Consultancy Services for the Digital 21 Strategy Review for the Office of the Government Chief Information Officer

Transcription

1 IBM China / Hong Kong Limited Smarter Hong Kong, Smarter Living Consultancy Services for the Digital 21 Strategy Review for the Office of the Government Chief Information Officer September 2013

2 Distribution Distribution of controlled copy Copy No. Holder 1 The Office of the Government Chief Information Office (OGCIO) 2 IBM China/Hong Kong Limited (IBM) Copyright IBM Corporation

3 Table of Contents 1. Executive summary Previous Digital 21 Strategies Latest technology developments SWOT analysis Vision Smarter Hong Kong, Smarter Living Strategic thrusts to deliver the vision of Smarter Hong Kong, Smarter Living Driving towards Smarter Hong Kong Smarter Living Introduction Context Report Review of Hong Kong s current ICT strategy and development Looking back Facilitating a digital economy Promoting advanced technology and innovation Developing Hong Kong as a hub for technological cooperation and trade Enabling the next generation of public services Building an inclusive, knowledge-based society Summary of achievements and improvement opportunities Latest technology developments Changes under way Technology trends A fundamental rethink of the way people live and work SWOT analysis of ICT development SWOT context SWOT analysis SWOT analysis conclusion Vision Smarter Hong Kong, Smarter Living Articulating the vision Anticipated impacts Strategic thrusts to achieve Smarter Hong Kong, Smarter Living Overview Empowering everyone through technology Igniting business innovation through exploitation of technology Copyright IBM Corporation

4 7.4 Supporting a thriving Hong Kong ICT industry and research and development Transforming and integrating public services through technology Programmes in support of the strategic thrusts Programmes Empowering everyone through technology Igniting business innovation through exploitation of technology Supporting a thriving Hong Kong ICT Industry and research and development Transforming and integrating public services through technology Summary Appendix A Acronyms Appendix B Secondary source documents reviewed Appendix C Acknowledgement Appendix D ICT-related measures under the Mainland and Hong Kong Closer Economic Partnership Arrangement (CEPA) Appendix E Location of Wi-Fi hotspots in Hong Kong Copyright IBM Corporation

5 1. Executive summary Hong Kong was early to recognise the importance of information and communications technology (ICT) developments. In 1998, the Hong Kong Special Administrative Region Government (the Government) published the first Digital 21 Strategy, which was updated in 2001, 2004 and This study reviews the 2008 Digital 21 Strategy and formulates a blueprint to steer and guide the development of ICT in Hong Kong for the next few years. 1.1 Previous Digital 21 Strategies The previous Digital 21 Strategies have enabled the establishment of a world-class ICT infrastructure and have seen significant progress in many areas, including: Robust and affordable communication networks High mobile and broadband penetration and coverage Relatively high usage of e-government and e-commerce services Investments in cultivating innovation is contributing to Hong Kong s vibrant digital economy Progress in securing digital inclusion for all groups Steady progress in furthering Research and Development (R&D) initiatives many in collaboration with Mainland China. Whilst Hong Kong has made significant progress in achieving objectives set by earlier Digital 21 Strategies, advancement and consumerisation of ICT continues to drive change in our daily lives at an accelerating pace, and the technology landscape today - and over the next few years - is substantially different from when the last Digital 21 Strategy was published in Recent radical developments in ICT have reshaped many industries, business models and the interactions between people, businesses, and governments. Looking forward, it is important to understand existing and upcoming ICT trends in order to appreciate the array of potential enablement opportunities and challenges facing Hong Kong over the next few years. Copyright IBM Corporation

6 1.2 Latest technology developments Many opportunities and challenges, highly relevant to Hong Kong s future digital strategy, have recently emerged due to developments in mobile and cloud computing technologies, Internet of Things, next generation workplace, big data and analytics and social media Mobile Recent years have seen an explosive growth in the proliferation of mobile devices and consequently in mobile e-services too. Modern citizens have a rapidly growing expectation to do anything at anytime and anywhere using their mobile devices and therefore both businesses and governments have to rethink how they design and deliver mobile e-services to customers and citizens Cloud computing Cloud computing provides a scalable computing environment for businesses without the need for them to own or manage the computing assets, which allows users to request and utilise computing resources as a service whenever it is needed. One of the most promising practical opportunities presented by this technology is the potential for cloud platforms to offer small and medium enterprises (SMEs) a simple and inexpensive way to harness computing resources for the direct benefit of their businesses Internet of Things Internet of Things (IoT) refers to the pervasive presence of connected devices such as everyday objects embedded with Radio-Frequency Identification (RFID) tags, sensors, and actuators, that have sensing, data capture and communication capabilities. These everyday objects can connect to the Internet and with each other through a network to form a global network of intelligent computer systems and devices Next generation workplace Next generation workplace enables workers the ability to work anytime, anywhere, on any trusted device, in any language. Social networking services with mobile technologies will replace as the primary form of business communication and workers will collaborate based on the swarming work style where teams are formed quickly to tackle a problem or an opportunity and then dissipate. Knowledge is collective through mass collaboration and can be easily shared and accessed Big data and analytics Big data is, in simple terms, an unprecedented massive collection of complex and large data sets that are continually being accumulated from everywhere: sensors used to gather climate information, posts to social media sites, digital pictures and videos, Copyright IBM Corporation

