APEC E-commerce Readiness Assessment Guide - A Self-assessment on Hong Kong's Readiness for E-commerce

Introduction

This paper summaries the results of a self-assessment on Hong Kong's readiness in developing e-commerce by using the Asia Pacific Economic Co-operation (APEC) E-commerce Readiness Assessment Guide.

Background

2. The APEC E-commerce Readiness Assessment Guide is a private sector led initiative. It is a self-assessment tool that can be used by economies, cities or communities to assess their readiness to participate in the digital economy. The assessment results will not only help governments identify actions that may need to be taken to improve their environment for e-commerce. It will also facilitate the dialogue between governments and businesses on the relevant e-commerce policies.
   
   

3. The APEC E-commerce Steering Group, which is a standing committee responsible for the implementation of the APEC Blueprint for Action on E-commerce, strongly supports this self-assessment initiative. It actively encourages its member economies to make use of the Guide on a voluntary basis to carry out the self-assessment.
   
   

4. It should be noted that the Guide provides a general framework for analysis within the economies which utilise the Guide. Its purpose is not for comparison between economies and that the results are not intended to be scored.

Readiness Assessment

5. Readiness is assessed by determining the standing of the economy in the areas that are most critical for e-commerce development. The Guide contains six broad indicators of readiness for e-commerce. They are -

   • basic infrastructure and technology;
   • access to necessary services;
   • current level and type of use of the Internet;
   • promotion and facilitation activities;
   • skill and human resources; and
   • positioning for the digital economy.

In the Guide, these indicators are developed into a series of questions that provide direction as to desirable policies that will promote e-commerce and remove barriers to electronic trade.

Assessment Results of Hong Kong

6. Hong Kong has conducted a self-assessment on the basis of the Guide. The assessment results are set out in the Annex.

(a) Basic Infrastructure and Technology

7. The results in respect of basic infrastructure and technology confirmed that Hong Kong has an advanced telecommunications infrastructure. With the progressive liberalisation in the last few years, our telecommunications market is now characterised by open and effective competition, voluntary and industry led standards and wide consumer choices. In respect of basic telecommunications infrastructure, our network has been fully digitised since 1995. The teledensity in Hong Kong has already exceeded 55%, while over 50% of the population has access to cable. Currently, about one third of the population in Hong Kong have access to the Internet.]
   
   

8. In respect of the speed and functionality of our infrastructure, broadband access is widely available. At present, our broadband network covers over 90% of the households and all commercial buildings in Hong Kong. The maximum connection speed supported by our infrastructure is 1 Gbps and the average connection speed available is 1.5 Mbps.
   
   

9. In terms of terminal equipment, our mobile phone penetration rate, currently at 69%, up from 54% a year earlier, is amongst the highest in the world. The number of personal computers at home also increased significantly over the last two years, with the penetration rate increasing from 34% in 1998 to 50% now. In addition, over 99% of our population have a television at home.
   
   

(b) Access to Necessary Services

10. Internet Service Providers (ISPs) play a critical role in the provision of access to the basic infrastructure and services for content hosting. The affordability of their services has a direct effect on the penetration of the Internet. In Hong Kong, the ISP market is very competitive. There are now around 190 ISPs in operation in Hong Kong. Consumers here enjoy the choice of a wide and sophisticated range of services at competitive prices.
    
    

11. A possible area for improvement, however, is related to customs clearance of shipments entering and leaving Hong Kong. At present, the customs environment is not fully paperless. Only air cargo can be pre-cleared by electronic data interchange (EDI) through the Customs' Air Cargo Clearing System. To improve the efficiency of customs clearance of all cargo, the Customs and Excise Department is examining the feasibility of expanding the use of EDI in pre-clearance of sea and land cargo as well.

(c) Current Level and Type of Use of the Internet

12. The use of the Internet has become an integral part of our daily lives in Hong Kong over the last few years. The number of Internet users has grown in leaps and bounds and the Internet is also used for a wide variety of purposes. Nowadays, consumers in Hong Kong are making use of the Internet to send e-mails, surf the cyberspace, carry out research and conduct low-value transactions. We have yet to see many consumers making high-value purchases over the Internet in Hong Kong. This may mean that consumers have not built up sufficient confidence to conduct major transactions electronically. Businesses in Hong Kong, on the other hand, are comparatively more aggressive in the use of the Internet. According to an industry study, over 35% of the companies in Hong Kong are using the Internet in their operation, from marketing, providing online customer support, enhancing efficiency and conducting transactions electronically. According to industry estimates, the total value of transactions (both business-to-business and business-to-consumer) conducted via the Internet in Hong Kong amounted to US$2 billion in 1999. That figure is expected to grow to over US$70 billion by 2004.
    
