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Trade and Industry Department The Government of the Hong Kong Special Administrative Region
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MY COLOUR

Speeches

Speech by the Director-General of Trade and Industry Mr. Joshua Law at the
Electronic Commerce Advisory Board meeting of the Hong Kong Article Numbering Association on 13 December 2000

Mr.Au and distinguished members,

I am pleased to have been invited to this meeting to speak about the roles of the new Trade and Industry Department.

2. As you are aware, a number of organizational changes have taken place among various Government bureau and departments that look after the trade and industry portfolio in July this year. These include :

the setting up of the Innovation and Technology Commission to provide stronger support to the promotion of innovation and technology;

the setting up of an agency named "Invest Hong Kong" to execute investment promotion programmes to attract external direct investment; and

last but not the least, the taking over of the functions of the then Industry Department in respect of general support for the industrial sector and small and medium enterprises by the then Trade Department, and the forming of the new Trade and Industry Department.

3. The objective of putting trade and industry under one roof is to have a single front-end department to oversee, co-ordinate and provide maximum support to industry and commerce, as the changing economic landscape in the manufacturing sector has made it difficult, if not impossible, to clearly distinguish a manufacturer from a service producer, particularly those that engage in "producer services".

4. In spite of the apparent advantages of putting the trade and industry portfolio together, some industrialists and members of the community have however looked at the issue skeptically. Their concern is that with a separate Commission to promote innovation and technology and to attract overseas investment respectively, the Government is only interested in promoting and supporting hi-tech investments brought in by multi-national corporations.

5. This, of course, is far from the truth. The Government has been encouraging and promoting industries to embrace innovation and technology because, as the Chief Executive has explained in his Policy Address two years ago, "innovation and technology are important drivers of economic growth. In a knowledge-based global economy, they are essential in adding value, increasing productivity and enhancing our overall competitiveness." There is a rather common misconception that only state-of-the-art researches, such as projects on genome and cloning, and non-traditional businesses, such as IT businesses, could establish ties with "innovation and technology". This has caused some of our industrialists to feel that their sectors are being neglected now that the Government promotes these qualities. The reality, however, is that to remain competitive in the increasingly globalized and knowledge-based economy, each and every enterprise has to be innovative and build up its capability of applying technology, including information technology and E-commerce. In fact, if we look at the leading players in Hong Kong's textiles and clothing, plastics and toys sectors today, which have been regarded as "traditional" industries, they all owe their success to being innovative and their readiness to apply technology. Innovation and technology is therefore an important pointer not only for hi-tech industries but also manufacturing industry, including "traditional industries".

6. With an expanded scope of work, the new Trade and Industry will focus on the following aspects:

Enhanced support for SMEs

7. Small and Medium enterprises (SMEs) have always been a pillar of Hong Kong's economy. At present, there are over 290,000 SMEs in Hong Kong. They account for more than 98% of all local enterprises and employ about 60% of private sector employees. Over the past few years, the Government has been actively supporting SMEs. The establishment of the SME Office, the Small and Medium Enterprises Committee (SMEC), the SME Information Centre and the SME Virtual Information Centre, the implementation of the Special Finance Scheme for SMEs and the launching of the latest Pilot Mentorship Programme for SMEs are a few examples.

8. The Asian financial crisis has however revealed various weaknesses in the capacity of SMEs. Also, the advent of the knowledge-based economy has brought about new challenges and opportunities to SMEs. To remain competitive in the New Economy, SMEs must equip themselves with the capability of applying innovation and technology, quick in response, be creative and be able to master management and entrepreneurial skills. However, in the past few years, SMEs' attention and priorities had been unduly put on how to secure loans to tide over the financial turmoil arising from the Asian financial crisis. Very little attention was given to build up their long term capability. As the economy is recovering, Government believes that SMEs should now be more prepared and be in a position to harness the opportunities of a knowledge-based economy, globalsation of the world economy and opening up of the Mainland market upon China's accession to the World Trade Organization (WTO). As reflected in the Chief Executive's Policy Address on 11 October 2000, Government stands ready to help SMEs to solve different problems at different stages of their development, under the themes of "helping to start a new business", "helping to build a new business" and "helping to expand a business".

9. As you are aware, the SMEC, which is Government's principal advisory body on issues relating to SMEs, has lapsed since July 2000 upon the expiry of the term of appointment of its members. As mentioned in the Policy Address this year, the Government is taking the opportunity to widen the representation of the SMEC and enhance its status when appointing members for the new term of office. The Committee will be tasked with the responsibility of working closely with the business sector and SMEs, and putting forward practical recommendations for new measures for supporting SMEs six months after its reincarnation. Worthwhile proposals will be implemented making use of the amount recycled from the now-defunct Special Finance Scheme, which is estimated to be about $2 billion.

10. The new membership of the SMEC will be announced shortly. We will be working closely with the SMEC in the coming months, with a view to coming up with new initiatives within the specified period of time. In the process, we will hear and take into account the views of various trade and industry associations, associations that represent the interest of SMEs and relevant parties. Indeed, I look forward to hearing initial views from Members on means for helping SMEs embrace information technology and take full advantage of e-commerce a while later.

Strengthen support for "traditional" industries

11. I have already explained earlier why Government's efforts on promoting innovation and technology should not be taken as if Government is no longer concerned about the growth and development of traditional industries. As a matter of fact, the Government has attached great importance to the development of manufacturing industries. Under our free market economy principle, we have been striving to create the most conducive environment for our manufacturing and services sectors to develop and propser. We do this by providing the necessary physical, human and technological infrastructure, supporting applied research and development, facilitating technology transfer and upgrading, identifying opportunities and challenges, promoting innovation and maintaining the most business-friendly government regime.

