Press Release
 
 

 Email this articleGovernment Homepage

Speech by SITB (English only)

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

Following is speech by the Secretary for Information Technology and Broadcasting, Mrs Carrie Yau, at the Century 21 Club Luncheon today (September 26):

Exploiting Technologies for Our Future

Mr Ito, Ladies and Gentlemen,

Thank you for inviting me to the luncheon today. I feel most honoured to address such a distinguished gathering of top management businessmen from leading Japanese companies in Hong Kong. It also gives me great pleasure to be here with members of a club which has shown a long-term interest in Hong Kong development.

I understand that Century 21 Club's interest in Hong Kong dated back to the pre-unification period. The Club's predecessor, the 97 Japanese Business Committee, was formed in 1992 by a group of top management leaders from Japanese companies which were determined to participate in Hong Kong business in the long run. The interest in Hong Kong continued after our reunification with China in 1997 through the present incarnation, the Century 21 Club. It has been more than four years since the handover. You have seen, here in Hong Kong, for yourselves first hand the successful implementation of the one country two systems concept. Anything more I say on this will be superfluous.

Your interest in Hong Kong is a natural development, given the close trade and economic relations between Japan and Hong Kong. Japan is Hong Kong's third largest trading partner, while Hong Kong is Japan's sixth largest. Japan also has substantial investment in Hong Kong. Indeed, Hong Kong is Japan's second most important investment destination in Asia. As you may already know, the major traded items between Japan and Hong Kong are electrical and electronic equipment, telecommunications equipment, office machines and data processing machines. Many IT-related companies have presence here, including NEC, Sony, Toshiba, Sharp, Fujitsu and Canon, just to name a few. Some of them also have set up design centres here, such as Fujitsu and NEC.

While Japan is certainly more advanced than Hong Kong as a technology producer, we in Hong Kong are good technology users. With the implementation of our Digital 21 IT Strategy, we have achieved a robust record of technology deployment and application. Let me cite you a few examples -

a) we have a household computer penetration rate of 60%;

b) nearly half of the population are already internet users;

c) we have a mobile penetration rate of 83%, one of the highest in the world;

d) there are more than seven million e-money smart cards in circulation in the market, more than enough for one per person on average. I trust you would all be familiar with our Octopus card which is in fact using Sony technology - a clear case of Japan - Hong Kong technology co-operation. Not only can the card be used for paying fees for various types of transportation, it is now also branching into retail payment transactions.

All these, in essence, means enrichment of our daily lives, transforming business operation, and driving Hong Kong's development as a leading digital city in the region.

Today, I would like to focus on three areas. The first one is where Japan is leading and has a competitive edge while Hong Kong is a good user with great potential to be a producer as well as a content provider, and that is, digital entertainment. The second area is the third-generation mobile services auction held last week, which I know I will not be able to get away from this luncheon without talking about. The third area is Japan-Hong Kong co-operation in the IT field.

Digital Entertainment

First, on digital entertainment. Digital entertainment in general refers to entertainment that involves the use of digital technologies such as computer graphics and interactive techniques. The most common form of digital entertainment is games played in arcades and game rooms, and games played via television, computer or the Internet. Edu-tainment software and traditional forms of entertainment like films, television programmes and animations that employ digital technologies in the production process can also be regarded as digital entertainment.

The digital entertainment industry is growing fast all over the world. Focusing on the games sector alone, it is estimated that around half of the Japanese households, one third of the American ones and one fifth of the British ones have at least one game console of some kind at home. The global game business is estimated to be worth US$20 billion a year. Japan is a leading player in the game industry. This can be exemplified by the fact that many of us in Hong Kong have grown up with one of the game consoles of Sega or Sony at home.

No doubt digital entertainment is getting popular in Hong Kong. But we are not merely a user. We also have good potential to become a producer and a content provider in the area of digital entertainment. In the 1998 Policy Address, the Chief Executive emphasized that Hong Kong should position itself to be a regional centre for multi-media based information and entertainment services. The digital entertainment industry is both technology driven and manpower intensive. It requires skills and creativity. Hong Kong, with our advanced telecommunications infrastructure and a dynamic and innovative workforce, has the necessary ingredients in place for riding on this fast evolving digital entertainment wave.

