Speech by Mrs Jessie Ting, Deputy Secretary for Information Technology and Broadcasting at Onyx Software - CEO Power Breakfast on eBusiness

7 December 1999

Mr Frei, Mr McPherson, Mr Cheng, ladies and gentlemen,

It gives me great pleasure to join you this morning to share my thoughts on the development of e-commerce in Hong Kong, its significance to Hong Kong's continued economic growth, and what action the HKSAR Government is taking to provide a favourable environment for e-commerce to flourish here.

The most visible form of e-commerce today is, without doubt, retail business on the Internet, with household names like Amazon.com. But the bulk of e-commerce activities are invisible to consumers, going on behind the scene among businesses. Apart from communicating with their business partners via e-mails, companies are increasingly taking to the Internet to perform various operational tasks and processes such as collecting market and sales information, inventory control through direct links with suppliers, obtaining and providing quotations, tracking shipments, etc.

E-commerce has transformed the way business is conducted by reducing costs, streamlining the supply chain, and enhancing efficiency and productivity. This has led to improvements in overall competitiveness. For instance, a retail outlet running low on a particular merchandise will have the replenished items delivered from thousands of miles away without having to make a phone call or send a fax because the supplier's computers are able to detect the reduction in inventory level automatically through electronic linkage. To quote another example, sourcing of suppliers (especially overseas ones) has until the advent of the Internet presented a particular challenge to companies with limited capital outlay and a small team. Now, potential suppliers who are able to deliver products or services at the right price at the right time are only a click away. E-commerce has opened up new opportunities for businesses. In the Internet age, it does not matter where you are located as long as you are on-line. According to a recent industry study, the cost savings globally through business use of e-commerce amounted to US$17 billion last year. That figure is expected to increase to US$1.25 trillion by 2002.

The emergence of the Internet and e-commerce has globalised the world economy. This means more intense competition for individual businesses whose markets and potential competitors are no longer confined to one or two locations. The companies in Hong Kong are facing the same challenge as the rest of world. To maintain their competitive edge, local businesses are coming to grips with this new wave of economic transformation. John Chambers, CEO of Cisco Systems, has said that in e-commerce, "the big won't beat the small - but the fast will beat the slow". This observation offers considerable encouragement to the small and medium sized enterprises (SMEs) in Hong Kong, which constitute over 98% of our businesses.

Recognising the importance of e-commerce in driving our future economic growth, the HKSAR Government has made firm commitments to providing a favourable environment for e-commerce to develop and thrive in Hong Kong. Let me outline some of the initiatives undertaken by Government in this regard.

One of the key concerns about conducting transactions over the Internet is security. E-commerce will not take off for as long as the community perceives the Internet to be insecure. To allay this concern, Government is working to provide a safe and secure environment for the conduct of e-commerce through the establishment of a local public key infrastructure supported by certification authorities. With the use of digital signature and public/private key technology, we will be able to authenticate the identity of the parties to an electronic transaction, ascertain the integrity and confidentiality of the messages exchanged and ensure that the transactions made with these messages cannot be repudiated. Government will take the lead in establishing a public certification authority through the Hongkong Post, which plans to offer public certification services to both businesses and individuals early next year.

We will also develop a clear legal framework to enhance certainty in the conduct of electronic transactions. In July this year, we introduced an Electronic Transactions Bill into the Legislative Council. This Bill seeks to give electronic records and digital signatures used in electronic transactions the same legal status as that of their paper-based counterparts. It also seeks to establish a framework which promotes and facilitates the operation of certification authorities in Hong Kong. This new piece of legislation is being examined by a Bills Committee in our legislature. We expect the Bill to be enacted in early January.

To further encourage the public to engage in e-commerce, Government will become a leading participant in electronic transactions through the launching of the Electronic Service Delivery (ESD) Scheme. Under the Scheme, we will provide Government services to the public over the Internet and through other electronic means via an open and common information infrastructure. The services, to be provided in a citizen-centric and seamless manner, will be available 24 hours a day, 7 days a week. Our objective is not only to provide more efficient and better quality services to the community, but also to encourage the community to accept e-commerce as an integral part of their daily lives. The open and common information infrastructure to be developed for the Scheme will be made available to businesses for the conduct of e-commerce in the private sector. As such, the ESD Scheme will serve as a catalyst to pump-prime the development of e-commerce in Hong Kong. We awarded the contract for the provision of ESD system last month and the first phase of the Scheme will be launched in October 2000.

In parallel, with the needs of our SMEs in mind, we are working with various trade and industry support bodies organisations to enhance public awareness of the importance of e-commerce through a variety of promotional and publicity activities. We also encourage these bodies to provide practical and affordable solution packages to help local SMEs to switch to e-commerce. For instance, the Hong Kong Productivity Council is developing a web-based e-commerce solution package, which will enable SMEs to carry out various back-end operations and information management functions like confirmation of sales, issue of invoice and placing of orders with suppliers, etc with ease.

The development of e-commerce is an irreversible global trend. It is not a question of whether to join the club, but of how fast we can race to the forefront of this business development. For Hong Kong to maintain its pre-eminent position in the global trading community, local companies will need to learn this new language of doing business quickly and master it. We look to you, the decision-makers for local businesses - to work together with the Government to ensure that Hong Kong will reap the enormous benefits brought about by e-commerce.

Thank you.

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