7 purchase transaction records, and mobile device Global Positioning System (GPS) signals to name a few. And the types of data are becoming more diverse and varied. The analysis of this big data can provide new and useful insights into all aspects of life for the benefit of the whole community Social media Social media allows people to create, share and consume information, ideas and content through the Internet. The growth of social networks has risen almost exponentially alongside Internet usage in the past number of years and is another important irreversible trend which provides opportunities to create additional value during the interactions with customers and/or citizens Implications of technology trends These digital forces are changing how citizens live, how businesses work and how governments serve. This radical shift requires business enterprises and government agencies to fundamentally rethink the end-to-end experience for their customers and citizens in addressing their new expectations, namely: instant access to information, products and services engagement as individuals, on their own terms anytime and anywhere transparency from businesses and government agencies they interact with trusted, mutually beneficial relationships that go beyond one-time transactions seamless experiences that deliver product and service quality. 1.3 SWOT analysis Having looked back at the history of Digital 21 Strategies in Hong Kong and examined the current and future major technology trends, it is pertinent to consider Hong Kong s unique advantages and disadvantages in the form of a SWOT (strengths, weaknesses, opportunities, threats) analysis summarised in the table below. Strengths First class ICT infrastructure Robust & reliable legal, business and economic environment Receptive market for innovative products Strong regional business hub Strong reputation for commercialising new developments in business and technology Weaknesses A relatively small domestic market Many competing thriving sectors (e.g. financial) Shrinking manufacturing & industrial sector Shortage of land Copyright IBM Corporation

8 Opportunities Growing opportunities in Mainland China as its economy shifts from exports to domestic consumption, the services sector expands, and China s own exploitation of ICT grows rapidly Huge possibilities presented by the next generation of technology trends (e.g. Cloud, Mobile, Big Data, Social Media, Internet of Things) International experience illustrates the benefits of leveraging PSI datasets more widely Innovation in healthcare and elderly services incentivised by the ageing population Threats Competition from other Asian and global economies which are also seeking to establish digital leadership Uncertainties in the global economic outlook Risk of digital divide for those without ICT access In conclusion, Hong Kong has excellent hard and soft infrastructure and a population with a strong global and regional reputation for trade and financial business acumen. Although the domestic market is small, the opportunities arising from physical and cultural proximity to Mainland China combined with the next generation of technology trends provide potential for Hong Kong to thrive among other competitive economies. 1.4 Vision Smarter Hong Kong, Smarter Living We envision Hong Kong as a world-renowned smarter city where technology helps improve quality of life by enabling: Citizens and visitors to be more engaged with, and understood by, businesses and government agencies through intelligent and interconnected touchpoints Businesses to be more innovative in anticipating changing customer needs, and growing and expanding beyond Hong Kong borders both physically and digitally Hong Kong s ICT industry to continue to be successful and reach new heights by exploiting both the technology possibilities and the opportunities in the Mainland The city to be more sustainable through smarter, interconnected infrastructure The community to be more inclusive and prosperous through an open and collaborative digital ecosystem Hong Kong society to be more knowledge-based, with real-time access to knowledge and information anytime, anywhere. Technology can facilitate better communication and great collaboration between and among Hong Kong s citizens, businesses and government departments and should be a means of support and assistance to disadvantaged groups in our society. Under the new vision, we expect significant impact on various sectors in the Hong Kong community as follows: Copyright IBM Corporation

