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Following is a speech (English only) by Secretary for Information Technology and Broadcasting, Mrs Carrie Yau, at the Team Canada IT Sectoral Exchange Session today (February 16):
Chairman, Deputy Minister Wright, Distinguished, Guests Ladies and Gentlemen,
First of all, let me extend my warmest welcome to members of Team Canada. It is indeed a great pleasure for me to meet with our Canadian friends and share with you the IT developments taking place in Hong Kong. I vividly recall my own visit to your country towards the end of last year where I was most impressed with what you are doing in developing cutting edge technologies.
But before I get down to IT business, let me just quickly review our economic performance during the past year. 2000 was a pretty good year. GDP has grown by about 10 per cent, which is double the rate we were predicting back in March last year. Prices are stable, with slight deflation which has helped keep costs down, particularly rents. The unemployment rate is edging down. The recent cuts in interest rates are likely to boost consumer sentiment and help alleviate the burden of mortgage holders. Our currency has remained rock solid thanks to the linked exchange rate with the US Dollar. And over the past year we have also seen a resurgence of interest in Hong Kong as a regional base for multinational companies. Indeed, the London-based Economist Intelligence Unit has recently ranked Hong Kong as the most important Asia-Pacific centre for regional headquarters in a study which surveyed more than 8,000 international companies.
In the area of information technology, we are doing as well, if not better, than our general economic performance. Just a brief background for those who are new to Hong Kong. We launched the first IT strategy - Digital 21 - in November 1998. Its primary focus was to build capabilities and infrastructure to support a thriving information economy and to create a strong foundation for growth in IT uses.
After two years of implementation, we have now put in place the essential information infrastructure and elements for Hong Kong to develop as a leading digital city. Major milestones achieved include -
* increased telecommunications sector investment;
* an advanced telecommunications infrastructure with strong competition in price and service;
* development of a legislative framework for e-business and a local public key infrastructure that lays down the necessary infrastructure for e-business to flourish;
* improved public sector efficiency including the recent launching of the Electronic Service Delivery scheme to provide Government services online to the community;
* significant private sector innovation and a culture that thrives on the innovative e-business applications; and
* the creation of an improved image of Hong Kong as a leader in the information economy.
At present, one in every two households in Hong Kong has a computer, compared with one in three two years ago. More than one-third of our population are Internet users. They are served by over 220 Internet Service Providers.
Apart from the "wired" network, Hong Kong is also a leading user of wireless technologies. Our mobile phone penetration rate at 76% is amongst the highest in the world. There are over 6.8 million e-money smart cards in circulation for use in financial and transportation transactions. This is believed to be the highest smart card utilisation in the world. Leading-edge technologies such as 3G mobile communications, Digital Terrestrial TV and Next Generation Internet applications will come on stream in the near future, making Hong Kong one of the leading cities in exploiting technologies to drive economic growth.
In view of these factors, many overseas research firms are optimistic about our e-commerce potential. For example, Forrester has estimated that the e-commerce value of Hong Kong will grow from US$2 billion in 2000 to US$70 billion by 2004, one of the highest growth rates in the Asia Pacific region. The Economist Intelligence Unit has also ranked Hong Kong amongst the top 10 in the world with best e-commerce readiness.
But as everyone involved in IT knows, today's innovations are tomorrow's antiques - a phenomenon that drives the private sector and governments all over the world to develop new policies and initiatives to reap the full benefits of the Information Age. In light of this, we have recently reviewed our Digital 21 - taking stock of what we have done so far and identifying new areas to focus on for the future. We plan to launch the new strategy shortly. But I would like to briefly introduce to you the approach we took for the review and the key areas we would focus on in the new strategy.
Focus of the Revised Digital 21 Strategy
The new Digital 21 Strategy aims at capitalising on Hong Kong's early success in establishing a world class environment for the information economy and focuses on promoting further developments to improve the overall wealth, economic and social prosperity of Hong Kong. The key policy objective is -
"Building on Hong Kong's early success in establishing a solid foundation for e-business, Digital 21 will now strive to position Hong Kong as a leading e-business community and digital city in the global information economy".
Based on this, the new Digital 21 strategy has identified five new key result areas that we need to focus on in order to improve Hong Kong's competitiveness in the changing world of technology. The five areas are -
* enhance and maintain a favourable environment for e-business to flourish
* develop a skilled workforce for the information economy
* ensure the Government leads by example
* leverage Hong Kong's strengths to exploit enabling technologies; and
* strengthen the community for digital exploitation.