The progressive liberalization of our telecommunications market for both fixed and wireless access in recent years has encouraged significant private sector investment. We now have an advanced telecommunications infrastructure with strong price and service competition. Our broadband coverage reaches practically all commercial buildings and over 95% of our households. With over 2.6 million Internet accounts in Hong Kong and about half of our households connected to the Internet, online entertainment has good potential in Hong Kong. In particular, Internet games have become very popular and we have seen a steady increase in the number of Internet cafes in the past few months.

Apart from our telecommunications infrastructure, we also have creative talents to meet the manpower-intensive demands of the industry. There are at present around 30 computer graphics production houses in Hong Kong with some 600 animators. Their creative work has received high recognition both locally and in the region. A leading local digital effects production house, Menford, has partnered with one of Japan's top international producers to produce high quality animation for TV commercials and electronic games. Their project "AC Water-man" won the Grand Prize of the Japan International Advertising Association Award.

In 1998, the Hong Kong film "Stormriders" stunned the audience with its digital visual effects produced by a local company, Centro Digital Pictures. The film became a box-office success and went on to win the 1998 Golden Horse Award for Best Visual Effects in Taiwan. "Shaolin Soccer", the film with the top local box-office receipts of over $60 million in Hong Kong this summer, innovatively employed extensive digital visual effects to blend traditional Chinese martial arts and soccer into an interesting story.

Recently, some of our creative talents have ventured beyond the traditional application of digital technologies in advertising and films to the production of computer games and edu-tainment software. For example, Centro Digital Pictures has recently collaborated with Sony Computer Entertainment to produce the first Chinese Playstation game, based on a Chinese martial arts fiction.

Our enterprises do not confine their ventures to Hong Kong locally. A leading telecommunications and IT company in Hong Kong, Pacific Century Cyberworks, has positioned itself to become the leading broadband Internet technology, infrastructure and media company in Japan as well. It has acquired a game software developer, Jaleco, and an online game provider, VR, to develop interactive games, which, together with other acquired content, will be distributed via multiple platfoms, including the Internet, mobile phones and satellite broadcasting. It has also formed a joint venture with another leading media company in Japan to develop content for web TV.

This is a snapshot of where we stand now on digital entertainment. The Government will continue to foster a favourable environment and implement new initiatives to support the further development of the industry. On the infrastructure side, our initiatives include the development of the Cyberport which is an information infrastructure for companies specialising in IT applications, information services and multimedia content creation. We also have the development of a major film production centre in Tseung Kwan O with private sector investment of over HK$1 billion which will provide, inter alia, state-of-the-art digital film production facilities. Hong Kong will also be connected to the international Internet2 network soon which will allow research and development on fast-speed electronic link that will help spur the development of digital content. Digital terrestrial television will soon be launched and our cable television network will also become digitalised. To help increase the supply of quality manpower to the digital entertainment industry, we have put in place a scheme to provide financial assistance to employers for training their staff in new technology. We will also launch a pilot funding scheme to support local students to pursue post-secondary programmes on creative media outside Hong Kong. In addition, we also have various funding schemes to support and promote research and development in, among other subjects, digital entertainment.

Third-Generation Mobile Services

I would now like to turn to third-generation mobile services. For an audience that comes from a country which is a leading player in the telecommunications sector and will launch the first 3G commercial service in the world next month, I need not delve into details about what exactly 3G is about. But just let me say a few words on the background before going to the 3G bidding exercise held in Hong Kong last week.