9 For the Community, the achievement of the vision would mean having easy and ready access to most public services and private sector services generally available on personal mobile devices from any location. The services will usually be highly personalised to give richer user experiences and fully integrated for maximum convenience. For the business community, the smarter city would be able to build the necessary infrastructure to enable fast ubiquitous high bandwidth access, extensive choice of ICT services and platforms for trading and payment, for example. In addition, through the broad promotion and adoption of e-commerce, businesses will further enhance their capabilities in reaching to their customers more effectively and more broadly including crossing the border beyond Hong Kong and Mainland China. For the ICT Industry, the smarter city is expected to drive further development of the ICT industry, and by becoming a role model in exploiting technologies, Hong Kong will provide unique opportunities to the local lct industry. Hong Kong will provide the ecosystem to support the development of ICT startups and also the more mature services and environment needed to encourage the development of City ICT champions recognised as leaders in their fields both regionally and globally. For the Government, the enhanced e-enabled public services will allow civil servants to respond more effectively to citizens by offering more personalised and targeted services. In particular, civil servants would be able to provide more face-to-face time in consulting and helping citizens directly rather than spending time on administrative matters. For each of these four major constituents of Hong Kong society, we have proposed a specific strategic thrust designed to deliver the Smarter Hong Kong, Smarter Living vision. 1.5 Strategic thrusts to deliver the vision of Smarter Hong Kong, Smarter Living As the broad strategic programmes, we have designed the following four strategic thrusts to drive Hong Kong towards the vision: Empowering everyone through technology Igniting business innovation through exploitation of technology Supporting a thriving Hong Kong ICT industry and research and development Transforming and integrating public services through technology. Empowering everyone through technology ICT now plays such an important part in every aspect of life education, work, leisure, entertainment, culture, arts, business and public services that citizens can more readily reach their full potential only when they have the confidence, literacy and basic skills to access and use technology. In order to achieve the vision, it is vital to ensure that everyone has these basic capabilities to operate and live in an ICT-rich environment. This strategic thrust also Copyright IBM Corporation

10 drives the availability of high bandwidth Internet access through wired, mobile and/or other wireless mechanisms throughout all the main areas of the city. While the primary focus of the vision outlined in this report is the people of Hong Kong, there is also an opportunity to significantly improve the experience of people visiting Hong Kong whether for business, tourism or visiting friends and family. Another important concern is to include and enable the participation of all groups in this new digital environment also specifically considering the elderly, people with disabilities, those with less / limited financial means, etc. It is also important to look at the possibilities for technology to improve the quality of life for disadvantaged groups for example better facilitate people with disabilities to find and make their way around the city. To support the realisation of this thrust, the key initiatives include: Providing every citizen with a free and universal Hong Kong Digital ID enables every citizen to conveniently and securely use a much broader range of smarter city e-services (that are more personalised and richer in function) to process everyday transactions (e.g. e-cheques) Facilitating access to technology and broadband aims to remove the barriers that may prevent citizens from enjoying the benefit of living in one of the leading digital cities in the world Boosting education by enabling e-learning for the whole curriculum in every classroom through high bandwidth access for all schools truly revolutionises the experience and quality of learning for students in Hong Kong by allowing multimedia online access to relevant multi-lingual courses, teaching materials, test evaluations and other collaborative e-learning tools; and liberates teaching professionals to devote more focused attention on individual students to drive enhanced learning outcomes Including elements of programming in every child s education programme to inculcate a generic logical mindset and a proclivity to look to ICT for solutions provides an exciting new way to help our children to become familiar with harnessing the immense power of technology, to personally develop creative solutions to everyday problems and to be trained in structured and logical thinking Providing visitors and citizens targeted information enriches the engagement of visitors and citizens via advanced, personalised and multi-media online experiences; and maximises each visitor s and citizen s enjoyment and convenience. Igniting business innovation through exploitation of technology Some of the most exciting and influential business developments in recent years (including Google, Facebook, Wikipedia, Amazon and Alibaba), have arisen, not from new technological inventions as such, but from inspired new ideas about how to exploit technology. This strategic thrust strives to establish new ways to ignite, nurture and protect such innovative ideas and to create new collaborative environments where these ideas can be shared, exchanged and further developed into potential business innovations with meaningful economic value for Hong Kong. Copyright IBM Corporation

11 The variety and volume of business innovations can be further strengthened by opening up all public sector information (PSI) for use by ICT-savvy entrepreneurs. For example, experience in the US has shown how broad PSI sharing can electrify public interest and excitement in the development of new mobile apps which make innovative use of this information. To support the realisation of this thrust, the key initiatives include: Establishing innovation and collaboration platforms to accelerate innovative business applications of technology to boost Hong Kong s competitive edge fosters creative and innovative communities to drive vibrant exchange of ideas, leading to the development of exciting and valuable new ICT-enabled business models / solutions Promoting cloud platforms and knowledge sharing for small and medium enterprises to help them succeed through increased leveraging of technology seeks new ways to stimulate SMEs to increase practical use of new technologies in order to boost productivity, to achieve greater business success and to expand employment opportunities for the community Accelerating innovation by making all public sector information available for use by private and other non-government sectors unlocks the hidden treasure trove of PSI datasets for free use by ICT-savvy entrepreneurs, enabling them to create innovative new applications (with an emphasis on the mobile variety) for use in Hong Kong and, where proven successful here, potentially for the international market. Supporting a thriving Hong Kong ICT industry and research and development As outlined in the SWOT analysis, Hong Kong s open and transparent governmental framework and excellent ICT infrastructure make Hong Kong a fertile ground for ICT entrepreneurs to grow their innovative ideas into thriving ICT business startups. The unique advantages of close proximity to Mainland China coupled with Hong Kong s longstanding tradition as an important regional business hub can help shape a unique flavour to Hong Kong s emerging ICT industry. This strategic thrust addresses the challenges of how to grow a unique thriving ICT industry in Hong Kong - helping to translate innovation and research into business opportunities and economic value. The attraction and retention of the right ICT talent is a critical first component to this proposition. In association with the innovative environment mentioned in the previous strategic thrust, the right quantum of human capital and talent will provide the intellectual engine required to drive the ICT industry and ultimately help to create ICT champions in Hong Kong. Although we recognise that Hong Kong has a small domestic market, the opportunities arising from collaboration with Mainland are manifold especially for Research and Development (R&D). Meanwhile the prevalence of design talent and the extraordinary mobile penetration in Hong Kong suggests that the unique flavour of the Hong Kong ICT industry could help establish Hong Kong as a Mobile Centre of Excellence and a Digital Media Centre of Excellence. Copyright IBM Corporation

