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Question and Answer Session


									Transcript of the Question and Answer Session Question - Doug Oxley, Hong Kong Society of Accountants: The panelists talked about cost in general but nothing specifically. Can we have some idea of specific cost? Answer - Mr Allen Ma: Let me make sure I have picked up the question correctly. Your asking, from an accountant’s perspective, the cost of implementing e-commerce in Hong Kong. I am also an accountant, so see if I can interpret it. Actually, it is not a cost issue here. The cost of investing into the hardware and software, etc, is very minimal. It is really mindset and your desire to invest into For a small business bringing up your people to the e-commerce world that matters.

to be involved in the Internet and e-commerce, you are probably talking about between $30,000 and $50,000 to have a good set-up in your office. I am talking about a class A set up – not involving pirated copies of software. Answer – Anthony Au: I think that price is about right, but on the other hand it really depends on what kind of e-commerce we are talking about. I think my definition for e-commerce is really talking about, if you have nothing to start with you might even want some e-mail accounts, information that you can post to your customers, that’s what I call the first step. So for something like that, you are talking So I think the first thing is you what is the first step and about some catalogues so people can access your information, that can go down to as small as HK$5,000, if you already have a computer. also what you want to do in a few months time. Question – Alice Mak, BAT: I would like Allen to share his experience with us. We agree that for this e-commerce, especially we need a lot of IT resources, like people with artistic sense, who know psychology, know all the craft design. These are the group of totally out of discipline type of people and they are creating something very innovative, very creative. group of a different type of animal? But on the other hand, at the back -end you need a lot of support. So how could those traditional IT managers manage this How could they make this project a success? have got to know what you want, and also be able to know

Answer - Mr Allen Ma: I think there are two approaches. One is basically you out-source all of this to a player in the business, so that you do not get involved in all the nitty-gritty and just focus on your business.

The second alternative is that if you believe this will become one of your core competence in the future and you want to really understand it and get your hands dirty, then you need to start to give the chance to your IT people – I’m using your terminology, IT people – to play around. Do not restrict their innovation, do not give them a fixed agenda, because, today, nobody really knows how to do e-commerce properly and correctly, there is simply no single answer. So, give them the right opportunities and environment to play around and very quickly, through their dialogue with people outside the company, through their reading of journals, through their browsing of websites, etc, they will find a much better way. It may not be the only correct way. Answer – Anthony Au: I just want to add a little bit. I will tell my IT people that if they are not going to change, how can they do a smart job with my company? You go out but you cannot find another job; you’ve got to change. Question: We’re all talking about e-commerce here, and the development of the e-commerce industry in Hong Kong, and what still seems to be the biggest obstacle to the development of e-commerce amongst SMEs, is the fact that it is still difficult for them to get merchant accounts in banks. There is some talk about some of the banks offering these things but it is still difficult for SMEs to get merchant accounts. Answer – Anthony Au: I think that a merchant account is not difficult only for the SMEs, it is the same for even the bigger companies. But I think that is going to change. As long as we build up the momentum in Hong Kong, more banks are And on the other hand, even though we really don’t have going to try and line up and get your business – like the property – so I think that is going to change very soon. the service, I think there are a number of things that can be done, because you are really talking about the SMEs and they will start from very small items. Say, for example, one of my friends who started the business, they sell the pictures of the movie pictures. That is something that they will eventually lose some money on because some guy is not going to pay them, but because of the very high profit margin they can afford to lose 10% to 20% of the money that supposedly they should collect and they still make a good profit. So I think that this is what I call the innovation. You should be looking at areas where you can have a good return of profit. Ms Tan Poh-lee: Can I add something.

