Speech by Mr Simon Yan, Assistant Director of Information Technology Services at the Hong Kong Institute of Vocational Education on 5 - 11 - 1999

Ladies and Gentlemen:

Thank you for giving me the opportunity to share with you the Government's Information Technology (IT) strategy for the Hong Kong SAR.

The Vocational Training Council has made significant contribution in developing a competent workforce to meet the demand in this new information age. Some of our staff members at ITSD had attended your courses and they had very positive feedback on those courses.

I hope the discussion today will inspire your thinking in the changing skills requirement of the workforce in Hong Kong and help you in planning future curriculum.

The SAR Government is committed to developing IT to support business. In fact, the Chief Executive, in his 1998 Policy Address, has called for the use of IT to help us to retain our competitive edge and to drive our overall economic expansion.

The Information Technology and Broadcasting Bureau (ITBB), which was established in April 1998, announced in November 1998 "Digital 21" which is the strategy guiding the various IT related initiatives and projects.

The strategic objective of "Digital 21" is to enhance and promote Hong Kong's information infrastructure and services so as to make Hong Kong a leading digital city in the globally connected world of the 21st century. This is under the leadership of ITBB.

The main thrust of our IT strategy includes:

• developing high capacity telecommunications networks to provide the arteries through which digital information flows;
• establishing an open and common interface enabling individuals, business and government to interact easily and securely through digital networks;
• educating and training in IT to equip our younger generation and our work force with the skills necessary for the digital world; and
• cultivating a culture that welcomes the use of new technologies in the community.

We believe this IT Strategy dovetails with Hong Kong's strengths.

First we are creating an environment which further encourages the development of high capacity telecommunications infrastructure. This is a prerequisite for us to fully exploit the business opportunities in the Information Age.

Judging by world standards, Hong Kong is already in a leading position. For example, our broadband network covers practically all business buildings as well as 75% of all households. The latter percentage is expected to grow to 80% by the end of this year. Despite our relatively small size, we have 4 local fixed telecommunications network operators and we expect to license a fifth one shortly, based on the local cable TV network. We have over 130 Internet Service Providers, serving over 1 million local Internet users. As for mobile tele-communications, we have 6 mobile tele-communications licensees operating eleven networks on the basis of 4 digital standards. Though somewhat behind Scandinavia, we have the highest penetration rate of mobile telephones in Asia, at 49 phones per 100 inhabitants.

But we are not complacent, we have decided to introduce even more competition in the markets through liberalization of the telecommunications markets. We are confident that substantial additional capacity will be built as a result so that we can adequately meet the growing demand for bandwidth at reasonable prices.

Second, we are developing the infrastructure for a common software interface through which individuals, business and Government can interact easily and securely.

Concerns about the security of transactions conducted over open networks are often cited as an impediment to using e-commerce. In addressing this, we are establishing a Public Key Infrastructure (PKI) with the assistance of Hongkong Post, which will begin providing a public certification service by the end of the year. PKI covers the use of public key cryptography and digital certificates as the accepted means of authentication and access control over untrusted networks, such as the Internet.

This will provide a secure environment for authentication, integrity and confidentiality that are crucial to conducting business in cyberspace.

We don't intend imposing a ceiling on the number of certification authorities, leaving this entirely to market forces.

The Information Technology Services Department will be responsible for granting official recognition of the various certification authorities, but it will be up to them to seek recognition.

We have introduced an Electronic Transactions Bill into the Legislative Council to provide a clear legal framework for electronic transactions. We expect it to be enacted by the end of 1999.

We aim to provide certainty in conducting e-commerce by giving the same legal status to electronic records and digital signatures as their paper-based counterparts.

The Bill will also provide legal backing for the operation of certification authorities in Hong Kong.

For e-commerce to flourish in Hong Kong and to reach out to all potential customers, we must develop a Chinese language interface that is open and common for users in the community who prefer to communicate electronically in Chinese.

The critical issues revolve around the existence of multiple coding standards and the fact that none of these coding standards covers all of the Chinese characters commonly used in Hong Kong. For instance, BIG5 covers traditional Chinese characters only and GB covers simplified Chinese characters.

So, we are taking an active role in ongoing discussions with the International Organization for Standardization on the development of the ISO10646 standard, which is intended to encompass all written scripts, including the Chinese characters used in Hong Kong.

To set an encoding standard for local characters, we have published the Hong Kong Supplementary Character Set (HKSCS) in September. The HKSCS specifies the code for those characters in the ISO 10646 Private Use Area as well as the BIG5 user defined area. This is a major step in preparation for the adoption of ISO 10646.