12 One measure of success for Hong Kong will be any measurable increase in the number of business startups at the intersection of business and technology and the emergence of potential ICT champions, amidst a competitive marketplace for talent and ideas. To support the realisation of this thrust, the key initiatives include: Supporting the evolving ecosystem to groom technology startups creates the culture and environment to bring together all the necessary ingredients for successful growth of new start-ups at the intersection of business and technology to foster the emergence of Hong ICT champions Growing top talent in ICT and business technology application puts in place the right professional frameworks and provides more focused training in collaboration with ICT industry leaders for the mutual advantage of prospective employers and employees alike Establishing Hong Kong as a Centre of Excellence for Multi-Platform Apps actively facilitates and encourages more business opportunities, events and competitions for multi-platform solutions Continuing to develop Cloud Computing and Data Centre Hub tries more effective promotion methods for cloud computing and data centre provisioning Exploiting convergence to combine Hong Kong s strengths in the media, creative and technology industries to make the city a Centre of Excellence in Digital Media builds a collaborative and innovative platform for professionals, amateurs and regular citizens to innovate, co-create and distribute new content through the latest digital media Continuing to leverage Hong Kong s unique position by enabling ICT businesses to access Mainland opportunities seizes full advantage of the physical and cultural proximity to expand the market for highly-prized solutions and services derived from Hong Kong s business acumen and technological innovation into the Mainland Transforming and integrating public services through technology Over the last decade, e-government services have evolved from the online provision of static historical public information to a more citizen-centric interactive multi-media twoway customer experience for both citizens and businesses. New and emerging technologies are exponentially expanding governments capacity to provide next generation public services. This strategic thrust seeks to build upon the Hong Kong Government s achievements in evolving its services and interaction relationships with the community. Mobile technologies, in particular, offer a transformational channel for more personalised anytime and anywhere services. With the highest mobile penetration rate in the world, Hong Kong is ideally placed to take the next step from e-government to mobile government, fundamentally transforming the delivery and coverage of public services. The key benefit is that mobile government offers a better, more convenient, more integrated and wider range of services which can be highly personalised and locationsensitive. Through the shift from e-government to mobile government and a continued Copyright IBM Corporation

13 acceleration of mobile penetration, there is an expectation that public services should be mobile as a default. At the same time, the Smarter City provides an explosion in volumes of real-time data through intelligent sensors which offer valuable real-time multi-media location-sensitive information that can be instantly communicated to citizens through their mobile devices. To support the realisation of this thrust, key initiatives include: Delivering mobile government to citizens and businesses at their fingertips easy access anywhere, anytime makes multi-platform the default channels of choice for online e-services to increase service quality, to delight and to increase productivity of the world s number-one mobile community Integrating and targeting services tailoring to individual needs designs and delivers more personalised e-services tailored to match individual needs and personal requirements to provide the type of service excellence and operational efficiency for citizens and businesses in Hong Kong Establishing a Smarter City infrastructure through further digitisation and Internet of Things and utilise Big Data to manage the thriving and growing city expands the coverage of sensory and other intelligent devices and further exploit other digitisation technologies throughout the smarter city then synthesise and analyse the mass of resulting data to produce insights and solutions for the benefit of the community as a whole. 1.6 Driving towards Smarter Hong Kong Smarter Living This report sets out a vision and blueprint to steer and guide the development of ICT in Hong Kong over the next few years, and proposes a set of strategic thrusts and supporting initiatives to drive towards the achievement of the vision of Smarter Hong Kong, Smarter Living. A further level of detail, linking areas of action to each initiative, is provided in Chapter 8 of this report. Copyright IBM Corporation

