The PECC Asia Pacific IT Summit (19-20 November 1998, Santa Clara)
Speech by Mrs Jessie Ting, Deputy Secretary for Information Technology and Broadcasting
"Hong Kong's Growth Strategy in the Information Age"

20 November 1998

Ladies and gentlemen,

It is my pleasure today to share with you my observations on the challenges and opportunities in the information age and how Hong Kong responds to the new circumstances to achieve sustained growth well into the future.

Many of the distinguished speakers yesterday touched on the distinctive features of the digital age that we are in. With the benefit of their insightful comments, I would suggest that this brave new world is typified by the ever expanding cyber space, global connectivity by digital networks and the convergence of the media.

Today, more than 100 million people worldwide are using the Internet. But this is only a fraction of those who are thronging to join this connected society. Traffic on the Internet has been doubling every 100 days. And according to recent industry estimates, global purchases through the Internet will increase to US$350 billion by 2002.

As the trend of digitalisation marches on, the significance of physical distance and time difference diminishes. What used to be separate markets now merge into a single global marketplace. Never before have we come across such exciting opportunities and challenges. The ability to make the optimum use of IT will be the key to maintaining our competitiveness.

Information technology has brought sweeping changes to the way we run our lives. The driving force behind all these changes is the digital convergence. With the convergence of information technology, telecommunications and broadcasting, formerly disparate networks can now do essentially the same thing - transmit all forms of data, be it voice, texts or multi-media, at high speed. As a result, any information can be accessed on demand through a multitude of access devices.

Against this background, where does Hong Kong stand? How can we grasp the new opportunities? Does Hong Kong continue to have an edge over our regional and global competitors?

The answer is a resounding yes.

Hong Kong has an excellent communications backbone. Our telecommunications network, which is the cornerstone for the digital world, is one of the most advanced in the world. Our fixed telecommunications network has been fully digitalised since 1995. We now have 3.6 million exchange lines serving the entire population, or about 108 exchange lines per 100 households. That is one of the highest in Asia. Our broadband coverage for households and businesses is expanding rapidly and is set to reach 70% by next summer.

In terms of IT usage, we also have a pretty impressive record. The number of Internet users in Hong Kong has been increasing at a staggering rate of some 30% every six months. There are now about 640 000 Internet subscription accounts and for every hundred people, 12 are Internet users. The PC home penetration rate is 34%, which compares very favourably with that in other countries advanced in IT.

Hong Kong is therefore well positioned to ride on the digital revolution. But that is not all. We have distinctive comparative advantages which are not available to many of our competitors.

First, language. Hong Kong is a bilingual city. where both English and Chinese are used. So, we are able to communicate with and obtain information from most regions of the digital world where English is the lingua franca. On the other hand, we can use Chinese to promote and develop Chinese content for the web, to cooperate with other Chinese communities, and to act as the digital intermediary between the Mainland of China and other parts of the world. Hong Kong also has an edge over its competitors in terms of culture and institutional arrangements. Hong Kong has a free and market-based economy where there is free flow of information. The community can freely co-operate and make association with any other place in the world. Hong Kong is also a cosmopolitan city which accepts different cultures. We are quick to assimilate the latest knowledge and technology.

In both of his policy addresses to date, our Chief Executive Mr TUNG Chee Hua affirms the strategic importance of information technology in the future development of Hong Kong. In his inaugural Policy Address, he pledged to make Hong Kong a leader, not a follower, in the information world of tomorrow. In his second Policy Address delivered last month, Mr Tung looks to IT as the guiding light to help Hong Kong to retain its competitive edge and to drive its overall economic expansion.

Time does not allow me to elaborate on the full range of IT initiatives we have embarked on to realise our Chief Executive's vision. I shall focus on four areas to which we have devoted particular attention in order that Hong Kong will stay competitive in the cyber age.

Connnectivity and access

Connectivity and access are the entry ticket to the globally connected community. I mentioned earlier that Hong Kong had an excellent physical communications infrastructure. But there is no place for complacence. We have recently proposed to introduce even more competition into the telecommunications market as a means to promote more extensive network roll-out, greater innovation and wider choices for the consumers at lower prices. As a first step in that direction, we have decided to completely open the market for the provision of external telecommunication services from January 1999.

