Luncheon Speech by Mr K H Lau, Director of Information Technology Services at the Faculty of Engineering Distinguished Lecture of The University of Hong Kong on 27 - 4 - 1999

Dr Cheung, Prof Wu, Dr Barrett, Ladies and Gentlemen,

Let us first take a look at the Internet-enabled environment in which businesses operate today. Internet users worldwide had grown from 40 million in 1996 to more than 100 million in 1997, and are expected to increase further to 150 million in 1999. It has been forecast that the number of computers with Internet connection will rise to 1 billion in six years' time. Internet traffic doubles every 100 days. For the last Christmas, on-line purchases in the US totalled US$2.8 billion, compared with US$1.1 billion in 1997. Analysts are forecasting total electronic transactions, covering both business-to-business and retail transactions, of over US$400 billion by 2002. This growth rate is 40 times that of the global GDP.

How does Hong Kong fare, compared with our regional or global competitors? Are we ready to join the e-commerce club? The answer is YES. We now have more than 1 million Internet users and over 130 Internet service providers. There is already in place a world-class telecommunications infrastructure over which Internet traffic flows and our broadband coverage is fast expanding.

Electronic commerce is a versatile tool with which businesses can explore new frontiers in the global market. Whether or not to adopt electronic commerce is entirely a business decision. But Government can play an important role in providing the necessary infrastructure and environment to facilitate this decision-making process. In the "Digital 21" IT Strategy for the HKSAR published last November, we have set out a number of initiatives to help develop Hong Kong into an e-commerce hub.

To demonstrate the benefits and cost-effectiveness of electronic transactions, Government has decided to take the lead by launching the Electronic Service Delivery scheme, or ESD in short. Under this scheme, public services will be available round the clock at no extra charge to the users. We envisage that the infrastructure developed for ESD will at a later stage be made available to the private sector for the conduct of electronic commerce. We have received six tenders for the supply of the ESD system and are now in the process of evaluating these tenders. The ESD contract is expected to be awarded later this year. We aim to launch the first phase of the scheme, which covers a variety of services provided by 10 government departments and public agencies, in the latter half of 2000. In preparing for the implementation of the ESD, we are concurrently looking into a number of related issues with a view to providing a favourable environment for the scheme to take hold. This will also provide a sound foundation for electronic commerce to develop in Hong Kong. These issues are the establishment of a public key infrastructure, the provision of a clear legal framework for electronic transactions, and the development of a common Chinese language interface. Let us look at these issues one by one.

Concerns about the security of transactions conducted over open networks have often been cited as the reason for shunning from electronic commerce. To address these concerns, Government will establish a public key infrastructure in Hong Kong with the assistance of the Hongkong Post, which will start providing a public certification service by the end of this year. In its recent tender for the design, development and implementation of a public key infrastructure system, Hongkong Post has received thirteen bids from a broad range of renowned companies in this field. I should mention that we do not intend to impose a ceiling on the number of certification authorities to be set up in Hong Kong and will leave this entirely to the market.

On the development of a clear legal framework, our objective is to provide certainty in the conduct of electronic commerce by giving the same legal status to electronic records and digital signatures as their paper-based counterparts. We also seek to provide legal backing for the operation of certification authorities in Hong Kong. We shall shortly introduce an Electronic Transactions Bill into the Legislative Council to establish this legal framework.

For electronic commerce to flourish in Hong Kong and to reach out to all potential customers, we must cater for those who prefer to communicate electronically in Chinese. This points to the need to resolve problems arising from the use of different internal coding systems in different Chinese-speaking communities. Government takes an active part in the ongoing discussions in the International Standards Organisation on the development of a new "10646" standard, which is intended to encompass all written scripts, including the "Han" characters in various Asian languages.

On the publicity front, we shall work closely with other organisations, such as chambers of commerce, the Hong Kong Productivity Council and the Hong Kong Trade Development Council, to encourage the private sector, especially SMEs, to adopt electronic commerce. For instance, in the Hong Kong Information Infrastructure Expo 1999 held jointly by the Information Technology and Broadcasting Bureau and the Hong Kong Trade Development Council in March this year, we set up a "Government On-line" pavilion to showcase public services currently available on-line as well as simulations of ESD services which will be on offer next year. A record number of some 78,000 people visited the Expo. We are also much encouraged by the overwhelming response to the "Interactive Government Services Directory " launched on 11 March this year. We shall continue our efforts in this respect so as to foster interest in the business potentials offered by electronic commerce and to give the public a better appreciation of the convenience of electronic commerce.

I hope the foregoing has given you a picture of the Government's role in promoting the development of e-commerce in the HKSAR. We shall do all we can to provide a conducive environment for private sector businesses to stay ahead in the fast expanding global market.

Thank you.

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