Speech by Mr. Stephen Mak, Deputy Government Chief Information Officer, at the SME Entrepreneur Consortium Inauguration Ceremony
7 - 6 - 2005

Dr Quat, Dr Hall, Mr Jun, Mr Ballard, Distinguished Guests, Ladies and Gentlemen,

Good morning,

I am pleased to be invited here today to speak at the SME Entrepreneur Consortium (SMEEC) Inauguration Ceremony. I notice a great turnout from a good cross section of industries, possibly an indication of the nature of the event we are going to witness today.

Importance of SMEs

I can't emphasise more of the role played by the small and medium sized enterprises (SMEs) in Hong Kong's economy. The SMEs comprise over 98% of business establishments in Hong Kong and employ about 60% of the working population in the private sector. Without exaggeration, it is safe for me to say that the SMEs form the backbone of our economy, and they are one of the main driving forces of our economic development. They are a significant source of innovation, job and wealth creation as well as export revenue. Among others, their competitiveness has a strong linkage to their utilisation of technology. Effective utilisation of information and communications technology (ICT) can improve SMEs' internal business procedures, lower transaction costs, and help them to better understand the operating environment with regard to both demand and supply. We believe that the SMEEC is well positioned to further harness the benefits of ICT for business, especially for the SMEs, and the community.

Industry Development and Support

Information is fast becoming an important factor of production and a critical success factor for businesses. More specifically, ICT has now become a tool whose significance cannot be ignored as those of sound financial and general management. Under the Digital 21 Strategy, the Government has been assisting the business sector, especially the SMEs, to adopt ICT and e-business to enhance their efficiency and productivity. We have, in collaboration with industry support organisations and trade associations, launched a wide range of support measures, including awareness building programmes, support centres, advisory services and financial support. Specifically, we have, since 2004, been rolling out business sector-specific programmes to promote IT and e-business adoption amongst individual sectors. We have so far covered the travel agents, private medical practitioners, and drugstores and the initial results are encouraging. We are reviewing these programmes with a view to extending the concept to cover other potential business sectors in future.

In addition, we have put in place a wide range of measures to promote the development of the local IT industry, in particular SMEs. Here are some examples:

• expanding local business opportunities for the IT industry through aggressive outsourcing of Government IT projects; and
• working with Mainland authorities on the implementation of various initiatives such as the Mainland and Hong Kong Closer Economic Partnership Arrangement (CEPA) and the Pan-PRD Cooperation Framework to facilitate local companies in entering the Mainland market.

Next wave of e-government

In formulating our strategy for the next wave of e-government, promotion of IT adoption among the SMEs remains a high priority. The Government is committed to ensuring that the SMEs will benefit from e-government initiatives. To achieve the overall objective of using IT to provide customer-centric services, we will pursue key priorities under the next wave of e-government. The salient point is to implement a new strategy for e-government service delivery adopting a service clustering model and a customer segmentation approach. No doubt this strategy will take into account developments in the industry and business sectors and try to maximise the synergy that we can achieve with initiatives like the one we are seeing today.

Conclusion

According to the 2004 Annual Survey on Information Technology Usage and Penetration in the Business Sector, the PC and Internet Penetration rates for the Medium Establishments are 84% and 76% respectively, whilst those figures for the Small Establishments are just 54% and 46% respectively.

While these figures would sound familiar to you, I should nonetheless highlight that the penetration rates among Small Establishments are much lower than those of Large Enterprises, which stand at 97% and 90% respectively. If this is any indication of the relative competitiveness of SMEs, I'm sure you will agree with me that a lot more work can be done in promoting the ICT usage among the smaller establishments. I understand that the Inauguration of the SMEEC today marks the beginning of some projects that aim at enhancing the access to relevant information and the use of ICT among SMEs in one form or another. I congratulate the organisers and the Steering Committee for organising these initiatives and wish them every success in their endeavours.

Thank you.

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