12. While we believe that innovation and technology is the key for enterprises, including traditional manufacturing industries, to maintain competitiveness and enhance value-added in the new millenium, we have not neglected the needs of local manufacturing industries for support on other aspects. We are aware of the calls from various local manufacturing industries for Government to help them to equip themselves for the advent of the knowledge-based and IT economy, and the opportunities and challenges as a result of increasingly globalised world economy and Mainland's accession to the WTO. These range from helping them to enhance their design capability, build brand names, establish "best practice" operations, expand overseas markets, identify new business opportunities, to enhance productivity, entrepreneurship, quick response capability, management control skills, IT know-how and application level, and supply chain management. We would continue to work closely with trade and industry organizations and leverage on the expertise of the Trade and Industry Advisory Board, which is reconstituted from the then Trade Advisory Board and has started operation since July this year, with a view to developing support programmes to address these needs.

Improving trade environment

13. Apart from providing support to industry and SMEs, the new Trade and Industry Department will continue to safeguard Hong Kong's economic interest through bilateral and multilateral trade negotiations. With the assistance of HKSAR's Economic and Trade Offices overseas, we would keep a watchful eye on economic measures of major trading partners with a view to protecting Hong Kong exports from any discriminatory treatment. We will also utilize various multilateral trade channels such as WTO and APEC to improve regional and international trade environment.

Help local businessmen assess the impact of the Mainland's accession to WTO and realise new opportunities

14. Looking at Mainland's accession to the WTO from Hong Kong's perspective, the issue carries two important messages. First, it reinforces globalisaion of world economy on which Hong Kong must leverage if we were to maintain our position as a world class trade and business centre. Secondly, in order to seize the vast opportunities ahead, Hong Kong has to further develop and secure our role as a strategic partner not just to the Mainland but also between Mainland and the rest of the world.

15. We believe that the new Trade and Industry Department has a crucial role to play in helping local businessmen to assess the impact of Mainland's accession to the WTO to them and to prepare themselves for the opportunities and challenges. If necessary, the Department would consider conducting studies to examine the relevant issues and widely disseminate the outcomes and findings to local business community, with the support of various trade and industry organizations. Indeed, my colleagues and I have been doing quite a lot on this. For example, in the past 12 months or so, I myself have spoken on this issue at numerous public seminars, conferences and symposiums. It is interesting to note that as the community's participation in the discussion of the issue has widened, we have more informed audiences at these symposiums, and they are more optimistic about the impact and opportunities arising from Mainland's accession to WTO.

Strengthen ties with the Mainland

16. Help local businessmen who are doing business in the Mainland to understand Mainland's policies relating to trade, industry and customs, and help them reflect their views and requests to the Mainland authorities, will continue to be an important work of the new Trade and Industry Department. The Mainland/HKSAR Joint Commission on Commerce and Trade, which is a high level liaison mechanism set up between the Ministry of Foreign Trade and Economic Cooperation and the Commerce and Industry Bureau in November 1999, and its Working Groups, have proven to be an effective channel to enhance communication, understanding and co-operation between the two places on trade and commercial matters. Through this mechanism, we have been able to help local industrialists convey their feedback on various Mainland policies and measures, particularly on issues relating to the new management measures on import and export food labels and the Shadow Margin Account Scheme which applies to outward processing trade.

17. We will continue to make use of the Joint Commission and its Working Groups to reflect the views and concern of Hong Kong businessmen on issues relating to conducting business in the Mainland and help convey information provided by the Mainland.

18. The above summarises the major tasks of my new department in the coming years.

19. There is however an area of work which I have so far not paid sufficient tribute to in my speech. And it is our efforts in making use of information technology to deliver services to the public and in promoting wider use of e-commerce by the business community. You should not be too surprising to note that the then Trade Department was indeed the pioneer within the Government in the use of Electronic Data Interchange (EDI) service for the submission and processing of statutory trade documents. Following the launch of EDI service for Restrained Textiles Export License (RTEL) in January 1997, full EDI service has been implemented for RTEL in January 1999 and extended to applications for Production Notification in February 2000 and Certificates of Origin in September 2000. Currently, we are actively exploring the extension of the service to other trade transactions, such as cargo manifest and the Textiles Trader Registration Scheme.

20. Apart from the development of EDI services, we are also working on a number of IT projects and initiatives to provide better services to the business community. These include plans to develop a web-based portal to deliver services and disseminate information to the public on a 24- hour and 7-days-a-week basis.

21. Mr. Chairman, the HKANA has been playing a pivotal role in helping local enterprises enhance efficiency and value-added by embracing e-commerce, through promoting article numbering, bar coding, automatic data capture and EDI application in Hong Kong. I believe that there are indeed rooms between HKANA and my department to cooperate closer to pursue the common objective of promoting IT and e-commerce, particularly among SMEs. That's why when Anna [Miss Anna Lin, Chief Executive, HKANA]invited me to be one of the honorary advisors for the "Global e-ID Promotion Campaign", I have accepted the invitation without hesitation. As I mentioned to Anna on that occasion, my colleagues and I am more than happy to further explore with you Association on means to jointly promote the wider use of IT and e-commerce.

22. Thank you. I am pleased to take questions and listen to your views.