With a common software interface in place, the government will then take the lead in promoting the benefits and cost-effectiveness of e-commerce with the launch of its Electronic Service Delivery scheme, or ESD for short.

This will provide public services round the clock through the Internet, interactive phone or TV, touch-screen kiosks, at no extra charge to users.

The successful tenderer to build this e-commerce infrastructure is expected to be announced soon and we aim to launch the first phase towards the end of next year.

The initial services will be provided by 10 government departments, these services include filing salaries tax returns, renewing driving licences, paying government bills, and many others. Tourists will also be able to make use of the infrastructure to access information about Hong Kong.

The infrastructure developed for ESD will be made available at a later stage to the private sector for conducting e-commerce.

As many of you will know, the global Internet boom has already given rise to a whole new industry of Internet service providers, web-page designers, Internet shopping support services and so on.

While I agree that there is a lot of scope for the consumption of Internet services and content in Hong Kong, I think an even greater opportunity lies in the development and supply of these services and content from Hong Kong to the rest of the world.

Given our bilingual capability, the free flow of information in and through Hong Kong, the freedom of expression that we enjoy and our unique position as a Special Administrative Region of China, Hong Kong is particularly well placed to serve as the Internet content hub for the Asia Pacific region and as the digital intermediary for doing business with the Mainland of China.

With this in mind, we are now working towards the development of Hong Kong into an Internet Content Hub. This will flourish the local digital content development industry and is in-line with our policies to promote the development of a technology-based and high value-added economic sector in Hong Kong.

The Chief Executive, in his Policy Address last month, mentioned that innovation and technology are the major driving forces of economic growth. We strive to become the hub of IT development in Asia. To this end, we are doing all we can to develop the local IT Industry.

The Government currently provides support through various institutions to assist technology development in the industry and business sectors, especially SMEs. They include technical development, advisory services, business incubation programme and R&D support facilities provided by the Hong Kong Productivity Council and the Hong Kong Industrial Technology Centre.

As part of the Government's innovation and technology support programme, the Innovation and Technology Fund (ITF) was established as a statutory fund with an injection of $5 billion. The fund aims to increase the added value, productivity and competitiveness of our industries through financing projects that contribute to innovation and technology upgrading in both the manufacturing and service industries.

Separately, the Government is outsourcing its IT projects to create a market of sufficient size to stimulate the development of the IT industry locally.

The Applied Science and Technology Research Institute (ASTRI), to be established with an investment of over $2 billion in the coming ten years, will play a pivotal role in developing Hong Kong into a knowledge-driven and technology-intensive economy. ASTRI will fill a crucial gap in the technological infrastructure of Hong Kong in the area of midstream R&D; it will conduct application-driven and market-oriented R&D work for transfer to industry.

The Science Park, to be set up at Pak Shek Kok in Tai Po, will also help move the Hong Kong industries towards higher technology and higher value-added production by stimulating the growth of technology intensive activities and facilitating technology transfer in the region. It will help Hong Kong obtain the critical mass for widespread applied research and development work; and to exploit the enormous potential from the convergence of technologies.

Both ASTRI and the Science Park are links in the government's commitment to supporting the development, transfer and use of advanced technologies in Hong Kong.

Our plans to position Hong Kong at the forefront of innovation and technology in Asia have been enhanced with the announcement of several initiatives, including the visionary 'Cyberport'.

This project, estimated to cost some $13 billion, aims to provide a specially designed environment for the development of leading edge IT applications and services.

The tenants will benefit from a range of shared facilities including broadband telecommunications backbone and interfaces with universities and research institutes, multi-media laboratories, a cyber library and other information technology and services support facilities.

We expect that the Cyberport will help spur the development of the information technology and services industries in Hong Kong. Furthermore, by attracting both leading multinational and local information technology and services companies to the Cyberport, local companies will be able to benefit through working closely with market leaders and achieve synergy, including collaboration in developing local content and applications, which will advance the realization of Hong Kong's position as a major Internet content hub.

University-industry collaboration is vital to the betterment of Hong Kong's IT industry. Connecting the right technology to the right people will generate the momentum of success. It is nice to see that such collaboration activities are becoming more and more active in Hong Kong.

The Cyberspace Centre of the Hong Kong University of Science and Technology is helping local software companies and other industrial sectors to make more effective use of the Internet through seminars, publications, hotline services and consultancy work.