14 2. Introduction 2.1 Context Globally, Information and Communications Technology (ICT, such as the Internet, broadband and mobile technologies) continues to transform the way that people live, spend their leisure time, work and consume products and services. The impact has become all the more fundamental as ICT has become mobile, and as more of the infrastructure and things around us have become instrumented and interconnected. Hong Kong was early to recognise the importance of ICT developments and the potential contribution that technologies could make to Hong Kong s continued success. In 1998, the first Digital 21 Strategy was published by the Hong Kong Special Administrative Region Government (the Government) to set out the vision of Hong Kong as a digital city. As the needs of community changed and the technology advanced over the next decade, the Strategy was updated in 2001, 2004 and The Digital 21 Strategy has served Hong Kong well, and in the light of the scale of the changes during the currency of the different editions of the strategy, and the progress made, the Government has embarked on a more extensive review of the current position in Hong Kong, the role of ICT, international developments, the future strategy Hong Kong should adopt and the programmes and actions the Government and others should take to ensure that Hong Kong is able to fully exploit the benefits of ICT in future. Of course Hong Kong s success in the effective exploitation of ICT rests on the contributions of many organisations and indeed the community as a whole. This strategy review both looks at the actions the Government can take, and how it can work with other important stakeholders and enable them to make their full contributions. 2.2 Report Smarter Hong Kong, Smarter Living is the strategy for the overall ICT development in Hong Kong in the next few years. It moves away from a particular date or century and reflects that ICT or digital developments are now integrated with every aspect of Hong Kong s community, economy and public sector so the strategy is not so much a separate digital programme. Of course, it continues to be very important to have a clear blueprint, actions and timescales for the programme itself, and we recommend the approach to this later in our report. Copyright IBM Corporation

15 Figure 1 Formulation of vision and strategic thrusts Latest technology development Review of Hong Kong s current ICT strategy and development Review & Trends (chapter 3 & 4) Strength Opportunity Weakness Threats SWOT analysis (chapter 5) Vision Smarter Hong Kong, Smarter Living Vision (chapter 6) Empowering everyone through technology Igniting business innovation through exploitation of technology Supporting a thriving Hong Kong ICT industry and R&D Transforming and integrating public services through technology Strategic Thrusts (chapter 7) IBM would like to express its gratitude to all those who helped and shared their views in the course of this study. Copyright IBM Corporation

16 3. Review of Hong Kong s current ICT strategy and development 3.1 Looking back The previous Digital 21 Strategies have enabled the establishment of a strong foundation for Hong Kong s exploitation of ICT, namely robust and affordable communication networks, relatively high usage of e-government and e-commerce services, progress in securing digital inclusion for all groups, and a successful and expanding ICT industry. The diagram below illustrates how each edition of the Digital 21 Strategy has built on the previous progress and taken Hong Kong from foundation, to connection, to acceleration and digitisation High capacity communications systems Common software interface for secure electronic transactions People who know how to use IT A cultural environment that stimulates creativity and welcomes advances in the use of IT 2001 To enhance the world class e-business environment in Hong Kong To ensure that the Hong Kong Government leads by example To develop Hong Kong's workforce for the information economy To strengthen the Hong Kong community for digital exploitation To leverage Hong Kong's strengths in exploitation of enabling technologies Foundation Connection Figure 2 Highlight of past Digital 21 Strategies Acceleration Digitisation 2004 Government leadership Sustainable e-government programme Infrastructure and business environment Institutional review Technological development Vibrant IT industry Human resources in a knowledge economy Bridging the digital divide 2008 Facilitating a digital economy Promoting advanced technology and innovation Developing Hong Kong as a hub for technological cooperation and trade Enabling the next generation of public services Building an inclusive, knowledge-based society Our review of the outcomes of the 2008 Digital 21 Strategy has confirmed significant achievements in the last few years and, at the same time, has identified areas that could be further developed. The following paragraphs examine the results against each of the five key focus areas in the 2008 Strategy. Copyright IBM Corporation

17 3.2 Facilitating a digital economy Government continues to play a significant role as a user, supplier and facilitator of ICT and its applications and of bringing together relevant stakeholders in the community High mobile and broadband penetration Since 2008, through the facilitation of the Communications Authority, Hong Kong has continued to increase its household broadband penetration from 75% to 85.5% (as of March 2013). Meanwhile its mobile penetration rate has rocketed from around 140% to just under 228.4% (as of March 2013) 1. It is among the world s highest, representing a significant margin of difference with neighbouring Asian economies (see figure 3 below). The average peak Internet connection speed of 57.5 Mbps is the fastest in the world and average Internet connection speed of 9.3 Mbps is also among the fastest. 2 Figure 3 Mobile penetration rates in neighbouring economies ( ) Penetration rate 250% 200% 150% 100% 50% Hong Kong Singapore Taiw an South Korea 0% Reference: IBM analysis, Office of the Communications Authority, ida (Singapore), Ministry of Economic Affairs (Taiwan), Organisation for Economic Co-operation and Development Continued increase of ICT expenditure within the Government It is Government s objective to make the best use of ICT to enhance internal operational efficiency and improve service provision. The following table shows the Government s IT expenditure since 2001 and demonstrates a marked increase in ICT expenditure since Reference: Office of the Communications Authority, Key Communications Statistics ( Figures as of March Reference: Akamai, State of the Internet, 4th Quarter, 2012 Report Copyright IBM Corporation

