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Following is a speech by the Secretary for Information Technology and Broadcasting, Mrs Carrie Yau, at the Federation of Hong Kong Industries Annual Dinner 2001 today (March 2):

Henry [Tang], members of the Federation, distinguished guests, ladies and gentlemen,

I am honoured to participate in the Federation's annual dinner today and to speak to such a distinguished gathering. I am conscious that I have a hard act to follow - last year the CE, the year before Professor Tien Chang-lin and back in 1998, the FS. But I promise one thing - I plan to keep my remarks reasonably brief. I believe in the old saying "a good speech is one with a good beginning and a good ending, which are kept very close together". I will try my best to meet the three criteria.

2. I would like to take the opportunity today to share with you some of my thoughts about the development of information technology (IT). As I see it, the emergence of IT has hit the entire world with the speed of a 'silver bullet' and its impact has been wider than anything we have seen before. It took some 38 years for radio broadcasting to reach an audience of 50 million, and 13 years for television. For Internet to reach the same number of users, it took only 48 months!

3. It has been estimated by market analysts that the total value of e-commerce transactions in Hong Kong will increase from US$2 billion in 2000 to US$70 billion by 2004 - one of the fastest growth rates in the Asia Pacific. The potential is enormous and it will constitute a major part of our future economy. While the recent bursting of the dot-com bubble may have changed the optimism of some towards the future development of e-commerce, if you look at the situation from another angle, isn't this no more than a consolidation of the e-commerce market which is a natural and inevitable phenomenon in the development of any newly emerged market?

4. The early dot-com fever which created an illusion that "bricks" could become "clicks" simply by putting up attractive websites, and adding an 'i' or 'e' to the companies' name, has gone. Blind optimism has now been replaced by realism and pragmatism. People now do understand that traditional business principles also apply to the New Economy. In other words, the keys to a sustainable business are still based on a good business model, quality products and services, and effective customer and market management. And these you all know far better than I do. And I look to you, members of the Federation, to actively adopt the use of IT in your business operation in order to enhance Hong Kong's overall competitiveness in the New Economy.

5. Indeed, we are now seeing a global trend for conventional bricks-and-mortar businesses to take a more realistic and promising approach by leveraging their competitive strengths in the cyber world. Some are utilising their traditional business base to capture the e-commerce opportunities on-line. One good example is the Stock Exchange of Hong Kong's new generation Automatic Ordering Matching and Execution System (AMS/3) which will provide the infrastructure for stock-trading online. And even the Jockey Club has gone into Internet betting as well. These show how traditional businesses can benefit from the advent in the use of IT.

6. And with the imminence of the accession of the Mainland China into the World Trade Organisation, it is all the more important that we should adequately equip ourselves so that we can fully benefit from the opening of the Mainland market. With our closed and special relationship with the Mainland, our experience in operation in the Mainland and our bilingual capability, Hong Kong is well positioned to take advantage from this historic opportunity, especially in areas like telecommunications and IT. But if we are not well equipped in the use of e-commerce, how can we expect to benefit from the e-commerce development in the Mainland which is expected to flourish with the opening up of its market.

7. So much about the Mainland. Back to the fundamentals in Hong Kong. As I have said, the potential for e-commerce development is huge with our excellent information infrastructure. More than 50% of our households and businesses have computers and over 70% of these have Internet connection. Our broadband coverage is 100% for commercial buildings and over 95% for domestic households. Mobile phone penetration rate is 76% which is the highest in the world. The critical mass is already here and I strongly urge you to join the 'e-volution' and 'log-on', it will open up a world of new connections and markets for you. The Government stands ready in the process to work hand in hand with you and help our industries reap the full benefits of the New Economy.

8. Henry has just mentioned a pertinent point about IT manpower supply. We fully recognise that a competent and adequate IT workforce is crucial to our future economic development in the digital world. There is now a gap between demand and supply which we need to address in order to sustain our development. That is why I have already set up a dedicated task force with the participation of Government departments, the business and IT sectors, and the academic and training institutions to focus on this important matter. We will announce our proposals very soon and we look to your support so that we can put these proposals in place as soon as possible.

9. But I would like to take this opportunity to raise two possible proposals with you. The first one seeks to increase the number of local IT professionals and the second to improve their quality. Firstly we cannot expect our universities to suddenly substantially increase the number of IT graduates overnight. We need to explore new sources. One possible option is for the industry to partner with prestigious overseas training institution to provide IT training courses in Hong Kong which are tailor-made for market needs. These courses should also lead to internationally recognised professional qualification which can help our employers readily ascertain the IT capability of the job candidates. This model is not entirely new since industry here has already partnered with local universities for this purpose, for example, Sun Wah Hi-Tech Group and Polytechnic University has set up a high quality IT training centre.

10. Secondly, with the development of the Internet, the entire world is now a global village and there is no geographical boundary to our market opportunities. We need people who have wide and international perspective, and who can help Hong Kong to compete in the international arena. The industry can indeed work with local academic institutions to introduce overseas internship programme and student exchange programme with reputable overseas training institutions so that Hong Kong IT students can have more opportunities to receive part of their training overseas, in an international environment. This will help widen their exposure. Upon return to Hong Kong, they would be a lot better equipped to help their employers compete in this global village. The Federation and other local chambers of commerce could help spearhead this by providing scholarships or sponsorships.

11. So both initiatives need the support of the industry and I look to the Federation partnering with the Government to take these initiatives forward.

12. Finally, ladies and gentlemen, I would like to take this opportunity to congratulate the Federation for what it has achieved over the past four decades in driving the development of our economy. Under the leadership of Henry, I have no doubt that the Federation will have an even more crucial role to play for Hong Kong in this new Information Age. Thank you.

End/Friday, March 2, 2001

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