I guess, with the introduction of the

Electronic Transactions Bill, that should also help. Chairman: It is also worth it, I think, if you are approaching banks, to remember the methodology I mentioned at the outset, which is, if you are very keen to get this business going, you can let the bank keep the money for three months and then hand it over to you at the end of the three months. I mean it’s better than nothing. I’ve come across this on previous occasions where the credit rating of the merchant was not very good but they were desperate to get funds and that was the arrangement that was made. Question: When you talk about e-commerce, and actually what you said, raising money, the question I always ask myself is, what’s the sort of concept of money these days? Because if you look at the really successful companies in this field, whether it is Adobe or even Amazon, they are all making losses in the sense that you have to make losses first to build up the brands, but in the future you have a lot of money and then the stock price actually pays it back. So the whole concept of how people look at money in short-term financing versus long-term financing – what is your view about whether this is really the key issue for e-commerce? Answer – Anthony Au: I will try to answer the question. What your talking about is you lose money in business but you earn money in the share-price raising. So, this is something that more people are talking, in Chinese ‘chow foh gei’ – that means you are really trying to trade a stock to make it a high price. To me, I think that this is controversial. America can work – not necessarily Hong Kong can work. But at the same time, what I personally believe is that we can go both ways. I mean at the time that we are still working on the stock price going up, at the same time we try to make the business work, make the business model work and also make money at the same time. So, I think that is the only way that we will not create another bubble, the technology bubble. So there is actually a lot of business in e-commerce that can make money. Answer – Mr Allen Ma: I think, as a businessman, the focus should not be, really, on the stock price short-term fluctuation. There are a lot of reasons why stock prices will fluctuate but as a serious investment my suggestion for you is really to look at the sustainability part of your business. Are you really building a business model that will give you a long-term and defensible competitive edge, rather than say that I float off something, I make money and I run. There are opportunities, but those opportunities are getting fewer and fewer. In the investment community they

call this ‘the bigger fool theory’. In other words, you will play up the price and you will always find a bigger fool to accept the stock from you. Is that going to happen in this world? I don’t think so. There may be a few exceptions, but generally speaking, it is untrue. Chairman: I think, also, maybe there is too much focus on de novo e-commerce businesses. I mean most successful e-commerce will be an adjunct, an add-on to an existing business and as we have heard earlier, the investment is really quite small. You can get off the ground for fives or tens of thousands of Hong Kong dollars, and you can be providing a service that is useful to your customers and will make them come back. Question – Roger Marshall, HK Venture Capital Association: There seems to have been an ambivalent view as to whether there is a role for venture capital in the development of e-commerce. On the other hand, there have been discussions, recently, following the publication of the final report of the Commission on Technology and Innovation, which seems to imply that this transformation that we are looking for in Hong Kong is certainly going to need venture capital and venture capitalist skills. I wonder if I might refer this question to, really, all members of the panel or any of them. Is venture capital something which is important to the development of e-commerce in Hong Kong? Answer – Mr K.C. Kwong: The short answer is yes, and that is why, in fact, we have established this Applied Research Fund of $750 million, and worked together with three venture capital companies to try to make the best use of the funds to finance really innovative ventures. And, also, later this year, I think the plan is that we will have the establishment of the Growth Enterprise Board, because for a lot of these new set-ups, capital is, of course, very important if they have to sustain their business. Answer - Mr Anthony Au: I think my answer is yes and no. The yes side is, I agree with what K.C. said, that money is important. I think that in many areas the money is going to help to kick-off e-commerce. On the other hand, money can also be dangerous for the people who do not know how to use the money, then I think they will lose the money. What I try to say is that, there are a lot of investment traps. thing as the other guy does at half the price. quarter the price. I think that people always see what the other guy is doing, so they want to do the same Another guy comes in and also wants to So I At the end of the day, nobody is going to charge any money.

think it happens every day.

Even though (there is) the new money from EC, I So I think that it is

personally see it is already invested in some hopeless business. good but they’ve got to be careful.

