LCQ7: Digitalisation of trade documents
***************************************
Question:
In the 2025-26 Budget and the 2025 Policy Address, the Government announced that it would make reference to the Model Law on Electronic Transferable Records (MLETR) advocated by the United Nations Commission on International Trade Law and consider legislative amendments to facilitate the digitalisation of "Business-to-Business" (B2B) trade documents. In December 2025, the Government published a consultation paper proposing the addition of a new part to the Electronic Transactions Ordinance (Cap. 553), which would provide a legal basis for the use of B2B trade documents such as electronic bills of lading and bills of exchange. It is learnt that the full digitalisation of such documents is expected to generate net cost savings of approximately $34.9 billion for the industry between 2027 and 2036. In this connection, will the Government inform this Council:
(1) given the Government's proposal in the consultation paper to rely on the factors set out in MLETR without introducing a mandatory accreditation regime, and to allow the market to assess the reliability of trade documents based on industry practices and market needs, how the Government will ensure that, in the absence of official accreditation, small and medium-sized enterprises (SMEs) can demonstrate the validity of electronic trade documents in a simple and low-cost manner to address potential disputes that may arise;
(2) how the Government assesses the current level of digitalisation of cross-border trade documents between Hong Kong and the Mainland, and what plans are in place to further develop or enhance such digitalisation; and
(3) as there are views that the digitalisation of B2B trade documents involves relatively complex and novel technologies, such as encryption protocols and blockchain, which may impose technology costs on enterprises, whether the Government has corresponding support measures in place to assist SMEs in upgrading and transformation?
Reply:
President,
The Government is committed to maintaining an environment conducive to preserving and enhancing Hong Kong's competitiveness as an international trade centre. Digitalisation of "Business-to-Business" (B2B) trade documents may reduce processing time and costs, enhance transparency and integrity, and facilitate international trade. However, transactions involving certain B2B trade documents, including negotiable instruments such as bills of lading and promissory notes, still rely largely on paper-based means because of legal requirements and industry practice. As technology advances, the digitalisation of these documents has emerged as a new trend. We hope that the legislative proposal will empower the industry to develop technical solutions that suit their actual needs, thereby further enhancing Hong Kong's competitiveness as an international financial, maritime and trade centre.
The Government has earlier sought industry opinions on the proposed legislative framework for facilitating the digitalisation of B2B trade documents with reference to the Model Law on Electronic Transferable Records (MLETR) and the experience of common law jurisdictions that have enacted local legislation in line with the MLETR (primarily Singapore and the United Kingdom). The three-month consultation period has just concluded on March 27. We are carefully studying the views received and will maintain communication with the industry so that we may refine our proposal with a view to introducing the legislative proposal within 2026.
Regarding the question raised by Dr the Hon Hoey Simon Lee, having consulted the Innovation, Technology and Industry Bureau and the Hong Kong Monetary Authority (HKMA), our reply is as follows:
(1) The MLETR advocated by the United Nations Commission on International Trade Law aims to provide a legal framework to ensure that electronic transferable records (ETRs) would have the legal recognition equivalent to their paper-based counterparts, thereby facilitating the use of ETRs. The MLETR is functionality-oriented, ensuring that ETRs possess the necessary characteristics to attain their legal recognition and functionality, while upholding the principle of technology neutrality by not specifying which technology or platform to be used, thereby promoting cross-boundary interoperability.
The MLETR stipulates that a reliable method needs to be used in determining whether an ETR may be recognised as the paper-equivalent. In defining a "reliable method", the MLETR provisions provide a series of factors to be considered, such as the security of hardware and software, the ability to prevent unauthorised access, applicable industry standard, etc. At present, there is no uniform technical standard that exists internationally for the delivery and settlement of various B2B trade documents (e.g. electronic bills of lading). A more common approach is for each jurisdiction to provide a legal framework consistent with the international standards (including the MLETR) for electronic trade documents, thereby allowing the industry to develop relevant systems or platforms based on their actual needs. This approach provides the necessary flexibility to accommodate rapidly evolving technologies and business models for developing technical solutions that suit actual needs. In fact, other common law jurisdictions have not introduced a compulsory accreditation regime.
Notwithstanding that, we suggest adopting the "proven-in-fact" approach advocated in the MLETR to enhance legal certainty, whereby the reliability of a method that is proven to have achieved its intended function need not be assessed with reference to the standard of the factors-based assessment.
Among the industry views received, most respondents support the suggestion set out in the consultation paper to use the series of factors set out in the MLETR provisions and the aforementioned "proven-in-fact" method to consider whether a method is reliable, without introducing a compulsory accreditation regime. We will carefully study all views received and consider the way forward.
(2) The Chinese Mainland has been actively promoting trials and the application of electronic trade documents in recent years, including making amendments to the Maritime Code of the People's Republic of China (Maritime Code) in October 2025 with reference to the MLETR and relevant international conventions, thereby providing legal basis to transport documents such as electronic bills of lading. The amended Maritime Code will come into effect in May 2026. We may enhance the cross-boundary acceptability of the relevant documents with the Chinese Mainland upon Hong Kong's completion of the relevant legislative amendment.
In addition to legal compatibility, on the aspect of relevant trials, the HKMA launched Project Ensemble in March 2024. Through experimentations under the Ensemble Sandbox, it aims to enable industry participants to explore leveraging the blockchain technology to build innovative financial infrastructure. Relevant experimentations include applying the tokenisation technology on electronic bills of lading and tracking the flow of goods through blockchain, providing the basis for enhancing the level of digitalisation of trade documents across borders in practice. To promote further cross-boundary interoperability with the Chinese Mainland, the HKMA signed a Memorandum of Understanding with the Shanghai Data Bureau and the National Technology Innovation Center for Blockchain in March 2026, exploring cross-boundary financial co-operation under Project Ensemble including the use of electronic bills of lading, so as to promote digitalisation of trade documents and trade finance between the two places.
(3) The Government is dedicated to promoting the upgrading and transformation of small and medium enterprises (SMEs) and enhancing their competitiveness through various support measures. Since 2019, the Government has consolidated the four SME centres, namely the Support and Consultation Centre for SMEs under the Trade and Industry Department, the SME Centre under the Hong Kong Trade Development Council, the SME One under the Hong Kong Productivity Council (HKPC) and the TecONE under the Hong Kong Science and Technology Parks Corporation, to provide "four-in-one" integrated services, such that SMEs can receive consultation and referral services in any one of the aforementioned centres. The Government has also established the SME ReachOut, which is operated by the HKPC, in January 2020 to provide SMEs with capacity building services. Depending on the needs of SMEs, the SME ReachOut would provide one-on-one technology or business know-how consultation meetings, assisting SMEs in enhancing their capacities and leveraging new technologies to strengthen competitiveness. In addition, the HKPC through the one-stop digital transformation consultancy service provides enterprises with support on blockchain and its integration with other relevant emerging technologies. Such support covers areas such as blockchain-based system design, application development and security assessment. The HKPC's Hong Kong Computer Emergency Response Team issues advice from time to time about cybersecurity, data protection policy formulation, secure content management and secure account management. These services assist enterprises, based on their actual needs, in upgrading and transforming their operational processes in a progressive manner, supporting the digitalisation of B2B trade documents.
Ends/Wednesday, April 1, 2026
Issued at HKT 16:43
Issued at HKT 16:43
NNNN