7. Concluding remarks
The Hong Kong public has been dissatisfied with the services provided by the WSD. Compared with the infrastructure
services provided by private utilities, the transmission network developed by WSD seems to be unable to meet the public’s expectations. As living standards in Hong Kong improve, people will inevitably demand cleaner water to drink and better services. Over the past few years, the problems of poor water quality and supply disconnections in certain districts in Hong Kong have drawn severe criticisms. Based on the experience of a trading fund for the sew age service, an establishment of a trading fund for WSD would be unlikely to improve performance. Corporatization and contracting out will not change the ownership of the water plants, they will remain public property. As a result, we cannot rely on the capital market to discipline the performance of the operators and to finance expansion. One alternative available to overcoming the monitoring problem and the financial constraints is a full privatization of the water supply industry in Hong Kong. In recent years, the central authority of the Chinese Government has tried to improve the performance of
state-owned enterprises by introducing market competition and corporatization. The regulatory function of various ministries or departments is separated from their business functions. Recently, the structural reform has gone further by listing state-owned enterprises on the stock exchanges. It seems that the pace of "privatization" is even faster on mainland China. To improve the performance of the local water supply industry, the Hong Kong Government should seriously consider following a similar track of privatization