Answer – Mr Allen Ma: I think venture capital will be very important in promoting e-commerce around the world, not just in Hong Kong. It is not really the amount of money you can raise through venture capital that matters. It is really the mindset and the selection and approval process adopted by the venture capital funds that matters. In the Internet world, as we have seen earlier on, we are talking about a very short business cycle and a very short decision-making cycle times too. you want to invest into those projects. So, you cannot use a conventional investment review type of mechanism to look at whether If we keep on using the conventional ones And because we know there will be no investment at all in the e-commerce world.

that we need a lot of pretty risky but manageable ideas for us to put our money in, hoping that maybe only 10% of them will fly, which is already very good for a venture capital fund, then we probably have to change our mindset, move into this VC fund mentality and make our investment decision accordingly. Answer – Ms Tan Poh-lee: My answer would be yes, but it depends on what you expect a VC entity to invest in. Because as John earlier pointed out, if you are looking to grow your business but you have already got your business model in mind and you are looking to sell your organisation’s product or services or information to have a broader reach of customers, then the investment is not large and perhaps you should not need VC money. Because whenever you invite an investor into your organisation, you are losing, perhaps, control, you are losing certain elements of management – perhaps you need to share that – and also, VCs always expect exit mechanisms, which, perhaps, are different from your own outlook with your bu siness. So, you are losing something and you should ask yourself whether you really need that money if that’s the model you’re going (with)? But, of course, if you are starting a new business and it is a new concept, then the VCs are very interested in investing and perhaps you do need that leg-up, that boost to your business. Question – F.T. Chan, HKU: My colleagues and I are discussing the issue of customer protection in e-commerce. I think that will be very important to create the kind of confidence for people to use the e-commerce. companies, to set up their own rules? Will the Government or the Consumer Council do something about it or will it be left to individual enterprises, And, who is going to be responsible when someone uses, for example, my information to complete a transaction that is not really

coming out from me?

I think the certification will only be part of the solution

because some companies just allow customers to place orders or create transactions without any kind of a certification scheme. Answer – K.C. Kwong: I think there is probably confusion here, which seems to be based on the assumption that electronic commerce or electronic transactions are different from normal conventional paper-based transactions, that a different type of consumer protection law should apply. relevant. I disagree with that. I would suggest that whether or not the transaction means is electronic or not electronic is not particularly As with conventional transactions, basically, we have contract laws and so At the end of the day it is the consumers, based on the on to protect the consumers.

information provided, who make the decision whether to buy or not to buy. And on the Internet, because of the anonymity, in most cases, of the sellers, the risk involved tends to be higher, and that is why the branding of the services of products is so much more important on the Internet. There is, of course, talk within the Internet community of the introduction of a system of trust labeling. consider doing, but that will not require legislation to introduce it. Answer – Ms Tan Poh-lee: I totally agree with K.C. I think the legal structure in place does protect consumers at the moment, and buying on the Net is no different from ordering over the phone or mail-order services or just going into a shop, because the Sale of Goods Ordinances, Supply of Services Ordinance, Control of Exemption Clauses Ordinance, they all apply, even though you buy on the Net. What, I think, the man in the street is more concerned about is, of course, credit card security, because normally, it is not whether or not a contract is formed or what contract has been formed, or what protection there is for the consumer vis-a-vis the goods or the services, it is whether that credit card transaction is secure; whether somebody can hack into it and get my credit card details. And, you know, as Allen pointed out, it is a mindset and mindsets are changing, even amongst consumers, and many years ago, we didn’t supply our credit cards over the phone, and now we do it all the time. So, I think mindsets will change. That, in fact, is something, which, for example, our own industrial and trade organisations can

Question – Michael Chan, Council Member of HK Society of Accountants: I have a question on the legal framework, following on from the last question. Certainly, the passing of the Electronic Transactions Bill will help the situation but

there are, certainly, other legal aspects that we need to take into consideration. Just to give examples, taxation, prevention of money-laundering. Certainly, I think there would be a need to review most, if not all, of the legislation in Hong Kong in the context of the changes brought about by e-commerce. Will there be or is there a task force at the moment, carrying out this particular project or mission? Answer – Ms Tan Poh-lee: I think, certainly, you point out certain hot issues in relation to e-commerce, and taxation is one of them. In particular, I think the Hong Kong Government, together with governments all over the world, is grappling with cross-border transactions, grappling with e-commerce issues. And the Hong Kong Government can only take a step by step approach and address the more urgent needs, and I think the Electronic Transactions Bill certainly does address some urgent need to set up a legal framework that would greatly help electronic commerce in Hong Kong. Having said that, of course, experts like yourself will contribute greatly to the discussion on whether the taxation framework in Hong Kong needs to change, and this is something that many countries all over the world are grappling with. You raise a good issue. Answer – Mr Allen Ma: question and the answer. Can I add the commercial perspective on to this I think, as Hong Kong businessmen, we need to ask The absence of any taxation law around the It is still a gray area.

