Oct. 12 (Bloomberg) -- Hong Kong will make gradual progress toward universal suffrage and will toughen vehicle emission limits and controls on power companies to clean up its environment, Chief Executive Donald Tsang said.

In his first major policy address since taking office in June, Tsang avoided giving details of his plans, which newspapers have reported will include giving an increased role to local government councils, which are mostly chosen by elections.

``The proposed methods will mark a key milestone in the development of democracy in Hong Kong,'' Tsang said. The government has been discussing with China the method of the selection of the next chief executive in 2007 and the next legislature in 2008, he said.

Tsang also said the city's air pollution was arousing ``grave concern'' and said the government would toughen vehicle emissions standards and tighten emissions caps for the city's two electrical power utilities, as well as encouraging them to use renewable energy.

Tsang, picked to replace Tung Chee-Hwa by a China-backed committee of 800 people, needs to produce economic growth, assuage demands for full democracy which China has said won't place before 2012 and ensure Hong Kong remains a competitive base for companies across the region.

The city, which this year had scares about the safety of pork and farmed fish imported from China, will also set up a new food safety department, incorporating some of the functions of several existing departments, Tsang said.

Democracy Moves

China, which gained control of the former British colony in 1997, has barred any increase in the proportion of directly elected legislators for the next election in 2008 and prohibited the direct election of the chief executive in 2007. It hasn't set a target date or deadline for full democracy in Hong Kong.

Tsang has also proposed expanding the Executive Council, the city's cabinet, to include more members who aren't government officials and will have official members attend only when they have a policy to be discussed. This will make the body more representative, he said.

The government will also enhance the role of the District Councils, 80 percent of whose members are elected, to give them more say over local government facilities such as libraries, swimming pools and sports centers.

Tsang also proposed setting up a system of officers to advise government ministers on political issues involved in the creation of programs. This will provide a channel into public life for politically ambitious people, he said.

Hong Kong is continuing to study introducing a minimum wage and maximum working hours, and will extend the minimum wage for workers at government-paid jobs to more publicly funded institutions such as schools, Tsang said.

A government-backed commission is continuing to study competition law, and it may recommend a ``comprehensive and cross- sector'' fair competition law, covering issues such as price- fixing, when it submits its report in mid-2006, Tsang said.

The government has previously said it favored antimonopoly regulation by industry, following the system it currently uses to supervise the telecommunications industry.

To contact the reporter on this story: Joshua Fellman in Hong Kong at jfellman@bloomberg.net

Last Updated: October 12, 2005 00:22 EDT