The quality of governance in Hong Kong has been a hot topic since former chief executive Tung Chee-hwa began his second term. It has usually been viewed in negative terms. Over the past two years there have been mass demonstrations, legal challenges, and public outcries over specific government policies. Each has, in its own way, reflected the public's desire for better governance. Beijing, too, has been troubled. President Hu Jintao last December called for improvements. Mr Tung promised to do better in his January policy address - and then resigned in March. A study of Hong Kong's governance over the past three years might, therefore, have been expected to give our city the thumbs down. But that was not the verdict of the World Bank in its review released this week. The study concluded that governance in Hong Kong has improved over the past three years. Our city's score improved on all six indicators used by the researchers, when compared with the results in 2002. They included accountability, effectiveness of government and the rule of law. This is a positive view of developments in Hong Kong, which was studied along with more than 200 states or territories. But some caution must be exercised before reading too much into the conclusions. The methodology used is subjective and complex and there is, of course, a margin of error. The six indicators are based on 352 variables and taken from the databases of 30 institutes, including the Heritage Foundation and Economist Intelligence Unit. Hong Kong emerged as the world leader in 'regulatory quality', thanks largely to our relatively free economy and low-tax regime. We also fared quite well on 'corruption control'. This is not particularly surprising. But the finding that the rule of law has improved is interesting, given the various constitutional controversies in recent years. This is partly explained by the broad definition adopted by the researchers. The rating includes, among other factors, consideration of the crime rate and public confidence in the police. Similarly, the strength of the civil service contributed to our rating for 'government effectiveness'. Hong Kong's score for 'accountability' was markedly lower than for the other indicators. The emphasis placed by the study on public participation in politics and democratic elections explains why. But the score has improved since 2002, perhaps because of the public's increased political awareness and activism. From Article 23 to the Hunghom Peninsula controversy, their voices have been heard. The bank's findings will be regarded with scepticism by many Hong Kong people. Many of our ratings are lower than those for 1996. And in some areas we are way behind other parts of the world. But the results underline the importance of our core values - and point to the way ahead. There is still much room for improvement. The calls for better governance have relented since Mr Tung's resignation. We are now in a transitional period. But the honeymoon will not last long. Chief Secretary Donald Tsang Yam-kuen, almost certain to become chief executive in July, will face high expectations. Hong Kong has seen two years of virtual policy paralysis. This must change. The new chief executive will need to push ahead with a policy programme that includes reform of the tax system, combating pollution and making the political system much more representative. There will be fresh controversies. The new leader should allow the public meaningful participation in the programme. This will mean breaking from the past approach in which policies were either pushed through - or abandoned in the face of strong public opposition. This is the way to improve governance in Hong Kong. The World Bank study is encouraging - but the hard work is yet to begin.