18 Figure 4 Historical Government ICT expenditure Million HKD (budgeted) Reference: OGCIO official website Facts & Figures, Government IT Expenditure. Last updated 31 May Top rankings in competitiveness and affordability Hong Kong continues to be recognised for its ICT development and innovation amongst other advanced economies, as demonstrated in the selected rankings below. These rankings also highlight the gaps that exist between Hong Kong and other developed and developing countries based on criteria such as ICT infrastructure, innovation, and competitiveness. Table 1 Hong Kong s ranking results in selected international ICT rankings Source The International Institute for Management Development (IMD) World Competitiveness Yearbook 2013 INSEAD and World Economic Forum (WEF) Global Information Technology Report 2013 Global Innovation Index 2013 International Ranking 3rd 1st in International Internet Bandwidth 2nd in Business and innovation environment 3rd in Mobile tariffs affordability 7 th worldwide 1 st I in Asia Copyright IBM Corporation

19 These rankings clearly show the strength of Hong Kong s ICT infrastructure which is a critical factor in facilitating the development of the digital economy. Conclusion Through Government facilitation in the highly liberalised market, various telecommunications, broadband and mobile service carriers are building Hong Kong s ICT infrastructure as one of the world s best. Also by leading as example, the Government has continued to increase its ICT spending in the recent years. However, given the speed of development in technology and the increasing demand for easy and convenient access (anywhere and anytime) and faster service, combined with rapidly multiplying volumes of data, Hong Kong will need to continue to focus on building its technology infrastructure to support future growth. 3.3 Promoting advanced technology and innovation Maintaining Hong Kong s edge as a world smarter city for technology adoption and innovation Research and Development (R&D) expenditure The figure below shows the overall trends in Hong Kong s R&D expenditure between 2007 and While public sector R&D investment grew by over 20% in this period, private sector R&D expenditure over the same period has stagnated. Hong Kong s overall R&D expenditure as a percentage of its gross domestic product (GDP) is less than 1% which compares unfavourably with neighbouring economies such as South Korea or Singapore, which are close to 3%. Copyright IBM Corporation

20 Figure 5 Hong Kong R&D expenditure ( ) (in million HKD) Public sector R&D Private sector R&D 9,000 8,000 7,000 6,000 6,352 6,055 7,028 5,265 7,359 5,474 7,545 5,767 7,751 6,194 5,000 4,000 3,000 2,000 1, Reference: Census and Statistics Department, Hong Kong Innovation Activities Statistics 2011 Facilities for innovation Hong Kong has made steady progress in furthering its R&D efforts and capability. For example, the Hong Kong Science Park is developing its phase 3 expansion, increasing the park size by 50% to accommodate 150 additional companies and create 4,000 research-related jobs. This new phase will be completed in stages from 2014 to Cyberport continues to be an important facility for promoting and supporting new and emerging ICT-related enterprises in Hong Kong. For example it has recently sponsored the Mobility Experience Centre (MEC), which is an exchange platform for new technology concepts and mobile experience intended to provide advice to small and medium enterprises (SMEs) on utilising mobile technology to enhance their working environment and generate business opportunities. Copyright IBM Corporation

21 The following table shows some core statistics about the ongoing Cyberport Incubation Programme and two other initiatives in Cyberport. Table 2 Progress of the Cyberport Incubation Programme (as of March 2013) No. of companies admitted 189 No. of patents, registered designs and trademarks granted to incubatees 103 No. of awards granted to incubatees 106 Amount of angel investment funding attracted to the incubatees HKD 55 million Reference: Figures provided by Hong Kong Cyberport Management Company Limited This programme provides incubatees with access to advanced facilities and resources, support in business development, financing and hiring of graduate interns, as well as entrepreneurship and technology training. On-site incubatees are also granted a rentfree office. The Programme provides an incentive for other world-class companies and clusters to develop business partnership with Cyberport tenants and incubatees. The level of intellectual property generated and the size of the angel investment funding attracted give encouraging signs of the benefits of this programme. Table 3 Progress of the Cyberport Creative Micro Fund (as of March 2013) Amount of funds granted (Hong Kong dollars) 6.3 million No. of projects supported 63 Successful completion rate of projects 3 95% Reference: Figures provided by Hong Kong Cyberport Management Company Limited 3 Successful completion of projects refers to the fulfilment of the target outcomes and milestones in the project proposal approved. They are projects that could successfully develop ICT-related business ideas into viable commercial businesses. Many successful CCMF grantees subsequently joined the Cyberport Incubation Programme to further develop their business. Copyright IBM Corporation

