Legislation on digital economy is both an inherent requirement for the high-quality development of digital economy and a necessary step to safeguard security and prevent risks. Hong Kong cannot afford any further delay in legislation on digital economy and e-Government services.
 

With the rapid development of information technology and the extensive use of digital technologies such as the Internet, cloud computing and AI, digital economy has become a key driver for economic growth. At present, major countries around the world all attach great importance to the development of digital economy, rolling out strategic plans and exploring the enactment of legislation to impose regulations in order to facilitate the healthy development of digital economy. For example, the State Council has issued the Plan for Development of the Digital Economy During the “14th Five-Year” Period to promote digital industrialization and industrial digitization, as well as to improve the governance system for digital economy; Singapore has introduced a Smart Nation blueprint; and the UK has launched the Digital Economy Act and the UK Digital Strategy.

In the case of Hong Kong, the Financial Secretary announced in 2022 the establishment of the Digital Economy Development Committee to accelerate the process of digital economy, and the committee would undertake in-depth studies in four major areas, i.e., digital infrastructure, cross-boundary data transfer, digital transformation of enterprises, and human resources support. The HKSAR Government has also taken measures in this regard. For the digital economy, it has launched the Commercial Data Interchange (CDI), and in the Budget, it allocated HKD50 million to expedite Web3 development and set aside HKD500 million to accelerate the digital transformation of small and medium-sized enterprises (SMEs). For e-Government services, it has set up the Next Generation Government Cloud Platform, the Big Data Analytics Platform, and the Shared Blockchain Platform. In his 2022 Policy Address, the Chief Executive set the targets of turning all government services online in two years and providing one-stop digital services by fully adopting “iAM Smart” within three years. He also stated to further open up data and expand the 5G service network.

However, generally, the authorities have focused more on digital infrastructure construction, but made poor efforts in legislation. The amendment of the Copyright Ordinance was finally adopted at the end of last year, i.e., 17 years after it was first released for consultation in 2006. But this was just time spent on trying to save Hong Kong’s copyright law from lagging behind the rest of the world for 20 years. We should take this as a fresh start and keep pace with the times by launching a new round of reviews on copyright concerning issues such as illegal streaming devices, data mining and AI in order to safeguard the soundness and competitiveness of Hong Kong’s copyright regime. In addition, according to the 2022 World Digital Competitiveness Ranking published by the International Institute for Management Development in Lausanne, Switzerland, Hong Kong ranked 9th among 63 major countries and economies in the world. We ranked only 18th in “Future Readiness”. At a more detailed level, we ranked 48th in “government cybersecurity capacity” and worse still, the lowest in “privacy protection by law”. I am pleased to see the Government is preparing for cybersecurity legislation, and planning for amendments to the Personal Data (Privacy) Ordinance, such as establishing a mandatory data breach notification mechanism and requiring formulation of a data retention policy to better embrace the challenges in the digital economy era.

Balance science & legislation and clarify management mechanism

Firstly, as data elements are the core engine for deepening the development of digital economy and e-Government services, their ownership and the rights to use and transfer them should be clearly set out in the law. At present, Hong Kong’s legal provisions relating to data are stipulated separately under the Personal Data (Privacy) Ordinance and the Copyright Ordinance, and there is no specific legislation to regulate data management. This goes against the global trend where countries are proactively setting up data governance systems. For instance, the EU enacted the General Data Protection Regulation in 2016 and made it mandatory to protect personal data rights in 2018, and the Mainland put into effect the Data Security Law and the Personal Information Protection Law last year. Hong Kong lacks a data management mechanism, which will hinder the Government and the private sector from opening up data and affect the progress of data flow. I suggest that the Government should, by drawing reference from Singapore’s Public Sector Governance Act, make clear the circumstances under which the Government must share data in order to alleviate privacy concerns. It should also explore establishing an accounting and audit system for data factors of production by way of legislation to encourage the private sector to open up data.

Furthermore, it is necessary to strike a balance between regulation and development in legislation on digital economy. For people using data to commit crimes or engage in improper operations, including platforms that abuse their monopoly status, the Government can draw reference from the Digital Services Act and the Digital Markets Act newly introduced by the EU to take necessary actions. For areas relating to application of new technologies such as AI, big data and cloud computing, the Government should remove unnecessary regulation and burden on enterprises. As the first step, it should consider removing non-regulatory measures such as those pertaining to technical standards in order to fully unleash the vitality of digital economy development with an accommodating mindset.

Speed up data flow to facilitate industrial digital transformation in Greater Bay Area

The development of the Guangdong-Hong Kong-Macao Greater Bay Area (Greater Bay Area), which has a huge market and great potential, requires smooth cross-boundary flows of people, goods, capital and data. The HKSAR Government is working with relevant Mainland departments to study specific facilitation arrangements to enhance such flows from the Mainland to Hong Kong, and will likely launch a pilot scheme for cross-boundary data flow in the Greater Bay Area this year. I hope that the Government and Guangdong Province, besides jointly coordinating and discussing to promote the construction of digital facilities and speed up data flow in the Greater Bay Area, could also further take forward the country’s Plan for Development of the Digital Economy During the “14th Five-Year” Plan Period and explore setting up a new mechanism for cross-regional and cross-platform collaboration of various industrial clusters in the Greater Bay Area. This could help promote the integration and sharing of innovative elements, enhance the collaborative supporting capabilities of industrial chains and supply chains, and promote the digital transformation of the industrial clusters in the Greater Bay Area in the long run.

This is a free translation. For the exact meaning of the article, please refer to the Chinese version.