Following is the full text of the speech (English only) delivered by the Director of Information Technology Services, Mr Lau Kam-hung, at the annual general meeting of the Hong Kong Institution of Engineers (Information Technology Division) this (May 3) evening:
Mr Chan, Ladies and Gentlemen,
It is my pleasure to be invited to speak at your Annual General Meeting this evening. I would like to make use of this opportunity to talk to you about the progress we have made in building Hong Kong as a major business centre in the digital world of the Information Age under our Digital 21 Information Technology (IT) Strategy.
The emergence of the Internet is the most significant feature of the Information Age. It has created an ever expanding and globally connected virtual community, which brings us new ways of doing business, learning and interacting socially.
Electronic commerce is also developing most remarkably around the world. It brings us new business opportunities, opens up new markets and helps us to reduce costs. Industry estimates suggest 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. These statistics and forecast indicate that Hong Kong is poised to ride on the wave of electronic commerce.
Moreover, the potential market in Mainland China is even more impressive. The number of Internet users in China has increased four times from about two million in 1998 to nearly nine million in end 1999. If this growth continues, China will have the second largest Internet population in the world in a few years' time. The potential for electronic commerce to develop in China is thus enormous, especially after China's accession to the World Trade Organisation.
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 promulgated 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.
This evening, I am going to focus on several key initiatives we have undertaken to facilitate 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 per cent this year. 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 issued 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 four to 16 months from licensing in January 2000.
We have also issued 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 issued 14 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 instill trust in the security and integrity of transactions performed electronically, it is important to ensure the security of individuals, businesses and Government over the open network.
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 as the accepted means of authentication and access control over untrusted networks, such as the Internet.
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 that the identities and the keys of the involved parties are valid and trustworthy, each party must have its identity registered, often on a 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.
PKI enables us to authenticate the identities of the parties involved, to ensure the integrity and confidentiality of the messages exchanged, and to make sure that the transactions cannot be repudiated.
A 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 CA, the organisation must be trustworthy to the public. Hongkong Post, which is part of the HKSAR Government, becomes a public Certification Authority on 31 January 2000 to address the basic security concern 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 private sector is free to set up more Certification Authorities, on a voluntary basis, to meet the demand of electronic commerce in Hong Kong. There is no mandatory licensing requirement for CAs. However, to protect consumer interests and to enhance users' confidence in electronic transactions, the HKSAR Government has established a voluntary system of recognition whereby CAs are free to apply for recognition from the Government.
Under the voluntary recognition scheme, I, being the Director of Information Technology Services, am empowered under the Electronic Transactions Ordinance to be the authority for granting recognition to those CAs which have achieved a trust standard acceptable to the Government 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 Recognized Certification Authorities.
The Certification Authority Recognition Office of my 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 to protect the interests of investors and users. The Electronic Transactions Ordinance (ETO) was enacted in January 2000 to provide the legal framework for Hong Kong to fully capture the growth and benefits of e-commerce.
Under the Electronic Transactions 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 voluntary 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 critical issues of using the Chinese language in electronic communication revolve around the existence of multiple coding standards and the fact that none of these coding standards covers all the Chinese characters commonly used in Hong Kong. For instance, BIG5 covers traditional Chinese characters only and GB covers simplified Chinese characters. 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 it is serious in networked 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.
To set an encoding standard for local characters, we have published the Hong Kong Supplementary Character Set (HKSCS) in September 1999. The HKSCS specifies the codes for those characters in the ISO 10646 Private Use Area as well as the BIG5 user defined area. This is a major step in preparation for the adoption of ISO 10646.
The next version of ISO 10646 is scheduled for release some time this year. It will ease the existing limitations on this aspect of Chinese language computing.
To lead by example and to create 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 delivery of public services but also help to familiarise our citizens with the e-commerce mode of delivery and give them the confidence in electronic transactions.
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 that 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 October this year. Subsequent 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. These services include the submission of tax return, voter registration, application for renewal of driving and vehicle licences, payment of government bills, booking appointment of 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, launched in April 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.
The Information Technology Services Department 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-sized enterprises, embark on e-commerce to explore new markets and to strengthen their competitiveness. ITSD has also arranged roving shows to enhance public understanding of the ESD scheme.
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 the better use of IT. And we have the will and the capacity to take the opportunities, move with the times and achieve real and positive change that will benefit the community.
End/Wednesday, May 3, 2000