In parallel, we have also proposed opening up the existing cable television network so that its full potential for delivering multi-media and telecommunication services can be realized. We have also proposed that the telecommunication networks be allowed to deliver multi-media and other electronic services.

The objectives of all these proposals are to encourage optimal use of the existing networks as well as to promote the development of new applications and innovative content in all forms of media. As we progressively open up our telecommunications and television markets, we ensure that sound competition safeguards are in place to enable all market players to compete on a level playing field. To further enhance Hong Kong's external communications links, we are now pressing full steam ahead with the development of a world-class teleport for satellite uplink and downlink services. The first phase of this teleport will be ready for use in early 2000 to coincide with the scheduled liberalisation of our external telecommunications facilities market.

Development of E-commerce

Turning now to the development of electronic commerce in Hong Kong. E-commerce has long been identified as the engine to drive future economic growth. To encourage the further development of electronic commerce, we consider it important that the government provides a supportive environment. To that end, the government will take the lead and deliver its services on-line under our Electronic Service Delivery (or ESD) initiative. Through ESD, the public will be able to transact business with Government online and in a seamless manner by means of Internet, telephone, interactive TV or other electronic means of access.

In the process of implementing ESD, we aim to identify and remove any impediments which might hamper the development of on-line service delivery. For example, we will address the fundamental questions of security, authentication and payments. To this end, we shall establish a local Certification Authority within next year. We shall also establish a clear legal framework in order to provide certainty in the conduct of electronic transactions. The framework will cover issues such as legal recognition of data messages and electronic signatures, as well as the establishment of certification authorities.

Taking a broader perspective, we see huge potential in Hong Kong developing into an information and electronic commerce gateway to the Mainland of China. With our excellent telecommunications network, our unique geographical position vis- ?-vis the Mainland of China, our ability to meet the specific needs of Mainland businesses through long years of partnership and our capability to provide Chinese and English support, Hong Kong has an unparalleled advantage in assuming this new role.

Investment in the human capital

To achieve sustained growth in this new knowledge era, it is crucial that Hong Kong continues to have ample manpower resources conversant with the latest technologies and capable of keeping up with the rapid advances in technological development. This underlines the importance of investing in our human capital. We already accord top priority to education in our annual budget. Following an earlier public consultation exercise, we shall shortly announce our 5-year strategy for IT in education. The strategy aims to harness the power of IT to enable our students to get the most out of their school education and to prepare them for the new demands in the cyber age. We shall learn from experience elsewhere in the application of IT to teaching and learning to help our young generations to develop a creative and inquisitive mind and to encourage independent lifelong learning. In addition, we have plans to build up a network infrastructure to facilitate sharing of educational resources and communications within the education sector and between the education sector and the community at large.

We are also planning a consultancy study on the manpower and training needs of our IT industry. The study will assess the existing manpower supply and demand, identify any mismatch between the two, compare our position with that of our competitors and draw up recommendations for a long-term strategy for IT manpower planning and training.

Development of the local IT industry

If Hong Kong is not to trail after others, we need to build up our own IT industry. We have adopted a vigorous outsourcing strategy for the provision of IT services within Government. Our objective is to create a market of sufficient size to encourage the development of and further investment in the IT industry.

We shall continue to provide support services to the IT industry, in particular, by encouraging R&D activities in leading edge technologies through a range of funding schemes and various supporting facilities such as the Hong Kong Productivity Council and the Hong Kong Industrial Technology Centre.

In order to keep ourselves in the forefront of IT development, and to make the best use of the ever advancing information and communications technology, we need to forge a closer relationship between academia and industry. The industry will need to have a better understanding of the research resources available in the universities and, at the same time, the universities will need to have a sharper awareness of the industry's needs. We shall do what we can to make this happen so that we can reap the full benefit of this partnership.

If my brief introduction to Hong Kong's latest strategy for growth in the information age has whetted your appetite, I would urge you to visit my bureau's web site (http://www.info.gov.hk/itbb/index.htm) where you can learn more about our IT strategy.

Thank you.

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