**************

Following is a speech (English only) by the Secretary for Information Technology and Broadcasting, Mrs Carrie Yau, at Partnership Summit 2001 in Hyderabad, India today (January 10):

Chairman, distinguished guests, ladies and gentlemen,

It is a great pleasure for me to participate in this prestigious summit which brings together such a wide cross-section of Government and corporate leaders and opinion makers from India and internationally for exchange and cross-fertilization.

It's been about 20 years since I last visited India. That is a long gap, but India is one of those places that leaves such a deep imprint on your memory, it doesn't seem like two decades have passed since I first laid eyes on the breathtaking Taj Mahal.

Today, India represents not only an ancient civilization but also a major force in the new digital world. The best attraction in India for IT entrepreneurs, or officials like me dealing with IT, are places like Hyderabad and Bangalore where technology start-ups are mushrooming and well trained and qualified software professionals are abundant. If I was given free reign to take anything back with me from Hyderabad, it would be an easy choice - a continuous stream of graduates from the Indian Institute of Information Technology to meet the IT manpower needs of Hong Kong!

Today's topic, 'Leveraging Information for Corporate Growth : How the Old Uses the New', is a fitting subject in the technology world. It seems that as soon as we learn to master a new technology something else emerges and makes it old technology. Mr Gordon Moore first foresaw that trend way back in the 1960s. His famous law that faster, cheaper and more innovative technologies emerge every 18 months aptly applies today.

It is this dynamic nature of the industry that encourages and stimulates innovation. But I have found that one principle has always prevailed, and that is the synergy of matching the 'old' with the 'new'. So I would like to take this opportunity to share with you how Hong Kong harnesses the 'old' and the 'new' in building for our future success.

Harnessing the "old" and the "new"

First of all, let me update you on our latest economic performance. Continuing from the rebound in late 1999 after the Asian financial turmoil, we had a sustained economic growth in the year 2000. Our real-term GDP grew by 11.7% in the first three quarters of 2000, and we expect a 10% overall growth for the whole year. We also anticipate that the growth trend would continue in the next few years, at a more moderate rate of about 4%.

The digital economy is a crucial part of our overall economy. Hong Kong launched its first IT Strategy, entitled 'Digital 21', in November 1998. After two years of intense implementation work, we have put in place the essential information infrastructure and elements for Hong Kong to develop into a leading digital city.

We have liberalised our telecommunications market and developed an advanced and world-class telecommunications infrastructure with strong price and service competition, largely based on the free economy and level playing field policies which have guided us all through the years. We have enacted the Electronic Transactions Ordinance and introduced a legislative framework for e-commerce to flourish, and established the local public key infrastructure needed for the conduct of secure electronic transactions, based on a minimalist regulatory approach. More recently we launched our Electronic Service Delivery scheme, or Government on-line services, that will transform the way in which the public interact with the Government and with each other. The Hong Kong Government is firmly taking the lead in the adoption of e-commerce and has set a good example for the private sector to follow.

All these have led to rapid developments in the IT and telecommunications fields. Now one in every two households in Hong Kong has a computer installed. More than one-third of our population are Internet users.

Our broadband coverage is 100% for commercial buildings and over 90% for domestic households. The current external connectivity at 44 Gbps is amongst the highest in Asia but it will substantially increase by another 10-fold in the next 2-3 years. Our mobile phone penetration rate of over 70% is the highest in the world after Scandinavia. We also have the highest utilisation of smart cards in the world. At present more than 6.8 million smart e-payment cards - that is, roughly one for every resident in Hong Kong on average - are used for public transport and other financial transactions. In the coming two years, leading edge technologies such as 3rd generation mobile communications, digital television and Next Generation Internet applications will come on stream, making Hong Kong one of the leading cities in exploiting technologies to drive economic growth.

Having regard to all these developments, many international research agencies are optimistic about the e-commerce potential in Hong Kong. For example, the London-based Economist Intelligence Unit has ranked Hong Kong amongst the top 10 places in the world with the best e-commerce readiness. Forrester has estimated that the value of e-commerce transactions in Hong Kong will grow from US$2 billion in 2000 to US$70 billion by 2004. But these added billions won't be manna from heaven for each and every new Internet venture. Far from it. In a free and open economy like Hong Kong, only the most competitive enterprises survive. And the most competitive enterprises always share the same motto : use 'new' technology to build on 'old' strengths for driving their future corporate growth.

Success cases

A number of successful conventional businesses in Hong Kong are vivid examples in demonstrating the application of this philosophy. A versatile conglomerate has successfully diversified from its traditional business into the telecommunications and IT industry. It has expanded into taking part in the bidding of the 3rd generation mobile services in the European markets. It is also the Government's contractor in developing our Electronic Service Delivery Scheme which now provides a user-friendly portal with integrated public and private sector services that can be accessed through the Internet and public information kiosks.