Equally exciting are the E-Business Technology Institute of HKU's new initiatives to draft a blueprint for supply chain management, building security systems for electronic transactions, developing a standard Web platform for small and medium enterprises and initiating joint research with universities in China to prepare business models and practices for China and Hong Kong.

The Hong Kong Internet Exchange (HKIX) operated by the Chinese University of Hong Kong is another success. The HKIX has enabled faster and more efficient switching of intra-Hong Kong Internet traffic, thus saving significant amount of precious bandwidth on our international links. It has also helped the Hong Kong Internet community to grow faster and healthier. With HKIX, the development of multimedia applications in Hong Kong is much more meaningful now.

I am sure industry-academia collaboration will continue to flourish and new projects will soon be initiated in exciting areas like the provision of computer emergency services, digital content development, Internet2, etc.

In order to develop Hong Kong into an innovation and technology hub, it is of vital importance that we have the people who are equipped with the necessary skills.

The Government is committed to promoting IT in education so that our young people can grow up with the knowledge, the skills and the vision to play an active part in the next century of information and technology.

Apart from providing all schools with basic facilities like IT and Internet access, school networks, and all teachers with training and support, we also fund individual schools, through the Quality Education Fund, to move faster in learning through IT if they are more ready and willing.

The Quality Education Fund also funds projects like the "Hong Kong Cyber Campus" initiated by the Chinese University of Hong Kong. This project connects our primary and secondary schools to a school intranet system and provides free dial-up lines for teachers as well as free e-mail accounts for students. It has facilitated the sharing of educational resources and strengthened communication among schools, teachers and students.

Our recent IT promotion programmes for secondary schools include running seminars in individual schools to equip parents to guide their children in the use of IT. We are also adding IT related questions to inter-school quiz in order to raise secondary school students' interest on IT.

On the development of IT manpower, the Education and Manpower Bureau has embarked on a consultancy study to develop a strategy to address the manpower and training needs of the IT industry. The study is expected to complete soon; I am sure the report will be useful reference for VTC in its future planning.

Meanwhile, we are funding training programmes like injecting $14 million to upgrade and expand the equipment used in City University's Digital Technology Training Programme for Computer Animation and Digital Effects. City U's course will produce 750 professionally trained 3D computer animators in the next two and a half years. The funding support will help nurture a critical mass of professionally trained 3D computer animators to support the development of the local digital content development industry. The availability of a large number of trained IT professionals in the field will in turn attract more 3D animation orders to be placed in Hong Kong from around the world, and will contribute towards the development of Hong Kong into a major regional centre for multimedia-based information and entertainment services in a significant way.

To provide entrepreneurial training to university graduates in the IT field and to cultivate an environment conducive to technology transfer and company spin-offs in Hong Kong, the Government has sponsored a sum of $12.5 million for local universities to implement the IT Entrepreneurial Programme (ITEP). This offers an excellent opportunity for our talented budding engineers in the IT sector to develop into the next generation of IT entrepreneurs in Hong Kong.

Lastly, for us to establish and maintain an advantageous position in cyberspace, we must foster a creative and technological culture in Hong Kong.

The Government will take the lead to develop the capacity, capability and commitment of officers and staff at all levels within government to take full advantage of the benefits and opportunities offered by new information technologies.

We will monitor Hong Kong's strengths and weaknesses in IT development and its development pace in relation to other places so that policies and measures can be made accordingly to keep Hong Kong in the forefront of IT development.

We will continue to promote the use of IT across the private sector, especially in small and medium sized enterprises, through various activities including seminars and exhibitions. Public recognition and award will be given to private sector organizations that have demonstrated excellence in the use of IT.

For the community, we will raise its awareness, confidence, and familiarity in the use of IT in all spheres of their lives, especially towards life long learning and knowledge renewal.

Extensive IT deployment will create more and new demand for skilled professionals. For example, the proliferation of desktops will demand skilled professionals to :

• plan the administration model for desktops, servers and network;
• set, implement and test the security policy;
• test, roll-out, upgrade and maintain the environment;
• handle emergency cases like malicious attacks;
• attend to problems from users;
• etc.

Taken as a whole, our IT strategy aims at preparing Hong Kong for the digital world of tomorrow.

Adapting to more change, more often and more quickly will become the norm.

There will be a handful of players in the global arena that have the will and the capacity to take the opportunities, move with the times and achieve real and positive change that will benefit the community. Hong Kong will be one of those players.

We have launched a web site on Digital 21 and we have enriched it with the progress on each initiative. You are welcome to visit it frequently.

Thank you.

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