surveying Assistant II (Band 1).



• The Senior Land Surveying Assistant will be deployed for collecting mapping intelligence data and makingrevisions of minor features on maps to relieve the work of Survey Officers (Land) so that the latter can focus onwork that require more technical skills and expertise. In light of added responsibilities, some existing Chainmanposts might need to be re-evaluated to assess if upgrade to Senior Land Surveying Assistant is necessary.

• Through enrichment of the job contents and with greater job versatility, better career advancement opportunitiescan be provided to these staff while at the same time better utilize the staff resources.

• The proposed structure of the Land Surveying Assistant and Mapping Assistant grades is shown as below :-

Proposed Grade Proposed Rank Title Band inSMC

SMO Equivalent Grade

Land SurveyingAssistant

Senior Land Surveying Assistant 3 -

Land Surveying Assistant I 2 Chainman

Land Survey Assistant II 1 Workman II

Mapping Assistant Senior Mapping Assistant 3 Photogrammetric Operator andPhoto-printer I

Mapping Assistant 2 Photo-printer II and Tracer



Proposed Remuneration Package

1. Market Comparison

• Existing SMO jobs have been analysed taking into account any changes in requirements after corporatisation andreference has been drawn to the remuneration packages being offered for comparable jobs in the market.

• All representative jobs in SMO including their nature of work, the qualifications and skills required, as well as the levelof experience required and responsibilities involved have been studied in detail. The jobs were then evaluated havingregard to their future requirements under the SMC set-up according to the job evaluation system. Researches into thepay and benefits being offered for comparable jobs in the market have also been made with reference to acomprehensive remuneration database of some 250 corporations and companies embracing a wide range ofbusinesses.

• Given the uniqueness of SMO’s operations, we have not confined the market comparison to jobs in the survey andmapping industry only. We have also drawn reference to the jobs in other professional and technical fields withcomparable qualification and experience profile and responsibilities that commensurate with SMO jobs.

• In terms of pay, the market comparison results show that most of the technical and support positions were slightlyabove market, while professionals and senior positions were in line with market median. As regards benefits, thecurrent SMO were above market practice especially in retirement benefits, education and other allowances.

2. Terms of Employment

• It is recommended that SMC staff be employed on a permanent basis save for short-term jobs for specialprojects/tasks. This is consistent with the common market practice and can minimize the administrative burden of



having contract renewal at regular intervals. However, very top position(s) may be offered fixed term contract in linewith market practice.

3. Remuneration Strategy

• It should be market driven and sufficiently attractive to motivate and retain high performers.

• It should be performance based and targeted at market 50th percentile to maintain competitiveness.

• It should have an incentive system to motivate staff and to enhance productivity.



4. Base Salary

• Based on market comparison results, the recommended salary structure (twelve-month pay per annum) is givenbelow :-

Proposed Salary Range (Monthly Salary HK$)

Staff TypeProposed

Bands Proposed Minimum Proposed Mid Point Proposed Maximum

Top Management 15 121,480 139,700 157,920

14 109,130 125,500 141,870

Senior Management 13 83,830 96,400 108,980

12 76,780 88,300 99,810

11 70,870 81,500 92,130

Mgmnt/Professional 10 50,720 63,400 76,080

9 45,040 56,300 67,560

8 35,690 46,400 57,100

7 29,000 37,700 46,400

Technical 6 23,080 30,000 36,930

5 19,310 25,100 30,900

4 15,170 20,100 25,030

General 3 9,210 12,200 15,200

2 7,700 10,200 12,710

1 6,420 8,500 10,590



5. Performance Related Incentive Scheme

• To promote performance in the organization, we propose the use of an incentive scheme based on performance.

• The performance target and incentive payouts should be determined at a later stage by the Board of Directors basedon such considerations as the corporation’s remuneration strategy and performance as well as the individual’sperformance.

• Based on the current market information, the annual payouts for good performers at different bands of the SMC are:-

Staff Type Bands Market Payout

Top Management 14 to 15 2 months’ salary

Senior Management 11 to 13 1 month’s salary

Management/Professional 8 to 10 1 month’s salary

Technical 4 to 7 0.5 month’s salary

General 1 to 3 0.5 month’s salary



6. Fringe Benefits

(a) Cash Housing Allowance

• a non-accountable cash housing allowance at the following rates is recommended:-

Staff Type Bands Cash Housing Allowance

Top Management 14 to 15 $25,000 per month

Senior Management 11 to 13 $15,000 per month

Management/Professional 8 to 10 $10,000 per month

Senior Technical 6 to 7 $5,000 per month

Technical 4 to 5 $3,000 per month

General 1 to 3 Not applicable

• The allowance would have no service requirements and no time limit.



(b) Annual Leave

• In light of market practice, the proposed annual leave entitlements based on working days are as follows :-

Staff Type Bands Annual Leave

(Number of Working Days)

Top Management 14 to 15 Less than 5 years of service:

5 to 10 years of service:

More than 10 years of service:

15 days

20 days

25 days

Senior Management 11 to 13 Less than 5 years of service:



15 days

20 days

25 days

Management/

Professional

8 to 10 Less than 5 years of service:



15 days

20 days

25 days

Technical 4 to 7 Less than 5 years of service:



10 days

15 days

18 days

General 1 to 3 Less than 5 years of service:



10 days

15 days

18 days



(c) Sick Leave and Maternity Leave

• Provisions of the Employment Ordinance will be followed for both sick leave and maternity leave.

(d) Bereavement Leave

• Bereavement leave is introduced to all staff in case of death of spouse, children or parents.

• The maximum number of bereavement leave is 3 days per annum.

(e) Medical Scheme and Insurance Scheme

• A non-contributory medical scheme is proposed as follows:-

Band 8 and Above Band 7 and Below

Medical PlanItems

ReimbursementRate

Maximum Benefits ReimbursementRate

Maximum Benefits

Clinical Plan

a. GeneralConsultation

90% $250 per visit up tomaximum 30 visits p.a.


b. SpecialistConsultation



c. PrescribedMedicine

90% $2,000 p.a. 90% $1,500 p.a.




Medical PlanItems

ReimbursementRate


Maximum Benefits

d. Diagnostic X-Ray and LabTest

90% $2,000 p.a. 90% $1,500 p.a.

HospitalizationPlana. Daily Room and

Board100% $1,200 per day and up

to maximum 45 daysper disability

100% $700 per day and up tomaximum 45 days perdisability

b. Hospital ServiceFee

100% $18,000 per disability 100% $14,000 per disability

c. OperatingTheatre


d. Anesthesia Fee 100% $16,000 per disability 100% $10,000 per disabilitye. Surgical Fee 100% $45,000 per disability 100% $30,000 per disabilityf. In-hospital

GeneralConsultation

100% $1,000 per day and upto maximum 45 daysper disability

100% $650 per day up tomaximum 45 days perdisability

g. In-hospitalSpecialistConsultation


Maternity Benefitsa. Normal Delivery 100% $10,000 100% $10,000b. Miscarriage 100% $5,000 100% $5,000




Medical PlanItems

ReimbursementRate


Maximum Benefits

c. Caesarean Birth 100% $15,000 100% $15,000

Dental Scheme N/A Panel dentist schemethat covers oralexamination, polishing,etc.

N/A Panel dentist schemethat covers oralexamination, polishing,etc.

• An insurance scheme to cover life insurance, accidental death and dismemberment and total permanentdisability is proposed as follows:-

StaffType

Bands Life Insurance Accidental Death andDismemberment (AD&D)

Total PermanentDisability (TPD)

All staff 1 to 15 36 months’ salary payableon death. The lump sumdeath benefit is provided tothe beneficiary of theemployee.

Maximum benefit is 36months’ salary, subject tothe degree of seriousnessof illness or injury

Maximum benefit is 36months’ salary, subject todegree of seriousness ofillness or injury

(f) Retirement Scheme

• We recommend the introduction of a MPF scheme with a top-up component by the SMC.

• The contribution percentage will depend on the staff’s years of service in the SMC as follows :-



StaffType

Bands Years of Service Employer’s

Contribution

Employee’s

Contribution *

All staff 1 to 15 Less than 5 years ofservice:


More than 10 years ofservice:

5% of relevant income

7.5% of relevant income





* Subject to a ceiling of HK$1,000 per month.

7. Annual Salary Increase and Progression within Grade

• The salary of individual staff will be reviewed annually.