One of our key utility companies has also branched out from its conventional business and has launched Hong Kong's first Internet-on-TV service for providing value-added services to the clients on its utility accounts. Its service allows us to access Internet through home television screens and provides a one-stop family oriented web site that offers a comprehensive range of household information and convenient online shopping services.

A world-renowned developer of educational technology in Hong Kong has also built on its strengths in R&D and married it with IT to produce innovative electronic educational and toy products now being sold in 14 different countries. These are but a few of the success stories. The Hong Kong Government will continue to work as a facilitator and provide the necessary infrastructure and create the favourable environment for more such success stories to be made.

Business opportunities

The imminent accession of China into the World Trade Organisation will also create new opportunities for Hong Kong businesses. With our special relationship with the Mainland and our experience and knowledge in its operation, Hong Kong is well positioned to gain from the opening of the Mainland market after the accession. We would also be the best partner for foreign investors who would wish to enter into the Mainland market.

Digital 21

To cope with technological changes and world e-commerce development, we will launch a new "Digital 21" IT Strategy within the next few months, which will capitalise on Hong Kong's early success in establishing a world-class environment for the information economy. The main aim is to promote further development of IT and e-commerce to improve our economic and social prosperity and to further strengthen Hong Kong's position as a leading digital city.

The key areas which we will focus on are -

¡X further developing and strengthening our world-class environment for e-commerce to grow and flourish;

¡X strengthening our IT workforce through enhanced local training and recruitment of overseas and Mainland China professionals to sustain the development of the information economy;

¡X building an e-government to take the lead in the adoption of e-commerce;

¡X exploiting advanced and enabling technologies to benefit our business and community and to drive our economic growth; and

¡X implementing positive measures to avoid the emergence of digital divide.

The new strategy will be implemented on the basis of upholding the pillars of our past success. These include a free and open market, the rule of law underlined by an independent judiciary, a simple, low and predictable taxation regime, free and unfettered information flow, etc. The common law system prevails in Hong Kong after the reunification with the Mainland of China in 1997 and it will continue to prevail as guaranteed under the Basic Law, our mini constitution, and under the "One Country Two Systems" concept. Contracts will continue to honoured and protected by law. Furthermore, our legislation on arbitration is fully compliant with the spirit of the Convention on the Recognition and Enforcement of Foreign Arbitral Awards, or what we call the "New York Convention", which makes us an ideal jurisdiction for concluding and implementing deals and contracts. We also have a world class regime for protection of intellectual property rights. Our IP laws, which comply fully with the standards stipulated under the WTO Agreement in respect of Intellectual Property Rights, have been in place since 1996.

International co-operation

And last but not least, international co-operation remains crucially important all the time whether we are in the old or new economy. Hong Kong has developed a network of co-operation with places which are advanced in the IT and telecommunications field. We are very pleased that we have signed an MOU on IT co-operation with India. We have also concluded similar bilateral arrangements with the UK, Canada, Australia, Israel and Finland.

Conclusion

Ladies and gentlemen, 'old' foundations and 'new' opportunities are simply two sides of a coin. The key to success depends on whether we can synergise them to enhance competitiveness. In Hong Kong, we have relied on the pillars of success in our 'old economy' to transform ourselves from a manufacturing economy in the 1970s and 1980s to a globalised, service-oriented economy in the 1990s. The next step in this evolution is to develop Hong Kong into a leading digital economy in the 21st century.

The International Telecommunication Union (ITU)'s Telecom Asia 2000 just took place in Hong Kong last month. The Secretary-General of the ITU, Mr Yoshio Utsumi, has remarked that the event in Hong Kong has been the ITU's largest and most successful regional event ever, and has attracted over 50,000 trade participants. The Partnership Summit 2001 is an equally valuable opportunity for IT and telecommunications leaders around the world to meet together, to exchange and explore opportunities for collaboration. I am sure we will, through the deliberations in the Summit, all gain useful insights and pointers on how we should map out our way forward in the new economy. Two more international IT events are upcoming in Hong Kong. The Information Infrastructure Exposition and Conference 2001, which showcases the latest IT technologies and services, will be held next month. Another major event is the tenth International World Wide Web Conference which offers a forum for Government, industry and academia to exchange views on the latest Web techniques and information. It will be held in Hong Kong in May this year. I would wish to invite you all to join these important international events in Hong Kong.

Thank you.

END/Wednesday, January 10, 2001 NNNN