(English only)

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Following is the full text of the presentation on the government information technology strategy "Digital 21" by the Director of Information Technology Services, Mr Lau Kam-hung, at a business conference on strategic e-commerce and cyberpayments today (Monday):

Mr. Clifford, Ladies and Gentlemen:

Good Morning.

It is my pleasure to join the Asia Business Forum's Conference on "Strategic E-Commerce & CyberPayments" to introduce to you the information technology (IT) strategy of the Hong Kong Special Administrative Region and the progress we have made in building Hong Kong as a major business centre in the digital world of the Information Age.

The rapid development of e-commerce has been the most remarkable development affecting our businesses. It brings about new opportunities, opens up new markets and helps to reduce costs. Industry estimates suggested that the total value of products and services transacted over the Internet in Hong Kong will increase from US$60 million in 1998 to US$2.4 billion by 2003. The potential market in the Mainland China is even more impressive, especially after China's accession to the World Trade Organization (WTO).

The HKSAR Government is fully committed to encouraging the development of e-commerce to maintain Hong Kong's competitive edge and to drive our overall economic growth.

As a practical expression of our commitment, we have published the "Digital 21" IT Strategy in November 1998 which sets out the vision and targets to enhance and to promote Hong Kong's information infrastructure and services so as to make Hong Kong a leading digital city in the globally connected world of the 21st century.

We believe that "Digital 21" will ride on Hong Kong's established strengths to foster an environment conducive to the development of e-commerce in Hong Kong.

Instead of going through all the initiatives in "Digital 21" one by one, I am going to focus on several key areas in facilitating the development of e-commerce in Hong Kong.

First of all, to ensure that electronic transactions can be performed effectively and efficiently over the Internet, it is necessary to have a high quality and high capacity telecommunications infrastructure to provide bandwidth and services at affordable prices.

Hong Kong already has a world-class telecommunications infrastructure. Our broadband network covers practically all business buildings and we expect the residential coverage to reach 85% in 2000. On the external front, our total capacity of submarine cables stands only second to Japan in Asia.

To maintain Hong Kong's pre-eminent position and to further enhance our telecommunications systems for the development of e-commerce, we will encourage more competition and innovation under an open, fair and predictable regulatory framework.

To encourage further local broadband coverage, we have decided to issue five licences for local fixed telecommunications network services (FTNS) using wireless networks. These five companies will be able to offer broadband services and they have pledged to roll out their new services within 4 to 16 months from licensing.

We have also decided to issue a fixed telecommunications network services licence to Hong Kong Cable TV to provide telecommunications services over its network. Its network will be rolled out to over 1.7 million premises by end 2002.

For the external front, we have decided to issue twelve licences for external satellite-based fixed telecommunications network services to increase our external telecommunications capacity.

These are our major steps in liberalising our telecommunications market and in introducing competition. Total investments by the new licensees would amount to about HK$4.1 billion in the next three years. We believe that the increased competition will lead to lower costs, better services, innovation and more choices to our businesses and consumers.

To ensure that individuals, businesses and the Government interact securely over the open network, it is important to instill trust in the security and integrity of transactions performed electronically.

The security concerns in electronic commerce can be addressed by the Public Key Infrastructure (PKI). PKI covers the use of public key cryptography and digital certificates to enable us to authenticate the identity of the parties involved, to ensure the integrity and confidentiality of the messages exchanged, and to make sure that the transactions cannot be repudiated.

Public key cryptography involves the use of a private key and a public key for encryption and decryption. The private key should be kept secret by the owner while the public key is made public in a public directory. When a sender digitally signed a message with his or her private key, the recipient could validate the signature only with the sender's public key. It can be applied to electronic mail, electronic service delivery and e-commerce.

To ensure the identities and the keys of the involved parties are valid and trustworthy, each party must have a registered identity, often known as the digital certificate. The certificate normally includes the user's information and the public key; the validity period; and the specific operation for the public key.

Certification Authority (CA) is responsible for the issuance and renewal of the digital certificates and where necessary their suspension or revocation. The establishment and operation of the CA(s) enables the large scale deployment of PKI technology that in turn facilitates e-commerce development.

To be a certification authority, the organization must be trustworthy to the public. As part of the HKSAR Government, Hongkong Post will become a public Certification Authority on 31 January 2000* to address the basic security concerns in doing business in the cyberspace. The PKI implemented by the Hongkong Post conforms to international security standards to address the issues of interoperability and compatibility, and meets both the security and operation requirements to support various e-commerce applications.

The establishment of a public CA also aims to save the total up front capital investment in this area.

In addition to the Hongkong Post, the private sector is free to set up its CAs to meet the demand of electronic commerce in the community.

In line with our minimalist approach and to encourage private sector initiatives, we do not impose a ceiling and mandatory licensing requirement for CAs. However, to protect consumer interests and to enhance users' confidence, there is a voluntary system of recognition whereby CAs are free to apply for recognition from the Government.

Under the recognition scheme, the Director of Information Technology Services is empowered under the Electronic Transactions Ordinance to be the authority for granting recognition to those CAs which have achieved a trust standard and have adopted a common and open interface in their operations. The guidelines on standards and procedures to be adopted by the recognised CAs in carrying out their duties are stipulated in the Code of Practice for Recognised Certification Authorities.

The Certification Authority Recognition Office of the Information Technology Services Department will take into account the capability of a CA in complying with the relevant provisions of the Ordinance and the Code of Practice in granting recognition to the CA.

