Postal service should also improve its profitability, says Audit Commission
Hongkong Post’s failure to comply with certain national security requirements, and its financial losses in seven out of the past 10 years were major issues highlighted in a report published by the city’s Audit Commission on Wednesday.
The report identified several incorrect practices, including the improper description of mail services to other regions of China as “international services”.
The commission said it examined Hongkong Post’s service contracts with designers on the designs of stamp themes and found there were no specific clauses safeguarding national security.
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The National Security Law for Hong Kong, which was enacted on June 30, 2020, stipulates that safeguarding national security is a constitutional duty for the city, and therefore Hongkong Post needs to incorporate clauses in its service agreements to fulfill the duty, the report said.
During a site visit to Hongkong Post and a review of its records in February, the commission found that the cross-border mail services to other parts of China were inaccurately labeled as “international services”.
The improper description appeared on Hongkong Post’s website, mobile app, and annual reports, as well as in the notices displayed in the General Post Office in Central, the report said.
Citing a circular issued by the special administrative region government, the commission said all government departments are required to accurately and carefully formulate references to the SAR and to other parts of the nation in their day-to-day operations and all official correspondence.
The report also revealed the postal service’s poor business performance, with losses incurred in seven out of the past 10 years. In the 2022-23 fiscal year, Hongkong Post recorded an operating loss of HK$305 million ($38.9 million), resulting in a negative 13 percent rate of return on fixed assets, far short of its target of 1.5 percent.
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The reasons for the huge losses, as concluded in the report, include a weaker-than-expected performance of Hongkong Post’s e-commerce services, higher operating costs than competitors, and sluggish sales of stamps.
The commission urged Hongkong Post to rectify the loopholes in its contracts and correct descriptions to comply with the national security requirements. In addition, Hongkong Post has been advised to increase revenue from its e-commerce services with more targeted marketing strategies, boost the cost-effectiveness of local mail services, promote the collection and study of postage stamps, and maximize income from advertising, in a bid to improve profitability.
On Wednesday, Hongkong Post said it will soon incorporate clauses about safeguarding national security in its agreements with designers, adding that the improper descriptions regarding cross-border services have been corrected.
