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Following is a speech by the Secretary for Commerce, Industry and Technology, Mr John Tsang, at the opening of the 29th APEC Telecommunications and Information Working Group (APEC TEL 29) this morning (March 24) (English only):

Ms [Salma] Jalife [Chairman of APEC TEL], distinguished guests, ladies and gentlemen,

Good morning everyone, and welcome to Hong Kong, Asia's World City. It is my great pleasure to have you with us today for the 29th meeting of the APEC Telecommunications and Information Working Group. I hope that you will find it a fruitful and productive meeting, and that you will get a chance to get around our wonderful city savouring all the delightful sights and sounds. And don't forget to buy something for your loved ones at home.

It has been 10 years since we first hosted an APEC TEL meeting. Since 1994, the information and communication technology industry has blossomed. There has been tremendous growth, but there are also some major challenges. During the dotcom boom in the latter part of the 1990s, there was a great deal of hype and, to borrow a phrase from Alan Greenspan, a lot of what he called "irrational exuberance" that led to inflated equity prices, inflated expectations and, eventually, some seriously deflated bank balances.

The dotcom bubble finally burst at the turn of the century when people recognised that explosive equity growth did not necessarily translate into a profitable business model. The myth of the "new economy" precipitated economic stagnation, heightened uncertainty and market consolidation. A few years down the track we now begin to see glimmers of a recovery in the ICT sector, coupled with a reversal of the negative sentiment in the financial markets. Investments in ICT have started growing again and technology stock prices are edging upwards.

Despite the roller-coaster investment climate, the use of ICT continues to thrive. Between 1999-2002, a period that straddled the bursting of the dotcom bubble, the number of telephones lines increased by 21% to 1.1 billion lines. Growth in mobile phone users was even more startling. The world's mobile phone users grew by more than 130% to 1.15 billion during the same period, and for the first time, surpassed the number of fixed telephone lines in 2002. At the same time, Internet users surged by 120% and the number of PCs by 40%.

These developments reveal an irreversible trend in the increasing adoption of ICT. A trend that will not be stopped by the ups and downs of the economy, nor the booms and busts of the ICT market. However, it is equally clear that the potential of ICT has not yet been fully unleashed. May it be the stimulus for new economic growth that we had hoped for back in the 1990s, or the improvement of our living standards in a way that we have long aspired to. We still have not realised all the advantages yet.

Now, as the global economy and the ICT industry seem to be on a positive trend upwards, it is time for governments, industry and academia to rethink the challenges we all face in realising the maximum benefits of ICT. There are many issues we need to address, such as the digital divide and e-security, two areas that have occupied APEC TEL discussions.

Today, I would like to take this opportunity to share some thoughts on two other areas of particular relevance to Hong Kong, and probably to the home economies of many of you here today as well. I hope that I will be able to add some food for thought to your discussions.

The first challenge I would like to talk about is productivity growth and ICT. In an increasingly globalised environment, we must consistently sharpen our competitive edge or we will be left by the wayside. Here in Hong Kong we did not see this clearly until the bursting of an asset price bubble in 1997. Over the past six years of economic restructuring, we recognised that productivity enhancement will be a key driver to sustainable economic growth. ICT is obviously one area that we may leverage on and better harness to strengthen our business environment and create opportunities for productivity gains.

Governments are big establishments, and we have recognised that ICT has a key role to play in helping us achieve productivity gains in the public service. Since 1998, we have introduced a series of e-government programmes that have enabled us to offer better quality and more efficient and innovative services based on ICT. These services have also contributed to a more open, inclusive and personalised government.

At present, 90% of public services in Hong Kong amenable to electronic transactions are already covered by an e-option. Our present task is to deepen the e-government programme and focus more sharply on service quality and effectiveness. This we hope will not only help us to better serve residents but also lead by example on the use of ICT in the wider community.

I would like to add that improving productivity with ICT is not an easy job. We need to invest not only in the purchase of IT and telecommunications equipment, but also in re-engineering the business processes and improving the skills of workers. This requires strong leadership, unequivocal commitment and persistent efforts. Although this is a challenging and slow process, it is one that will produce tangible benefits.

The second challenge is the impact of rapid technological advancement. The ICT industry is characterised by extremely short product life cycles, and the constant emergence of new technologies. In front of us we already have a dizzying array of technologies - 3G mobile telephony and data services; digital broadcasting; and radio-frequency identification (RFID) technology. The relentless march of progress will undoubtedly continue.

To the ICT industry, the furious pace of technological change poses a major challenge to translate new technologies and applications into marketable and appealing products in good time. Business models need to be constantly tweaked or re-invented to meet both technological advances and changing customer needs. For governments, it means we must keep our policy and regulatory regimes flexible and updated to avoid stifling the development of innovative technologies.

An excellent example is the convergence of telecommunications, broadcasting and the Internet, which has prompted the United Kingdom to combine its five regulatory authorities into a single body, Ofcom. In Hong Kong, we are also reviewing whether we should merge our telecommunications and broadcasting regulators to best serve Hong Kong in this era of convergence.

Another example is the increasingly popular voice over IP service, and I notice that regulatory authorities are already keeping a close watch on its impact on their regulatory regimes.

Here in Hong Kong, we are aware of the need for a comprehensive, visionary and well-articulated ICT strategy to embrace the challenges ahead and harness the full potential of ICT. A few weeks ago, we released our updated Digital 21 Strategy, which was first published in 1998. Our aim is to sustain Hong Kong's position as a leading digital city in the globally connected world. We have mapped out actions in eight major areas to take Hong Kong forward in the information economy, namely: government leadership, sustainable e-government programme, infrastructure and business environment, institutional review, technological development, vibrant IT industry, human resources in a knowledge economy, and bridging the digital divide. Together, these will accelerate Hong Kong's transition to a knowledge-based economy, and provide a catalyst for economic growth and prosperity.

Ladies and gentlemen, in this age of globalisation, maximum benefits can only be achieved with the concerted efforts of all parties. We have, therefore, always valued the opportunity to work with other APEC members on issues of mutual interest. Since its establishment in 1990, APEC TEL has committed itself to improving the telecommunications information infrastructure, and to facilitate effective co-operation, free trade and investment and sustainable development in the region. It has already demonstrated its success through promoting liberalisation in investment and trade in the telecommunications markets, e-security, e-government, mutual recognition arrangement for the conformity assessment of telecommunications equipment and human capacity building. I look forward to even more co-operation opportunities at the APEC TEL 29 meeting.

Thank you very much and have a good day.

Ends/Wednesday, March 24, 2004

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