3G revolutionises mobile communications by breaking previous limitations of simple voice or text-based communications and extending to high speed Internet-based activities, such as a greater capability for surfing the Internet and making video calls on phone. 3G provides a brand new platform to allow more innovative contents and applications, such as wireless gaming and online music download services through mobile Internet services. According to Newsbytes, the worldwide wireless gaming market will grow 18 times from now to 2006. Another survey by Jupiter Media Metrix indicates that the Japanese market for digital music will grow from US$9.6 million to US$800 million in 2006. With the recent global economic downturn, operators, investors and financiers no doubt are re-thinking and reviewing their business case for 3G. This is a healthy phenomenon for the future development of the telecommunications industry. But investments in 3G are long term investments. And the development of value-added killer applications which customers are willing to pay for is, I am sure, the million dollar question now in the minds of all 3G operators.

Indeed, Hong Kong is well placed to reap the fullest benefits of 3G in future. Our current airtime charges at as low as HK$ 20 cents (or US$2.5 cents) a minute are very reasonable, and indeed, "too" reasonable according to our mobile phone operators. Competitive prices and quality services have spurred our mobile penetration rate to 83%, as I mentioned earlier. And these are sophisticated mobile users who are always willing to test out new services and applications. Value added services such as mobile banking, placing of bets on horse racing and stock transactions using the mobile handsets are already available in Hong Kong. A customer culture which is receptive to innovation in places like Japan and Hong Kong does provide huge business potential for network operators, service and content providers as we enter into the 3G world.

As many of you may be know, we have announced the four successful 3G bidders last week. They are incumbent 2G operators, and their shareholders include various foreign investors, including Japanese partnership. Under our innovative design, the successful bidders will each pay 5% of their network turnover, subject to an annual minimum payment of HK$50 million (or US$6.4 million) for the first five years and rising minimum payment from year six onwards. We believe that this unprecedented design will ease the financial burden of the operators as they do not have to pay a huge upfront licence fee, and at the same time represents an efficient, fair and transparent way of awarding four licences. I welcome the result of the exercise as both the number of licences and the price have been determined by the market. I am therefore pleased to say that we have achieved our objectives.

The 3G licensing exercise marks the beginning of the new era of cutting edge 3G services and content to our consumers. Some people may say that the response to the bidding exercise was lukewarm as only four bidders had shown interest. But we must not miss the crucial point that we have introduced an open access regime whereby 3G licensees must make available at least 30 per cent of their network capacity to Mobile Virtual Network Operators and content providers. Others in the market can participate in providing 3G services through this avenue instead of operating as a licence holder. This will introduce more competition at the content and service application level and will enhance consumers' interest. Our small and innovative enterprises, in particular, have great potential in the content and service application business which is necessary to support the development of mobile commerce.

Japan, which has a leading edge in mobile applications, Internet-based applications and multi-media content development, will be able to take advantage of the launch of 3G service in Hong Kong and the expanding local digital entertainment market. This brings me to the third area which is Japan-Hong Kong co-operation to exploit technologies for the benefits of the two economies.

Japan-Hong Kong Cooperation

I am pleased to tell you that we are moving quickly in this direction. Apart from the various collaboration examples I have cited earlier in my speech, frequent exchanges take place which lay a strong foundation for further cooperation. To cite a few examples -

a) I recently met with Dr Tsutomu Kanai, Board Chairman and Director of Hitachi, and his team to discuss how we could together drive the development of public key infrastructure in the region and the establishment of an Asia PKI Forum;

b) the Hong Kong Postmaster General, who heads the Hongkong Post certification authority, visited Japan afterwards to discuss the preparatory work for the establishment of the Asia PKI Forum;

c) the Asia PKI Forum was formed recently and Hong Kong has participated in this Japan-initiated activity to promote the conduct of secure e-business in the region; and

d) I also met recently with an IT Research Mission from the House of Councillors of Japan which was lead by Mr Hiroshige Seko to visit Hong Kong to look at our E-government initiatives.

All these exchanges will greatly facilitate the cooperation between businesses in Japan and Hong Kong to exploit technologies together and to establish partnership.

And I look forward to opportunities like our meeting today which will enhance the understanding of the Japanese community about the development in Hong Kong, which will no doubt further help drive the exchange and cooperation between the two places, benefiting our future economic development. Thank you.

End/Wednesday, September 26, 2001

NNNN


Email this article