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Expediting the Development of Digital Economy

We are living in an era witnessing waves of technological transformation. Whether it is artificial intelligence (AI), biotech or new industrialisation, while research and development (R&D), innovation and application are crucial, the proper collection, categorisation, labelling, management and utilisation of data are no less important. Promoting comprehensive digitalisation across different industries and businesses is essential not only to enhancing the operational efficiency and competitiveness of enterprises, but also to spurring innovation in products, services and business models. It will also enable the provision of more personalised services to consumers and corporate clients. Technological innovation has become a vital driving force of production, with data being an indispensable element. Indeed, nurturing new quality productive forces that are centred around innovation and technology (I&T) has become the core of our efforts to promote the high-quality development of Hong Kong's economy.

Delivering a speech at the Visionary Forum of the Digital Economy Summit (DES) 2024 on Friday

The electronic Consumption Voucher Scheme in the past few years had popularised the use of electronic payments, enabling small and medium enterprises (SMEs) to better embrace digitalisation in their daily operations. In the face of intense competition both locally and from neighbouring regions, enterprises are seeing a pressing need to digitalise their business operations. Two years ago, I established the Digital Economy Development Committee (DEDC), which has brought together experts and academics from the relevant industries, as well as representatives of Government bureaux and departments, to discuss and explore how to further advance Hong Kong's digital economy. DEDC set up a number of sub-groups to conduct in-depth research on cross-boundary data flow, digital infrastructure, digital transformation and talent development, while collating opinions from the industries and stakeholders. It has put forward 12 core recommendations to the Government. Supported by five pillars, they provide important reference to our future work. Some of the recommendations have already been reflected in the Policy Address and the recent Budget.

Visiting the exhibition before attending the DES

First, we will strengthen Hong Kong's overall digital policy. The top-level framework for policy, governance, and implementation, as well as the relevant legislation and regulatory system, are the key factors. Upon completion of approval procedures by the Legislative Council, we will establish the Digital Policy Office (DPO) in the middle of this year. The DPO will be responsible for comprehensively formulating and implementing policies to promote the development of the digital economy and smart city. On the other hand, we will also review relevant legislation and guidelines with a view to enhancing data governance and establishing clearer guidelines for collecting and processing data; while allowing room to accommodate technological developments. Meanwhile, we will also seek to address challenges in data governance, such as mitigating risks related to data security and personal data protection.

Second, we will bolster digital infrastructure. This includes enhancing the utilisation and coverage of 5G networks; encouraging the construction of high-performance computing centres and data centres; further promoting electronic payments; launching the Digital Corporate Identity ("Corp ID") (i.e. the business version of "iAM Smart"); and developing a unique geocode system to allocate digital coordinates to building addresses, among other initiatives.

Providing high computing power infrastructure is pivotal to accelerating the development of Hong Kong's digital economy. It is also a key factor in supporting the advancement of AI. In last year's Budget, I proposed establishing an AI supercomputing centre in Hong Kong. The related development work is now progressing at full speed. It is expected that the centre will launch its first-phase services within this year. In this year's Budget, I also allocated $3 billion for a three-year AI Subsidy Scheme to support local universities, R&D institutions and enterprises in utilising the computing power of the centre, so as to drive breakthroughs in scientific research.

In addition, we have announced an allocation of $300 million to set up the business version of "iAM Smart" to facilitate companies to go through corporate identity authentication and corporate signature verification in a secure, convenient and efficient manner when they conduct online business transactions or use e-government services. This will dispense with many complicated procedures. We plan to start rolling out the Corp ID platform from 2026, which will offer four main functional services to around 1.8 million Hong Kong companies. Such services include corporate identity authentication, digital signature, authorised data retrieval for pre-filled forms within electronic service systems, and storage of electronic credentials for businesses. The system will also connect with various Government departments' electronic services to enhance operational efficiency. Furthermore, it will support the operation of the Commercial Data Interchange ("CDI") of the Hong Kong Monetary Authority, facilitating financial institutions in conducting customer due diligence.

Third, we will promote local and cross-boundary data flow. On the local front, we will make efforts to encourage the public and private sectors to open up more data. We will also expand the scope of CDI to enable banks to access data more easily with the consent from enterprises, thus facilitating loan approvals, especially those for SMEs. As of the end of last year, CDI has facilitated over 13,000 loan applications, with a total loan amount close to HK$12 billion.

The presence of a highly efficient data ecosystem has become one of the considerations for many enterprises to establish a foothold in Hong Kong. Whether they are engaged in AI, big data, life and health technology or fintech, these companies commonly recognise Hong Kong's distinctive advantages of converging both Mainland and international data under the "one country, two systems" arrangement. Such convergence is important for activities such as model training, drug-related R&D, and market expansion.

We have also made good progress in promoting cross-boundary data flow with the Mainland. Last December, we launched an "early and pilot implementation" arrangement in collaboration with the Cyberspace Administration of China to facilitate the cross-boundary flow of personal information within the Guangdong-Hong Kong-Macao Greater Bay Area. The first phase of implementation involves the banking, credit referencing and healthcare sectors, and their response has been highly positive. Based on the outcomes of the first phase, we will gradually expand the facilitation measure to encourage more industries in both places to leverage cross-boundary data and provide more cross-boundary services with greater convenience for residents and businesses.

In fact, in addition to driving digital operations in industries, data itself is a distinct new industry with huge development potential. Data has been commonly recognised as a valuable asset that can assist businesses in decision-making, create new business models, serve as an asset for cross-sector collaborations, and even be a tradeable factor of production. We have commissioned an expert group to undertake an in-depth study on how to develop a robust data trading ecosystem in Hong Kong. The scope of the study includes promoting the formulation of international data trading rules, thereby unleashing the potential of data elements and exploring new growth areas for the development of Hong Kong as an international financial centre and I&T hub.

Visiting InnoEX yesterday

Briefed by colleagues of the Architectural Services Department on the application of new technology in the daily operation at the Smart Hong Kong Pavilion of InnoEX

Fourth, we will expedite digital transformation. To support SMEs in digital transformation, Cyberport has launched in late March the Digital Transformation Support Pilot Programme. The Programme subsidises SMEs in the food and beverage industry to acquire ready-to-use basic digital solutions covering electronic payment, online promotion and customer management. The Programme will be further extended to SMEs in the retail industry as next step. It is expected that at least 8 000 eligible SMEs will benefit from the Programme.

Fifth, we will develop a sustainable digital talent strategy. We will nurture and retain digital talent through strengthening education and training initiatives, while also attracting talent and tech enterprises from outside Hong Kong. We will continue to enhance the digital literacy and capabilities of the whole community, fostering an environment that embraces digitalisation and digital development.

Hong Kong's digital economy is advancing fast, and the development of I&T is creating more businesses opportunities. Hong Kong is hosting the "Business of Innovation and Technology Week" ("BIT Week") this month, featuring a series of I&T signature events. From the Digital Economy Summit to InnoEX, and from the Elevator Pitch Competition to the Hong Kong Web3 Festival, these activities bring together both local and international industry leaders and pioneers, providing a platform for exchange and collaboration in the digital economy and innovation for the future. By gathering the wisdom of various parties and bringing in more insights, these activities have enriched Hong Kong's list of mega events and injected impetus to our economy.

April 14, 2024