To enhance certainty and security in the conduct of electronic transactions, it is necessary to establish a clear and supportive legal framework. The Electronic Transactions Ordinance was enacted earlier this month.

Under the Ordinance,

a) electronic records and digital signatures are given the same legal status as that of their paper-based counterparts;

b) a legal backing is established to promote and facilitate the operation of CAs;

c) a recognition scheme for CAs is set out and the Director of Information Technology Services is given the authority for granting recognition to CAs; and

d) the various general provisions concerning the operation of recognised CAs are stipulated.

For e-commerce to flourish in Hong Kong and to reach out to all potential customers, we must have a Chinese language interface that is open and common for users in the community who prefer to communicate electronically in Chinese.

The current critical issues of using the Chinese language in electronic communication revolve around the existence of multiple standards and the fact that none of these standards cover all of the Chinese characters commonly used in Hong Kong. Users may need to define their own Chinese characters in the user-defined area by themselves. This problem is not apparent on stand-alone computers but is serious in networked communication.

For example, User A and User B have separately used the same internal codes for different characters in their own user-defined areas. During data exchange, the characters "���" in the message transmitted by User A will be displayed as another characters "��c" on the screen of User B, causing confusion in the communication.

The HKSAR Government is taking an active role in the ongoing discussions with the International Organization for Standardization (ISO) on the development of the ISO 10646 standard. The standard is intended to encompass all written scripts, including the Chinese characters commonly used in Hong Kong.

The new ISO 10646 standard now being worked on and scheduled for release in mid-2000 will ease the existing limitations of Chinese language computing.

Leading by example and by creating an environment that embraces change, the HKSAR Government will establish ourselves as a forerunner in adopting e-commerce.

We are taking the lead by introducing the Electronic Service Delivery (ESD) Scheme aiming not only to improve the public services but also help to familiarise our citizens with e-commerce and give them confidence in e-commerce.

Under this scheme, public services will be provided over the Internet and through other electronic means via an open and common information infrastructure 24 hours a day, 7 days a week. The open and common information infrastructure which we are going to develop for ESD will serve as a platform for the private sector to make use of in conducting e-commerce at a later stage.

The first phase of the scheme will be launched in the latter half of 2000. Subsequence phases will be implemented on an ongoing basis. In the long run, we aim to include all public services amenable to the electronic mode of delivery under the ESD Scheme.

Under the first phase of the scheme, a wide range of services provided by government departments and public agencies will be provided which include the submission of tax return, voter registration, application for renewal of driving and vehicle licences, payment of government bills, booking appointment for ID card registration, information look-up for tourists, etc.

Besides ESD, the HKSAR Government is also working on other projects aiming to familiarise our citizens with the electronic world and to promote the wider adoption of e-commerce in the community.

The Interactive Government Services Directory (IGSD), launched in March 1999, enables the community to obtain public information and services electronically over the Internet in an interactive manner.

The Electronic Tendering System (ETS) of the Government Supplies Department, to be launched in early 2000, is another pilot project using the latest Internet technologies. Being one of the first applications using the PKI established by Hongkong Post, ETS will provide a secured electronic means for handling tender and related matters.

In the past few months, ITSD has jointly organised a series of free seminars on e-commerce with the Hong Kong Trade Development Council, the Information Technology and Broadcasting Bureau and the Hong Kong Information Technology Federation to enable Hong Kong companies, especially Small and Medium Enterprises (SME), embark on e-commerce to explore new markets and to strengthen their competitiveness.

To enhance public understanding of the Electronic Service Delivery scheme, the ESD roving show has been launched. Short film and information kiosks are used to explain and demonstrate some of the services of the scheme. Through the use of the ESD simulation software, the public can experience the ease of use and convenience to be offered by ESD which in turn promoting e-commerce to the public. This roving show is now being staged at Level One of the International Financial Centre at Central up to 26 January. Please come and see.

We have also showcased the ESD Scheme at the "Electronic Government in the New Millennium" Booth in the 34th Hong Kong Products Expo together with the Interactive Government Services Directory and the Hongkong Post's e-Cert.

Besides conducting seminars and exhibitions, we also support activities such as the "Digital 21 Power For Youth" campaign. This campaign consists of two core competitions and a series of relevant seminars and training courses aiming to promoting IT and e-commerce among the young generation.

The "E-community Ambassador" is another project which also aims to enhance public understanding of IT and promote the wider use of IT in the community. It is a demonstration and exhibition vehicle equipped with computer facilities. Support staff are available on board to introduce common IT knowledge and demonstrate how IT can bring convenience to our daily lives.

We shall continue to arrange events of this kind to promote the awareness of e-commerce.

By implementing the various initiatives, the HKSAR Government aims to create a user-friendly and conducive environment for the development of e-commerce to drive our economic growth.

Taken as a whole, we are preparing Hong Kong for the digital world of tomorrow through better use of IT. We believe that "Digital 21" will bring about the following benefits to Hong Kong:

* enhances our personal and social life,

* enables us to explore new opportunities, conquer new market, and adopt new ways of doing business, and

* enhances our competitiveness in the Information Age.

Adapting to frequent change, more often and more quickly, has become a norm for us to stay ahead of our competitors. There are a handful of players in the global arena that have the will and the capacity to take the opportunities, move with the times and achieve real and positive change for the benefits of its people. Hong Kong is certainly one of these players.

Thank you.

End/Monday, January 24, 2000

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