    

13. To encourage the wider use of the Internet and e-commerce, the Government is committed to becoming a model user of information technology and to transforming itself into an electronic Government. In addition to the provision of information through the various Government web sites, we have launched the Electronic Tendering System in April 2000, to provide a secure electronic means for handling tender and related matters to support Government electronic procurement. We will also be launching the Electronic Service Delivery (ESD) Scheme shortly to provide a wide range of public services to the community through the Internet and other electronic means. Examples of these online services include the submission of tax return, renewal of driving and vehicle licenses, payment of Government bills, and registration as a voter, etc. Our long-term goal is to include all public services which are amenable to the electronic mode of delivery under the Scheme.

(d) Promotion and Facilitation Activities

14. It is important to carry out promotion and facilitation activities so as to encourage the wide adoption of e-commerce across the community. The Government has been implementing a comprehensive programme to enhance public awareness in and understanding of e-commerce. The major focus of our promotion programme is the local business community, especially the small and medium sized enterprises (SMEs).
    
    

15. The Government works closely with industry support bodies (such as the Hong Kong Trade Development Council, the Hong Kong Productivity Council and the Hong Kong Information Technology Federation, etc.) and chambers of commerce in implementing our promotion programme. Major initiatives under the programme include : -

    • the organisation of seminars for SMEs to enhance their understanding of and awareness in e-commerce;

    • the development of practical and readily affordable e-commerce solutions for use by SMEs;

    • promoting e-commerce through large scale exhibitions (such as the Information Infrastructure Expo held in Hong Kong each year) and roving shows at convenient public locations;

    • preparation of reference material on e-commerce, such as success stories and simulation software, for distribution to SMEs;

    • production of publicity material (e.g. Announcement of Public Interest on e-commerce) for broadcast on television and radio to promote e-commerce to the general public; and

    • establishment of a telephone enquiry hotline to answer questions from SMEs which are interested in adopting e-commerce and to provide information on the various support services available from the relevant industry support organisations.

(e) Skill and Human Resources

16. According to the IT manpower study commissioned by the Government, there are currently 44,000 IT practitioners in Hong Kong. However, by the year 2000 there will be a demand for 57,000 IT practitioners, which will further rise to 85,000 by 2005 and 130,000 by 2010. In order to meet the projected demand and to ensure that we will have the necessary technical expertise for the development of e-commerce applications and systems, the Government is committed to strengthening education and professional training in information technology.
    
    

17. In respect of basic education, we launched the five-year strategy on "Information Technology for Learning in a New Era" in November 1998. Under the strategy, we will use IT to turn our schools into dynamic and innovative learning institutions to develop the capabilities of our students in processing information effectively and efficiently.
    
    

18. Manpower training is another critical factor for the development of e-commerce. In terms of professional training, our local tertiary institutions are offering around 19,000 full-time degree-level places in IT-related fields annually. Over 30 new programmes at the diploma, graduate or post-graduate levels on e-commerce and related subjects have been offered or planned to be introduced shortly. In terms of vocational training and retraining, the Vocational Training Council is offering around 17,000 sub-degree level IT places annually, while the Employees Retraining Board is providing over 44,000 IT related training places each year.

(f) Positioning for the Digital Economy

19. The assessment results indicate that Hong Kong has positioned itself well for the digital economy in a number of areas, including neutral tax system, support to the extension of the World Trade Organisation standstill on e-commerce tariffs, the establishment of a clear legal framework for electronic transactions and the policy in the use of encryption technology. Although Hong Kong is not a signatory in respect of the World Intellectual Property Organisation Treaties (WIPO) on copyright and related rights, we have already incorporated in our Copyright Ordinance the essential provisions on the protection of copyright in the digital environment.
    
    

20. In respect of privacy, we are committed to promoting the development of industry self-regulation in the forms of codes of practice and seal programmes.
    
    

21. The same is true for consumer protection. Hong Kong has started to develop self-regulatory mechanisms such as the Web Trust programme of the Hong Kong Society of Accountants. Consumer protection for e-commerce in Hong Kong can be further improved if such self-regulatory mechanisms gain wide acceptance in the industry.
    
    

22. The Hong Kong Productivity Council, the Consumer Council and the Office of the Privacy Commissioner for Personal Data recently jointly developed a guide on best practices for consumer and privacy protection in web site operation. We have distributed the guide to all ISPs in Hong Kong and have asked them to further distribute them to their clients, i.e. web site operators, for reference.

Comments

23. We welcome comments on the assessment results and how we can further improve Hong Kong's e-commerce environment. Please send your comments to Ms. Joyce Tam, Principal Assistant Secretary for Information Technology and Broadcasting, by e-mail at itbbenq@itbb.gcn.gov.hk or by fax at 2511-1458.