Key Result Areas
Maintaining and enhancing a favourable environment for e-business means that Hong Kong will continue to uphold the pillars of our success, including our free and open market policy, the rule of law, low and business-friendly taxes, a level playing field for business and the freedoms enshrined in the Basic Law, our constitution. In addition, we will ensure our hardware, such as telecommunications networks and external connectivity, as well as software, like our measures to facilitate e-commerce and the adoption of user-friendly licensing policies, are maintained and strengthened to keep in step with global IT development.
In nurturing a skilled workforce for the Information Age, we will formulate policies to ensure our manpower resources are well trained and are competent in IT skills. This will be achieved through a two-pronged approach - developing local talent and attracting overseas and Mainland professionals to come and work in Hong Kong.
The Hong Kong Government has also been taking a proactive approach in enhancing our e-culture by providing public services on-line through the Electronic Service Delivery scheme which was recently launched. Services like renewal of driving licence, submission of tax return and voter registration can all be provided online. We will further explore the possibility of expanding our on-line operations into areas such as e-procurement and other G2B and G2C transactions.
We will strive to become the leading city in exploiting enabling technologies. Hong Kong has been an early and successful user of advanced technologies in the past, such as interactive TV, video-on-demand, mobile telecommunications and smart card. In the years ahead, we will continue to adopt leading technologies to keep Hong Kong as a leading digital city. With our traditional role as a trading hub which matches demand and supply, new technologies tested in Hong Kong will easily find their way to target users not only here in Hong Kong, but in the rest of the region, for commercial application.
In line with this principle, we have just announced this week the licensing framework for Third Generation Mobile Services. There will be a prequalification process, followed by spectrum auctioning. This commits the applicants to providing a quality 3G network within a reasonable period of time. The spectrum auction that follows, unlike the more traditional auction of a dollar amount, will be based on a percentage of royalty on turnover. To minimise Government's risks, successful bidders need to pay a minimum, guaranteed payment. Auction by royalty achieves the following desired results :
* Telecoms operators face less financial burden, particularly upfront cost, in order to get a 3G licence;
* As a result, more investors may be attracted to the Hong Kong 3G market;
* The Government has a chance to share the upside gain of 3G business in the future.
One additional feature of our regulatory regime for 3G that is worth mentioning is our "Open network requirement". To encourage competition at the services and applications level, 3G network operators will need to lease at least 30% of capacity to non-affiliated service and content providers. We believe that an open network is what the consumers want and that content or application providers are encouraged to bring new innovation to an accessible 3G market.
Last but not least, we must strengthen our community for digital exploitation. We must safeguard against the emergence of digital divide. We have implemented a number of initiatives to promote the use of IT in the community, particularly for those people who have less opportunity to use the new technology in their daily life. For example, we are organising free training and awareness programmes for the elderly, housewives and the disabled. We will also continue to sustain their interests by organising IT related activities for them at neighbourhood level.
Ladies and gentlemen, Hong Kong has successfully built up an infrastructure that enables all kinds of new technologies to develop. Our economic policies are well recognised as the most user-friendly and freest in the world. The pillars of our success I mentioned earlier will be maintained and protected under the separate system that applies to Hong Kong as part of the 'one country, two systems' concept. Contracts will continue to be honoured and protected by law. Our legislation on arbitration is fully compliant with the spirit of the Convention on the Recognition and Enforcement of Foreign Arbitral Awards, or the "New York Convention". This makes us an ideal jurisdiction for concluding and implementing deals and contracts. We also have a robust regime for the protection of intellectual property rights. Our IP laws, which comply fully with WTO agreements, have been in place since 1996.
With all these favourable components in place, we are looking for 'kindred spirits' to capture the business opportunities arising from the Asian information revolution, in particular those arising from China's entry into the World Trade Organisation. Canada has long been our partner in the traditional trading regime. Our relationship has been further strengthened with the signing of a Memorandum of Understanding on information and communications technology in 1998. Since then, many successful partnerships have been formed, such as the joint venture between Hongkong Post and Entrust in developing digital certificates for secure mobile communication applications, and the software partnership of abc Multiactive Hong Kong. Canadian companies with expertise in developing innovative technologies like Mindquake has also come to establish operation in Hong Kong. Nortel has also strengthened its operation in Hong Kong by establishing a "Wireless Centre of Excellence", utilising our advanced external telecommunications network to provide round-the-clock engineering and technical support to its customers across Asia.
With our long-standing relationship in co-operation, I am convinced that Canada and Hong Kong can together create the synergy to leverage the development of the global digital economy to our mutual benefit.
Thank you.
End/Friday, February 16, 2001
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