The electric tram system was proposed in 1881; however nobody was willing to invest in a system at the time. In August 1901, the Second Tramway Bill was introduced and passed into law as the 1902 Tramway Ordinance. Hong Kong Tramway Electric Company Limited, a British company, was authorised to construct and operate the system. It was soon taken over by the Electric Traction Company of Hong Kong Limited, and the name was changed to Hong Kong Tramways Company Limited in 1910.
In 1922, a new company, Hong Kong Tramway Limited (HKT), was founded to take over and operate the system. The Tramway Ordinance of 1902 had awarded a 25-year operating mandate, which was then extended to a 50-year contract and expired on 23 May 1952. Due to the extension of the mandate, the Hong Kong Government had the chance to purchase the tramway at 5-year intervals, provided always that 6 months' notice of such intention was given. In 1974, Hong Kong Tramways became part of the Hong Kong and Kowloon Wharf and Godown Company Limited and is now operated under subsidiary Wharf Transport Investments Ltd.
The Hong Kong Tramways system was built from May 1903 (see timeline below). After equipment testing, the electric tram began operation on July 30, 1904. At that time the main route went along the northern waterfront of Hong Kong Island from Arsenal Street in Causeway Bay to Shau Kei Wan, with a branch serving Happy Valley. Shortly after, the line was extended westards to Kennedy Town. The length of the route was 15 km (9.3 miles), the same as today, except for track relocations and the extension of the Happy Valley branch in 1914. Originally constructed with both single and double-track sections, the last single-track section was eliminated in August 1949. Reserved track along Queensway (then part of Queen's Road East) was introduced from 1955.
In the late 1970s and early 1980s there were fears about the survival of the trams when the Mass Transit Railway began to construct the Island Line, which was proposed to run along a route that is similar to the trams'. A survey was taken by the company in 1984, and the results concluded that the public would prefer to keep the tram system intact.
Hong Kong Tramways is one of the three tramways in the world that have regular operation of double-decker trams (the others being Blackpool, England and Alexandria), and is the only system that runs exclusively on double-deckers.
Operated by The Wharf, the tramway runs on Hong Kong Island in Hong Kong between Shau Kei Wan and Kennedy Town, with a branch circulating Happy Valley. 240,000 residents commute by tram every day. Serving from 1904, it is one of the earliest forms of public transport in Hong Kong. Trams in Hong Kong have not only been a form of transport for over 100 years, but also a major tourist attraction.
this link has more about this:
http://en.wikipedia.org/wiki/Hong_Kong_Tramways#History