ourselves what does it mean to us?

world today, I believe it is giving us a lot of advantages. Don’t just sit there, take charge of the situation.

Question: Today’s title is ‘Opportunities and Challenges’, and I have not heard anything about the challenges from the experts, for example, Singapore and the Greater China region, and would you like to, please, give more detailed information on the challenges. And, I strongly agree with Mr Anthony Au, that one point is that PNet, everything is cost, and I am not agreeing that the PNet is necessary, and to increase our competitiveness, I think we should consider that, to cancel PNet. Answer – K.C. Kwong: As the Policy Bureau with responsibility for telecommunications, I had better answer the question on PNets. Obviously, for those who use the Internet or for the Internet service providers, they would argue very strongly that PNets charges should be dropped completely. But for those who provide the telecom infrastructure – like Allen’s parent company – are they going to

invest so that people can use it freely, without paying for the investment? the infrastructure provider and the cost to the consumer. one of the lowest Internet access charges in the region.

So, at the

end of the day, it has to be a balance, a balance between the return on investment for And I think we have, if you include the PNet’s charges and all the charges for connection to the Internet, we have

Answer – Anthony Au: This is the time when I don’t agree with K.C. I have been trying to say let’s remove PNets for four or five years. And I think that I am very, very glad that last Saturday I was with Dr William Lo, of the previous IMS, and we were talking about PNets because we’re talking about the Online Education Forum – the future of online education in Hong Kong. One of the major obstacles, really, on the education side is PNets prices. And Dr Lo said, okay, it’s too expensive. But in And he said that – because now he is a user. So I think it is very interesting.

fact I try to have lunch with Allen because I try to talk him out of the benefits of not having the PNets. I don’t know if he still wants to have lunch with me anymore. But on the other hand, PNets as a whole is a very small proportion of the income of what we are really talking about. I think that we are really talking about using a little fish to fish for the big fish. So, by removing the PNet licence, there are a lot of other areas that we can build and I think that we are also, in particular, talking about it on an international level. I think that there are a lot of advantages we can get back. This is the Internet world, I think that we should invest in it and let’s remove I, otherwise we make it more difficult. You can see from the newspaper that the school group is really trying to negotiate removing it. But why make it so complicated? personal interest for removing it. I have to tell you that I do not use PNet licence because I … so it is not because of my But on the other hand, I think for the long-term benefit of Hong Kong we should remove it, because upgrading costs are high, the benefit is not big enough to substantiate the difficulty we are going to get from it. Ms Tan Poh-lee: Can I just add something before Allen defends his company’s position. I think we also can look at examples in other countries. For example, in England, the largest Internet access provider now is Dixon, and of course there is no subscription charge, no PNet charge, it is absolutely free and users pay for usage o-online. So, as all speakers have earlier indicated, this is an evolving industry and the industry in Hong Kong may evolve along the lines of examples in other countries. Answer – K.C. Kwong: There seems to be a confusion between Internet access

charge and PNets charges.

They are quite different.

Answer – Mr Allen Ma: I have no intention of defending the case. The question is not whether we should abolish it, the question is how should we levy a charge on the use of the fixed network and we are open to suggestions. If there are any suggestions about how we should levy a charge, please put them forward. Question – Trade Commissioner, Consulate General of Canada: I have a question about opportunities. I think it is widely accepted that Hong Kong’s e-commerce system is not as well developed as that in other parts of the world, particularly North America, and I have a question for the panel but I particularly welcome the views of Mr Ma on this. Kong? