Boost planned for services sector

PUBLISHED : Tuesday, 30 July, 1996, 12:00am
UPDATED : Tuesday, 30 July, 1996, 12:00am

A $6.7 million budget to promote change in the services sector is expected to be set up at the Hong Kong Productivity Council.

A programme to promote service productivity in Hong Kong is being put together in the wake of a report which identifies profound changes occurring in the economy.

'There are some very fundamental changes taking place in the trading sectors with implications for the economy as a whole,' a report from KPMG Management Consultants said. The report was commissioned after the Financial Secretary made services a key public policy issue in his March budget.

The study said changes in the economy were more profound than a mere switching of activity from one mode to another or from one sector to another.

'A process involving the steady obsolescence of low value-added activities in the economy is taking place,' the study said.

Integral to this process is an integration of manufacturing and service functions which provides opportunities for industry to raise the value-added contents of their products and services, KPMG said.

'The traditional mode of operation is no longer valid for many companies which have moved into a range of activities often covering more than one sector, as well as a range of value-added services, such as product design and development, advertising, packaging and aftercare,' the report said.

Overall, the trade sectors accounted for 24 per cent of Hong Kong's gross domestic product in 1993. The import-export sector accounted for 19 per cent of gross domestic product the same year.

The final report from the working group on Hong Kong's trading sectors by KPMG recommends the Hong Kong Productivity Council promotes service productivity: The council will start up a new branch through a redeployment of internal resources and an up-front subvention of $6.7 million.

The council works with trading sectors a two to three-year programme to distribute information on service productivity measurement and a measurement model for the service industry.

A benchmarking centre be set up to be put in place such a model and support the work of the council in this sector.

Awareness of service productivity to be promoted to trading companies and the community.

The council proposes to set up a service productivity and quality centre to introduce to Hong Kong world class customer service practices. Included in the proposals is the need to set up a productivity index with the Census and Statistics Department to reflect true productivity trends.

The report of the working committee said: 'There is room for improvement in service productivity in Hong Kong. During the period 1982 to 1992, the real output per worker in services increased at an average rate of only 2.3 per cent a year compared to 8 per cent for manufacturing.'