Follwing is a speech by the Secretary for Information Technology and Broadcasting, Mr K C Kwong, at the 2nd Annual Efficient Consumer Response Asia Conference & the E-commerce for Supply Chain Management Summit '99 today (Thursday):
Mr Taylor, Mr Au, Ms Lin, Distinguished Guests, Ladies and Gentlemen,
I am honoured to be invited to speak at today's luncheon for the opening of the session on Electronic Commerce in the 2nd Annual Efficient Consumer Response Asia Conference.
The emergence of electronic commerce over the Internet has been the most significant development affecting businesses as we enter the new millennium. By leveraging on the latest advances in information technology, telecommunications and multi-media content creation, electronic commerce has become the key tool in enhancing corporate competitiveness. It enables businesses to become more adaptive and responsive to changes in market conditions, allows them to develop new markets globally and more effectively, and facilitates their targeting of customers on a localised or even individual basis.
All these benefits are driving the growth of electronic commerce at a phenomenal rate. According to industry estimates, the value of business between companies conducted over the Internet was US$43 billion in 1998. By 2003, the figure is projected to rise to US$1.3 trillion, accounting for 9.4% of total world-wide business-to-business transactions. The potential business market that can be tapped via the Internet is thus enormous.
Internet-based electronic commerce is also having a profound impact on supply chain management. The Internet, which will have a total of 150 million users world wide by the end of this year and over 500 million by 2003, provides businesses with world-wide connectivity at affordable prices. With this global connectivity, it becomes feasible for all businesses in the entire supply chain, including those small and medium sized suppliers and retail establishments, to be connected together electronically. Also, in an Internet-enabled supply chain, all a small and medium sized enterprise needs to be equipped with are basically a personal computer, a web browser and a means of connection to the Internet. The exchange of data using non-proprietary Internet-based technology is relatively straight forward and cost effective. This substantially facilitates the smooth and efficient movement of goods, services and money throughout the supply chain.
Apart from generating business opportunities and opening up new markets, the potential savings to be gained in business operation through the adoption of electronic commerce and the use of the Internet are equally significant. According to a recent industry study, the cost savings globally through the adoption of electronic commerce in business will rise from US$17 billion in 1998 to $1.25 trillion in 2002.
We in Hong Kong are well placed to take advantage of the Internet-enabled supply chain. We have an excellent and advanced telecommunications infrastructure. Domestically, we have fully digitised networks since 1995. Over 388,000 km of optical fibre has been laid. All commercial buildings and 75% of all households are already covered by our broadband network. Externally, Hong Kong is well connected with the rest of the world by eight submarine cable systems. With a total capacity of 19.1 Gbps, we are currently ranked second in the region, only after Japan. We already have another planned submarine cable system in the pipeline. This will more than double our total external capacity to 39.1 Gbps by the end of this year. But there is no room for complacency in Hong Kong. We will continue with the progressive liberalisation of our telecommunications market to ensure that our businesses will have the best infrastructure and services at competitive prices.
The Government is fully committed to encouraging the development of electronic commerce by providing a favourable environment for it to take hold and flourish. We understand that one of the major obstacles is the perceived risk in transacting business over the Internet, which is an open network. To strengthen public confidence in electronic commerce, the Government will establish a local public key infrastructure with the support of certification authorities. Through the use of private/public key cryptographic technology and digital signatures, participants in electronic transactions will be able to ensure the authenticity, integrity, confidentiality and non-repudiation of transactions made over the Internet. In order to make available certification services to the public as soon as possible, the Government will take the lead and establish a public certification authority through the Hongkong Post, which aims to start offering its certification services to the public by the end of this year.
In addition, to enhance the legal certainty of electronic transactions, we have introduced an Electronic Transactions Bill into the Legislative Council in July this year. The Bill seeks to give electronic records and digital signatures the same legal status as that of their paper-based counterparts. The Bill also aims to establish a clear framework to facilitate the operation of certification authorities in Hong Kong. The Bill is now being examined by a Legislative Council Bills Committee and we hope that it could be enacted as soon as possible, thus putting Hong Kong firmly on the world map on electronic commerce.
The Government will also lead by example by becoming a leading participant in electronic commerce through the launching of the Electronic Service Delivery (ESD) Scheme. ESD will make it possible for the public to obtain Government services on-line, in a seamless manner, 24 hours a day and 7 days a week through the Internet and other electronic means. We are about to award the contract for phase one of ESD and we expect to have the scheme up and running in the latter half of 2000. A wide range of services from 10 departments and public agencies will be covered which include submission of tax return, renewal of driving and vehicle licence, registration as a voter, search for job vacancy and payment of Government fees, etc. Apart from providing more efficient and better quality services to the public, ESD will also help to pump-prime the development of electronic commerce in the private sector. The information infrastructure to be developed for the scheme will also be open up for use by the private sector for the conduct of electronic commerce.
However, for Hong Kong to become a leader in the use of electronic commerce, Government's efforts alone are not sufficient. Private sector's support and participation are equally important. We need to work together to raise general awareness and understanding of electronic commerce. I am therefore particularly pleased to see the initiatives taken by the Hong Kong Article Numbering Association in the organisation of this event to promote electronic commerce. This will provide a valuable opportunity for business executives, industry experts, Government officials and other interested parties to gather together, exchange ideas and keep themselves abreast of the latest advances in supply chain management and electronic commerce. The event will no doubt give us important insights on and useful pointers to the way forward for developing Hong Kong into an electronic commerce hub for the region. I therefore wish to commend the Hong Kong Article Numbering Association for all the efforts it has made, and I wish the event every success.
END/Thursday, October 28, 1999