Hong Kong authorities have vowed to develop a long-term road map for the city’s struggling self-financing postal operator and keep an “open-mind” on all options, including privatisation or turning it into a traditional department.
Acting Secretary for Commerce and Economic Development Bernard Chan Pak-li revealed the move at the Legislative Council’s economic development panel meeting on Tuesday, saying the proposed HK$4.6 billion (US$587 million) cash injection to Hongkong Post was intended to “buy time” for the reform.
Chan said the government was “comprehensively” reviewing Hongkong Post’s operating model, and would submit a report on the long-term road map for the public postal service provider in three years.
He was speaking as the authorities consulted the legislature on the plan to inject HK$4.6 billion (US$587 million) into the Post Office Trading Fund, which manages and accounts for Hongkong Post’s operations.
“This is just a short-term and transitional plan that would allow us to continue providing public postal services and buy time for our reform,” Chan said.
“The reform process involves many complicated and even sensitive topics, including Hongkong Post’s structural change, service change and human resources arrangements,” he added, stressing that the authorities would need more time to liaise with stakeholders.
Since the trading fund was established in 1995, Hongkong Post has operated on a self-financing basis.
It has recorded eight consecutive annual deficits and posted its biggest loss since 1995 in the 2024-25 financial year, amounting to HK$821 million.
Officials told Legco that Hongkong Post had sought to offset losses from declining mail volumes by developing e-commerce services. However, they said such businesses have weakened over the years due to geopolitical changes and competition from private operators.
They said e-commerce generated nearly half of Hongkong Post’s annual revenue in 2020-21, but that proportion fell to around 25 per cent in 2024-25, equivalent to HK$700 million.
Chan said the government would remain “open minded” to different options, including turning the postal service provider into a traditional government department funded by public grants, privatising it or turning it into a government-owned corporation.
However, he cautioned that each option would have its own advantages and disadvantages.
While a traditional department would have less flexibility in fostering business cooperation, the government should also evaluate whether a profit-driven business model would compromise Hongkong Post’s ability to meet its universal postal obligations, he said.
Many lawmakers acknowledged that maintaining public postal services was essential and backed the HK$4.6 billion grant. However, some argued that Hongkong Post’s high staffing costs make it difficult to compete with private operators, urging the service to maintain only basic functions.
“The investment prospect is not good now, and there are many constraints from government regulations. If we continue encouraging you to enhance competitiveness against private operators ... you are set to lose,” Election Committee lawmaker Andrew Lam Siu-lo said.
“My advice is to only maintain the basic services, control your cost and make good use of your resources,” he said.
According to Chan, staff costs accounted for 65 per cent of Hongkong Post’s total expenses.
Another lawmaker, Webster Ng Kam-wah, said Hongkong Post had been left in a “weird” position as it was constrained by civil service framework but still required to compete in the private market.
“If we say Hongkong Post was sick in 2010, I would say it is in intensive care now,” he said. -- SOUTH CHINA MORNING POST