22 Launched in August 2009, the Cyberport Creative Micro Fund (CCMF) Scheme promotes innovation within the ICT industry by providing seed funding of HK$100,000 to cover concept and prototype development over a 6-month period to companies spearheading the development of creative ICT-related products or services. Some projects supported by CCMF were subsequently procured by major overseas enterprises. Such investments in physical facilities and centres can take time to generate outcomes, but early signs of success can be seen from the presentation of 5 Grand Awards and 6 Merits of Asia Pacific Information and Communications Technology Awards (APICTA) in 2012 to Hong Kong enterprises, with particularly impressive contributions made to e- Health and to media and entertainment sectors. Adopting Open Source Software (OSS) Government departments have been progressively installing OSS-based systems where OSS represents the most cost-effective solution. Adoption of open source in the new e-government Infrastructure Service (new EGIS), which targets for Platformas-a-Service delivery, is mainly on application server software. Given the rate of OSS adoption, over 50% of the e-services of EGIS III are / will be using JBoss (OSS) as their application server software. As of December 2007, there are around 4,317 OSSbased computers used in 50 Government departments (over 50% of all government departments). The total number of OSS-based computers has increased from 3,440 in December 2006 to 4,317 in December 2007, representing a 25% increase. This reflects that the government departments adopt an open position in the choice of software products and the adoption of OSS has been increasing. They are mainly deployed as web, database, , security, proxy servers and for office systems. Copyright IBM Corporation

23 Utilising Public Sector Information Another important area for promoting innovation is the re-use of Public Sector Information (PSI). The Government rolled out the Data.One portal in March 2011 to create a central platform for disseminating PSI in machine-readable formats to facilitate value-added re-use. It leverages on community wisdom and technological advancements to bring convenience to the public and facilitate business in a costeffective and creative way. Responses have been encouraging that many mobile applications have been developed using this source of data. The most popular PSI dataset, with over 700,000 daily downloads recorded to date, is the traffic snapshot data. The snapshot data provides real-time road traffic information and thus lends itself well to helping Hong Kong drivers to plan and optimise their car journey routes. The Government has also opened up another 11 categories of PSI, and is aiming for more. For information which is open to the public free of charge, it should also be made available in machine-readable formats on Data.One for free re-use. Conclusion While significant progress has been achieved in promoting advanced technology and innovation since 2008, the relatively low level of private sector R&D investment in Hong Kong is an area for attention in terms of formulating Hong Kong s next ICT blueprint. One challenge for further consideration is that, because of Hong Kong s shortage of land and a small domestic market, ICT startups often find it difficult to scale up due to high initial costs. Also the ICT industry is competing for the best and the brightest minds with other business sectors in Hong Kong e.g. financial services. Globally, Asian and other economies are seeking to establish digital leadership to enhance competitive advantage in the new digital age. These factors pose a challenge for Hong Kong to maintain its lead in advanced technology and innovation. 3.4 Developing Hong Kong as a hub for technological cooperation and trade Harnessing Hong Kong s role as a two-way platform for Mainland enterprises and fostering a vibrant ICT industry Closer Economic Partnership Arrangement (CEPA) CEPA offers specific opportunities for Hong Kong s ICT industry in seeking to explore further economic collaboration with the Mainland. For Hong Kong ICT services suppliers, they are allowed to set up joint venture enterprises to provide database services and set up wholly-owned enterprises to provide data processing and software implementation services. For Hong Kong, residents, they are allowed to take computer technology and software proficiency examinations. The full list of ICT-related CEPA measures are at Appendix D. Going forward, cross-boundary electronic commerce mutual recognition of electronic signature certificates will be developed to further expand both Hong Kong and Mainland s digital economies. Copyright IBM Corporation

24 Collaboration projects and platforms IBM s research shows that innovation creates the most value at the intersection of business and technology insight, and through collaboration. Many R&D collaboration platforms have been set up to promote collaboration between Hong Kong and the Mainland at the central, provincial and municipal levels. Examples include the Shenzhen-Hong Kong Innovation Circle and the Guangdong/Hong Kong Technology Cooperation Funding Scheme (TCFS) which embraces ICT R&D. Over 40 joint projects with a total funding of over $250 million have been approved for supporting R&D collaboration between universities, research institutes and technology companies in the two places. Facilities for collaborative ICT and R&D Within the last two years, four Hong Kong universities have established their industry, academic and research bases in the High-Tech Zone of Nanshan District in Shenzhen to conduct R&D and collaborate with their Mainland counterparts. There are currently 12 laboratories in Hong Kong that have gained the status of Partner State Key Laboratories (PSKLs) by pairing up with the SKLs in the Mainland. Some of them are actively conducting cutting-edge ICT related research. Conclusion There are encouraging signs of greater collaboration with the Mainland, on R&D activity in particular, which occurred over the last few years. The CEPA provisions continue to provide opportunities for greater economic collaboration going forward. 3.5 Enabling the next generation of public services Using ICT to improve public service delivery The figure below shows the dramatic increase in the number of e-government information enquiries and transactions within Hong Kong in recent years, which signifies the readiness and willingness of Hong Kong citizens to embrace technology and make greater use of public e-services. Copyright IBM Corporation

