Government commits to promote electronic transactions

March 24, 1999

The fast development of the Internet in the past few years has provided new opportunities for businesses, according to Mr K C Kwong, Secretary for Information Technology and Broadcasting.

Addressing a dinner meeting of the Business Week CIO Forum this (Wednesday) evening, Mr Kwong enumerated some of these opportunities which include :

- with electronic commerce on the Internet, expansion of sales activities can be achieved by simply expanding the capacity of the server network which is often much cheaper and more flexible than the employment of additional sales personnel;

- linking purchasing information directly between customers and suppliers via the Internet can reduce unproductive inventory held at the wholesale and retail levels;

- putting information on product descriptions, support services or order status on line can provide more efficient and focused services to customers; and

- through electronic commerce conducted over the Internet, one can reach new markets which may be too costly to explore through conventional means.

However, he said, for a business to feel comfortable about using the Internet in transactions with its suppliers and customers, it needs to be sure of the identity of the other party to the transaction, and that any agreements made electronically are binding.

The solution is for a safe and secure environment to be created for the conduct of electronic commerce, he said.

"We have therefore decided that the Government should take the lead in establishing a local public key infrastructure and a root certification authority in Hong Kong.

"Through the use of digital signatures accompanied by properly issued digital certificates and encryption using public/private key pairs enabled under the public key infrastructure, a business will be able to establish the identity of the parties to an electronic transaction, authenticate the electronic messages so transmitted, guarantee the integrity and confidentiality of the messages and ensure that they cannot be repudiated," he added.

The Hongkong Post has been tasked with the establishment of the public key infrastructure and its certification service should be up and running by the end of this year.

In parallel, Mr Kwong continued, the Government is preparing legislation to prescribe that electronic records will have the same legal status as their paper-based counterparts. It will also provide for the voluntary registration of certification authorities and the legal recognition of digital signatures accompanied by certificates issued by these registered authorities.

The Bill for this legal framework will be introduced into the Legislative Council within the next quarter, he said.

To encourage the community to engage in electronic commerce, the Government will take the lead to provide Government services on line over the Internet under the Electronic Service Delivery scheme (ESD).

Mr Kwong explained, "The purpose is twofold. On the one hand, we wish to improve the delivery of Government services by making it possible for members of the public to transact business with Government electronically round the clock, using various electronic means, including their PCs at home or in the office, interactive TV, interactive public pay phones and the like.

"On the other, we want to use ESD to drive the development of electronic commerce. Through ESD, we aim to establish an open and common platform which would serve not just our own needs, but also the needs of the private sector in carrying out electronic commerce."

He believed that with the support of the necessary public key infrastructure and legislative framework, the use of ESD would help to promote general awareness in and acceptance of electronic transactions in the community.

"This will in turn spur the development of more electronic commerce, in both variety and volume, in Hong Kong," he said, noting that the first phase of ESD would be implemented by the latter half of 2000.

- END -