It goes without saying that bureaucracy is alive and well within the Hong Kong government. But it is particularly egregious with respect to the process for getting approval for outside seating accommodation (OSA) for bars and restaurants.
You would have thought OSA was an easy win-win situation for the government. People like it and it is good for businesses since it helps to boost turnover. Indeed it’s also good for the civil service too since it requires civil servants to administer the process.
But speak to any restaurant or bar owner and they will tell you that trying to get OSA approval is a bureaucratic nightmare requiring vetting by no less than seven government departments and a waiting period of more than two years in some cases.
The Food and Environmental Hygiene Department which coordinates the approval process says it only takes that long when there are objections and complications. They claim the ‘standard’ processing time is 53 working days for approval but as a result of recent ‘streamlining’ it is now 46 days. These figures appear to be highly theoretical and were greeted with disbelief by those in the industry. FEHD’s figures show that in practice these processing times are rarely if ever achieved. Their figures for 2012, of example, show that successful applications took between 3-20 months with 10 months the average.
The number of applications for OSA has been falling over the years along with the rate of approvals. In 2010, 43 percent of applications were approved, in the first half of 2013 only 17 percent of applications were approved. There were 405 applications for OSA between 2009 and the first half of 2013. Of these 106 were approved, 90 rejected and 109 applicants, almost half, abandoned the process. The FEHD says that OSA applications involve a host of issues such as land use rights, the impact on nearby residents and traffic arrangement among others. It is therefore “necessary for FEHD to make referrals to six departments.”
One OSA application seen by howardwinnreports.com was submitted in August last year, but the owner didn’t hear back from the FEHD until January 2015, five months later, with requirement from the Fire Services needed. Three months later, in May, the owner received a letter from the FEHD saying that comments from other departments were still pending. In September he received another letter from FEHD noting there had been no objections from departments but with an added list of requirements. This has taken 15 months so far despite the absence of objections and the outlets location on the first floor of a privately-owned building in an area devoted to food outlets.
In Sai Kung there are cases where the process has taken more than two years. The approval process also appears arbitrary. Five or six restaurants in the same location are granted OSA while another at the same location is rejected because of objections from residents.
“If I had known it was going to be this hard, I wouldn’t have got involved in the first place,” said one owner. He had rented a location in Sai Kung on the basis that OSA would make it economically worthwhile. In the end it has turned out to be a highly stressful project.
The lengthy time period to process OSA applications has spawned an active business for third party operators who charge about HK$25,000 to process the restaurant license together with an OSA application.
In December 2012, the French and American Chambers of Commerce took the industry’s complaints to the Business Facilitation Advisory Committee (BFAC) which reports to the Financial Secretary.
This body was set up in 2006 to improve the competitiveness of local businesses according to its website by, “cutting red tape, removing unnecessary regulatory barriers, improving regulatory efficiency and reducing business compliance costs.” If this sounds too good to be true – it is.
The OSA application process was taken up by the BFAC’s Food Business and Related Services Task Force. It set up a working group comprising representatives from the seven departments that vet OSA applications.
In October 2013, the working group came up with 10 recommendations for speeding up the process.
The recommendations amounted to little more than minor tinkering with the existing arrangements. OSA applications still have to go to the FEHD and the six other departments. However one improvement of note is that where there is no vehicle traffic as is the case when outlets are located on the roofs, podiums or upper floors of a building, applications will now no longer have to go to the Transport Department.
In July the BFAC announced the recommendations had all been implemented and in a statement said, “The FRSTF appreciates the implementation efforts of the departments concerned and welcomes all the improvement measures to facilitate alfresco dining operation.”
However while the bureaucrats are patting themselves on the back for the alleged improvements to the process, those in the industry have noticed little difference.
If the BFAC was serious about cutting through red tape then it should have rethought the whole process by which bars and restaurants are licensed and the zones where they are allowed to operate. The current system is a bureaucratic boondoggle and it is holding back these businesses rather than facilitating them. Hong Kong’s ‘can do’ spirit is increasingly becoming a ‘cannot do’ spirit led by the civil service.