Opening Keynote Address by Ir Allen Yeung, JP, Government Chief Information Officer, at the “9th Annual Data Center Summit 2017”

Dear Distinguished guests, ladies and gentlemen,

Good morning. It is my great pleasure to join you all at the “9th Annual Data Center Summit 2017”, which enables us to share key trends and strategies for developing data centres in Hong Kong and positioning Hong Kong as a global data hub.

Data centres are essential infrastructure to sustain digital economic development and entrench Hong Kong’s position as a trading and financial centre as well as in support of logistics and the services sectors. As dynamics of businesses accelerate, data centres become the strategic assets to induce innovation and growth for businesses.

Cloud computing, big data analytics, Internet of Things, machine learning, and FinTech, etc., and the associated monetisation of these technologies, have transformed the landscape of the global business. This transformation creates soaring flows of data, which underpin and innovate the values of the movement of goods, services, finance, and people. The Economist in its May cover article stated that data have become a new currency of digital economy and a new fuel to innovation, as oil to the old economy. According to McKinsey, cross-border data flows accounted for $2.8 trillion US dollars of the increase of the world GDP in 2014 and generate more economic value than traditional flows of traded goods.

The demand for data centre services, especially high-tier data centres, is driven by this trend of the increasing use of Internet business and innovative technologies. According to Cisco, the global cloud workloads will be more than triple from 2015 to 2020, and the global cloud traffic will increase at a compound annual growth rate of 30% over the same period. As a result, the global workloads for data centres will more than double and the global data centre traffic will increase at a compound annual growth rate of 27% from 2015 to 2020. The fast-developing cloud computing technology drives the development of data centres. Cloud service providers need data centres to house cloud services and cloud-based resources. In the Cloud Readiness Index 2016, Hong Kong is ranked first in cloud readiness in the Asia Pacific. This puts Hong Kong in a strong position to lead the next wave of global innovation and leadership in technology.

Our fully liberalised regime on telecommunications market enables the development of a vibrant market of international and local Internet service providers. Hong Kong's telecommunications infrastructure is one of the world’s most sophisticated and advanced. The reliability level of our electricity power supply is supreme, which exceeds 99.999%. According to the Data Centre Risk Index 2016, Hong Kong was ranked as the third safest Asian city for data centres. Currently, Hong Kong is connected to ten submarine cable systems and 20 overland cable systems for external communications. Facebook and Google are building the fastest trans-pacific cable connecting Hong Kong and Los Angeles which, will come online in 2018 and will increase our external telecommunications capacity by 120 terabits per second. This makes a clear and compelling statement about Hong Kong's competitive position.

Further to a powerful combination of contributing factors, including our prime location, sound legal system, pro-business environment, robust enforcement for data protection and privacy as well as free flow of talent and information, Hong Kong is home to regional headquarters of the world’s leading multinational corporations. Over 3 700 multinational corporations set up their regional headquarters or regional offices in Hong Kong and over 1 100 state-owned enterprises established their presence here.

To capitalise on our competitive edges, the Government has been adopting a multi-pronged approach to promote data centre development. In terms of provision of land, the Government has earmarked three hectares of land in Tseung Kwan O for high-tier data centre development. The first site was sold in October 2013. We are now working with relevant government departments to make available the remaining sites for data centre use as soon as possible.

We also encourage the use of industrial buildings for data centres and have put in place incentive measures to facilitate redevelopment and conversion of industrial buildings into data centres. We launched two concessionary measures in 2012, which were extended in March 2016, to encourage the conversion of eligible industrial buildings for data centre use and development of high-tier data centres on industrial lots. In addition, we have worked together with the Lands Department to streamline the procedures for issuing waivers for changing the use of industrial buildings into data centre use, aiming to approve new applications within a much shortened timeframe of around two weeks.

To render assistance to enterprises interested in setting up data centres in Hong Kong, we have set up the Data Centre Facilitation Unit to provide one-stop support services to enterprises within and outside Hong Kong. The Unit has assisted several companies to establish high-tier data centres in Hong Kong. In addition, we proactively work with relevant government departments on measures to address the unique operational requirements of data centres. Together with the industry’s effort, the Government will continue developing Hong Kong into a prime location for data centres.

According to 2017 Policy Address, we have made a substantial investment of $18 billion to enhance Hong Kong’s innovation and technology ecosystem. These measures include promoting reindustrialisation, funding universities to conduct mid-stream and applied research projects, subsidising industry adoption of technology to upgrade and transform, and supporting start-ups. Furthermore, the Government has set aside sizable sites, including one of over 50 hectares near the Liantang / Heung Yuen Wai Boundary Control Point, for use by the innovation and technology sector and other emerging or traditional industries.

Leveraging our unique advantages under “one country, two systems”, we strive to give full play to Hong Kong’s role as a “super-connector” and give full support to the Belt and Road initiative and the Mainland’s “Going Out” policy. To this end, we will zero in on the strategic value of cross-border data flows to attract other countries to store data in Hong Kong to build Hong Kong into a global data hub. Aggregating international data will further attract technology, goods and service, capital and talents from all over the world, that will spur innovation and productivity, and in turn accelerate the development of data centre industry, big data business and related sectors, create new job types, and enhance the overall IT capability of Hong Kong. Hong Kong will serve as a platform to enable data exchange, data processing and big data analytics among businesses from the Mainland and other countries and regions, creating massive opportunities for Hong Kong’s new economy and for the common interest shared by Hong Kong and the rest of the world. The recent announcement of AWS to build its regional data centre hub with three Available Zones in Hong Kong further strengthens Hong Kong’s position as the data hub. We welcome more data centre operators to build its operations in Hong Kong.

Last but not least, I would like to thank the organiser in staging this Data Center Summit 2017 here in Hong Kong. It will facilitate the development of data centres, collaboration of the industry in the region and boosting Hong Kong’s development in this era of digital economy. I wish the Summit every success.

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