• The percentage increase of individual staff will be determined by :-

(a) the percentage increase in base salary for the whole corporation based on cost of living and market situation;

(b) individual’s performance; and

(c) individual’s current salary level as compared with the market and jobs of same nature in SMC.

• In determining the annual salary adjustment, the individual’s performance instead of his/her tenure should be theprime factor for consideration.



• The salary structure of the SMC should be revised periodically, having regard to internal and external factors such asmarket movements and changes in job contents.

• Adjustment in the base pay due to upward progression along the SMC pay bands may be in two forms :-

(a) first, progression along the pay band of one’s own rank (e.g. the progression of a Land Surveyor from Band 8 toBand 9 while retaining the same rank title as Land Surveyor). This should not be subject to the staff number inthe next higher band. SMC staff with good performance may progress to the upper band of his/her rank at arate faster than his/her counterparts whose performance is moderate; and

(b) second, promotion to the next higher rank (e.g. promotion from a Land Surveyor to a Senior Land Surveyor).The progression in this form will be subject to the number of vacancies available at the next higher rank. Asthere are overlapping pay ranges between two consecutive pay bands, it is recommended that an upwardadjustment of 10 –20 % in the base salary should be made to reflect the changes in the level of responsibilitiesand competence required of the promotee having regard to the staff’s current salary level, performance and jobknowledge.

8. Special Conversion Arrangements for SMO Staff

(a) Base Salary

• It is recommended that special conversion arrangements would apply to serving SMO staff who are eligible tojoin the SMO VR Scheme and who wish to join the corporation upon voluntary retirement. They will be offereda comparable job at a pay level equivalent to the dollar value of their existing civil service pay point at the timeof conversion.



• This incentive offer is proposed to be conditional upon the officer taking up employment with the SMC on a dateto be decided by the corporation within a period of two years from the establishment of the SMC, in line with thetwo-year option period proposed for the SMO VR Scheme.

• He/She will be slotted in the proposed banding structure appropriate to his/her rank in the SMC.

• On joining the SMC, the staff will be subject to the SMC package and the prevailing remuneration policy of thecorporation.

• Progression in base salary will mainly be performance driven.

• As SMO staff under the special conversion arrangement will join the SMC with the dollar value of their civilservice pay point at the time of transfer, there may be cases whereby their base salary will be higher than themaximum range of their pay band or the value of the jobs in the market. While we are not recommending strictcaps on individual jobs, it is proposed that the salary increase of the staff should, as far as possible, becontained to align with outside market as well as peers to maintain internal and external equity. We believe thattemporary containment in the base salary will be quickly compensated by the more flexible and betterprogression avenue channels in the SMC.

• It is not proposed that the special pay parity arrangements be applicable to SMO staff who apply for jobs inresponse to open invitations put up by the SMC.

(b) Benefits

• On switching to the SMC terms, SMO staff are eligible for the benefits provided by the SMC at his/herappropriate band. Retired civil servants will continue to be entitled to the civil service retirement benefitsincluding the grant of monthly pensions.



• They may continue to draw the cash housing allowance even if they have drawn/ fully drawn the civil servicehousing benefits before leaving the civil service.

(c) Promotion

• Both SMC staff and civil servants should have equitable opportunity for promotion.

• Selection of staff for promotion is decided on the criteria of character, ability, any qualifications prescribed forthe promotion post and experience.

• All eligible staff, irrespective of their terms of employment, are considered on equal terms.

• An appeal procedure should be put in place to deal with cases where staff feel unfairly treated.

• Civil servants selected for promotion will have their civil servant status retained. They will progress along thecivil service pay scale for the rank to which they are promoted.

• Corporation staff will upon their promotion, progress within the pay band(s) of their rank to which they arepromoted.



Appendix ACompetency Model

Competency Description

FunctionalKnowledge

Possession of the theoretical, technical and business knowledge in own functional area or line of business in orderto adequately perform duties. The knowledge can be acquired from general schooling, technical or professionaltraining, post graduate training and practical working experience.

CustomerFocus

Ability to use technical and experiential knowledge of the customer to anticipate customer needs and potentialproblems. Contributing to the development and implementation of a customer-focused strategy by solicitingfeedback from customers and assessing their satisfaction, using research, analysis, and communication tools tosearch for ways to increase customer satisfaction and gaining the support of key people in the customerorganizations.

