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Submission to Chief Executive's Commission on Innovation and Technology

Hong Kong Coalition of Service Industries

May 1998

1. The Hong Kong Coalition of Service Industries welcomes the opportunity to be consulted by the Chief Executive's Commission on Innovation and Technology on the future of innovation and technology for Hong Kong. The views herein are the result of consultation among members of the Coalition.

General aspects

2. While innovation and technology is critical to Hong Kong's continual prosperity, we observe that in the discussion there is often an emphasis on high-technology industries. While they are no doubt important one should not be too pre-occupied with high-tech industries alone. Innovation is needed not just for sectors like artificial intelligence, but also for retail, food catering, cleaning, waste disposal, tourist guide, etc. – sectors which are “low-tech” but which are nonetheless important for a modern international economy. Indeed, a case can be argued that the it is the low-tech industries that need more innovation and application of technology rather than the other way round.

3. On going through the list of proposed “Issues to be Addressed” by the Commission, we observe an apparent emphasis on “industry” which is mentioned five or six times. While clearly applications relevant to the services sector will be included, the note as drafted give the impression that Hong Kong is still an industrial economy. This simply is not the case. If Hong Kong is to make real progress and compete successfully with our regional neighbours in the fields of innovation and technology, one needs to make the mental adjustment to the fact that Hong Kong is now a service-based economy. Perhaps more frequent reference to “the business, services and industry sectors” rather than to “industry” would bring about a more appropriate mindset and ensure that the issues of innovation and technology are considered within a context which is relevant to the future and not the past. It is not apparent in this instance that government has made the necessary quantum leap.

4. In considering how best to promote innovation and technology, we would emphasise that government's role should be one of providing infrastructure and support, rather than “parental guidance” or involvement in the commercial aspects of innovation and technology.

Electronic Commerce

5. Electronic commerce is an important aspect of the information society. To ensure that Hong Kong stays competitive, government has a major role to play in providing the infrastructure necessary for e-commerce to flourish. Here the work done by the Information Infrastructure Advisory Committee (IIAC) of the Office of Telecommunications Authority (in which the HKCSI has taken part) should provide a useful reference to the Commission.

6. Besides those addressed by OFTA's IIAC, we wish to highlight the following issues in respect of e-commerce:

The need to implement a standard broadband telecommunication network providing higher speed access to the Internet etc., by all businesses and households, and linking them to the rest of the world.

To examine ways of establishing certainty in “digital identity” so that one can have a way to securely identify oneself when transacting electronically.

To examine ways of settling electronic transactions efficiently and economically, including linking up banks in Hong Kong as well as other global electronic funds transfer networks (e.g. VISA Net).

To consider setting up a Credit Bureau (like Trans Union and TRW in the USA) to keep track of individual’s credit history.

To examine the issue of technical standard for Smartcards to facilitate electronic payment of goods and services.

More immediately, to facilitate Year 2000 compliance of small and medium enterprises. Here government may have some role to play in providing the necessary awareness, funding and expertise to help SMEs Y2K-compliant.

Academic-industry cooperation

7. Constant and prolonged exposure of our businessmen and industrialists to technology and technological improvements and advancements will help to imbue in them a desire for change and innovation through the use of technology. In this regard, industry and academia can help each other. Industry sponsorship of academic projects will help resolve some of the financing issues relating to research and development work for the academia. However, business would only be prepared to fund R & D if at the end of the day, they can reap the benefits of them investing in the future. Accordingly, it would be reasonable for the sponsoring business to obtain all the revenue from the licensing of the intellectual property arising from or subsisting, in an invention or copyright work. In this context, the government can assist in this form of “joint development” of new technology by business and academia by ensuring that intellectual property rights are fully protected by the laws of Hong Kong.

The Mainland Aspects

8. Hong Kong's phenomenal growth over the past two decades has been the result of close integration between the territory and the mainland, particularly the Pearl River Delta. Hitherto this cooperation has been in the areas of light industry manufacturing and trade-related services. But there is no reason why such cooperation cannot also be in the fields of innovation and technology.

9. There are a lot of talents in the Mainland but many scientists are hampered by the lack of research funds, incentives and proper environment to convert their ideas into commercially viable products. To exploit this talent, Hong Kong government should consider seeking support from Central Government to allow us to access the Mainland research institutes through Hong Kong's offices (which could be government coordination offices or offices of quasi-governmental agencies such as that of the Trade Development Council) located in the major cities. This will help establish regular communication channels for the research institutes and the private sector for both Hong Kong and the Mainland.

10. Government may also consider setting up a technology library to tap resources from the Mainland and overseas. This facility may be open to use by the Mainland enterprises and should also provide services on patent data in Hong Kong, the Mainland and overseas.

Education

11. Ultimately, innovation can only come about through the development of a truly technology-conscious society. In other words, the basic issue is one of education, not just of IT but of the use of IT in all aspects of education in schools and universities. Educationists should be challenged to shape the young towards innovation and familiarity with technology. It is only through education that an “information society” can truly develop. We believe that early introduction of IT to formative minds has a more profound and lasting effect than training in the workplace, for example. If young people are exposed early in their mental development to IT, a culture of innovation will be developed for those who will join the workforce in the future.

(Ends)

	The need to implement a standard broadband telecommunication network providing higher speed access to the Internet etc., by all businesses and households, and linking them to the rest of the world.
	To examine ways of establishing certainty in “digital identity” so that one can have a way to securely identify oneself when transacting electronically.
	To examine ways of settling electronic transactions efficiently and economically, including linking up banks in Hong Kong as well as other global electronic funds transfer networks (e.g. VISA Net).
	To consider setting up a Credit Bureau (like Trans Union and TRW in the USA) to keep track of individual’s credit history.
	To examine the issue of technical standard for Smartcards to facilitate electronic payment of goods and services.
	More immediately, to facilitate Year 2000 compliance of small and medium enterprises. Here government may have some role to play in providing the necessary awareness, funding and expertise to help SMEs Y2K-compliant.