25 Figure 6 Number of e-government transactions and information enquiries (in millions) 14,000 12,912 12,000 10,000 8,000 6,000 5,536 4,000 3,431 2, Transactions Information enquiries Reference: Figures from internal surveys done by OGCIO (started in year 2010) In common with other developed economies, Hong Kong should anticipate the public s rising expectation for more and higher quality public e-services, partly fuelled by citizens positive experience of e-services available in the commercial sector. Therefore it is important that Government is prepared to provide public services that are more integrated around the needs of the citizens and more personalised to their circumstances. e-government services ICT exploitation offers the Government opportunities to increase understanding of citizens and issues through better, more timely analysis. This provides the Government with the means to anticipate and address issues early rather than making a lagging response to demand. Over the years since the first Internet services, Hong Kong s e- Government services have evolved from simple department-based information websites through to more integrated citizen-centric e-services that have greater interaction with the user. This evolutionary process is amply demonstrated by GovHK, which was the Government s first step in providing a one stop shop for public e- services in The figure below illustrates how this has since evolved into MyGovHK, an integrated and personalised portal for citizen-centric e-government services. A mobile version is planned to be launched by the end of Copyright IBM Corporation

26 Figure 7 Development timeline of e-government Table 4 GovHK statistics (as of May 2013) Traffic ranking in Hong Kong 112 Average number of daily visits to the desktop version ( Average number of daily visits to the mobile version (m. 74,983 20,305 Reference: Figures from internal survey done by OGCIO Figure 8 Average numbers of daily visits to GovHK 100,000 75,000 1,609 3,738 10,438 Mobile version Desktop version 50,000 25,000 46,819 66,312 68,109 70,854 22, Reference: Figures from internal survey done by OGCIO Copyright IBM Corporation

27 There have been more examples of recent progress on e-government services: Customs and Excise Department redeveloped the Air Cargo Clearance System in late 2010 to provide faster customs clearance, enhance its cargo handling capacity, improve security and accuracy in cargo selection, and achieve more efficient analysis of data including the smuggling trend. It also fully rolled out the Road Cargo System in late 2011 to facilitate electronic customs clearance. The utilisation of the latter reached 36 million in 2012, which is 4.6 times that of Ration and Valuation Department (RVD) launched the ervd Bill service in late 2010, allowing the public to receive the quarterly demands for rates and/or Government rent via the Internet in advance of the paper bills. It notifies users on issuance of electronic demands and may remind users of the payment due date. With the one-stop service for electronic company incorporation and business registration co-launched by Companies Registry and Inland Revenue Department in mid 2012, local and overseas investors can now start businesses less than one hour. The new service streamlines and automates the two departments business processes to facilitate business startups in Hong Kong. It also allows submission of 15 commonly filed statutory returns for companies. Leisure and Cultural Services Department completed in late 2011 Phase 1 of the Next Generation Integrated Library System that allows searching, reservation, borrowing and renewal of library materials through different platforms, and piloted the Radio Frequency Identification (RFID) technology in selected branch libraries. The implementation of Phase 2 has commenced, progressively rolling out such new functions and services as self-service printing, e-payment, customer relationship management, virtual reference service, electronic resources management, inter-library loan, and management information system. Development of the first stage of the territory-wide patient-oriented Electronic Health Record (ehr) Sharing System is in progress, with public consultation on the Legal, Privacy and Security Framework being conducted. Subject to the enactment of the ehr legislation, the ehr Sharing System is planned for rollout by the end of More examples and relevant information on the planning and progress can be found online. 4 The following figure illustrates the relative usage of the top ten most popular e- transaction and information enquiry public services in Hong Kong. It is interesting to note the variety and functional diversity of these e-services ranging from tracking of international Speedpost deliveries to library book online reservation and renewals. 4 Reference: Panel on Information Technology and Broadcasting (Papers), Copyright IBM Corporation

28 Figure 9 Top 10 most popular transactional e-services in the period from 1 January to 31 December 2012 Reference: Figures from internal survey done by OGCIO Figure 10 Top 10 most popular informational e-services in the period from 1 January to 31 December 2012 Reference: Figures from internal survey done by OGCIO Copyright IBM Corporation