Leadership Having foresight and strategic planning skills and accordingly create and communicate a clear strategic vision forSMC. Inspiring, convincing and influencing others to work towards achieving corporate results. Creating anenvironment that supports staff growth and development. Assuming responsibility and taking initiative. Organizingwork effectively, adapt to new job requirements and adjust readily to new situations and changed circumstances.

ProblemSolving

Ability to identify and resolve problems by using investigative and analytical skills. Dealing effectively with crisissituations under changing circumstances. Developing and implementing original/innovative ideas that havepractical applications. Recognizing when sufficient information has been gathered and analyzing those to makesound and timely decisions.

Search ForExcellence

Driving to continuously review processes and resource allocation methods with a view to increase the quality ofthe deliverables, reduce the time spans and increase the level of efficiency. Creating and implementing the newideas that help the organization respond to the evolving needs of its clients and the public. Maintaining personalcommitment, motivation and enthusiasm through times of uncertainty or high pressure.

Core

Com

pet

ency

Interpersonal Skills

Ability to interact clearly and effectively with internal and external customers, counter-parties or service providers.Understanding sensitivities in handling situations and using tact in dealing with people. Effectively negotiatingdeliverables, timelines and/or pricing

Quantitative Factor Number of employees supervised




MarketResearch

Ability to conduct value added research that supports the strategic direction of the organization and identifiesunique opportunities. Using systematic approaches to collect data on customer needs, attitudes and market trendsand analyzing the results to predict future needs. Researching the best channels to market SMC’s services,including identifying possible opportunities for alliances and partnerships. Communicating the results of theresearch to appropriate sections (e.g. technical, marketing, etc.) in an actionable manner.

MarketingSkills

Ability to prepare and implement marketing plans that include the products to be offered to the market, their pricingstrategy, the channels through which they will be distributed and the promotion mechanisms. Being able to interpretthe market research results and to devise plans that respond to customer needs and market trends.

Busi

ness

Deve

lopm

ent /

Mark

etin

g &

Sal

es

Sales Skills Ability to define and understand sales objectives and develop/implement logical business plans to achieve them.Listening effectively to clients’ needs and displaying the expertise necessary to give guidance and direction tocustomers. Retaining key customers by continuously meeting them, projecting a professional and positive imageand developing a trusting relationship. Effectively communicating the results of the interactions with clients tocolleagues responsible for market research or product development.

Keeping upwithTechnology

Ability to keep up with changes within the industry and the technology used and to apply/implement them in day today work. Understanding the strategic value of technology for SMC and helping to create an environment thatvalues technological excellence.

DataCollection &Analysis

Ability to co-ordinate effectively with various parties (e.g. district offices, other government departments, othersurvey & mapping institutions) to collect survey and mapping data. Being able to classify and analyze the data tocontribute to the creation of accurate and flexible databases.

Tech

nic

al /

Opera

tions

ProductDevelopment

Ability to combine the opportunities that technological advances provide with the results of the market research tocome up with new products and/or services. Communicating those with colleagues in the marketing and sales unitsto facilitate the roll-out to the market. In some cases, working together with business partners to design productsand/or services.

Non-

tech

nic

al /

Support

Policy /Procedure /SystemSetting

Ability to understand the strategic direction the organization is taking and to support this direction by putting in placepolicies, practices and systems that facilitate implementation. Enforcing these systems through appropriatemonitoring mechanisms and periodically measuring their success and relevance. Anticipating and planing forchanges to current organizational policies, practices, systems, culture, etc. needed to move in new strategicdirections and to ensure long term business viability.




ConceptualThinking

Ability to understand complexity and viewing situations from a broad perspective. Understanding the short and longterm impacts of actions and decisions on different parts of the organization. Using past experience and “rule ofthumb” common sense to identify problems and pulling different concepts and methods to create solutions.

Organization/ ProjectManagement

Ability to use planning and organizational skills to prioritize and manage daily work, assignments or projects tomaximize efficiency, timeliness and quality. Integrating planning efforts across work units. When required,developing organizational requirements, evaluating and selecting outside vendors, monitoring and evaluating thework performed. Integrating and co-ordinating the work of in-house resources and contractors/vendors toaccomplish project objectives.

proposal for corporatisation of the survey and mapping ... · smo’s main customers are government...

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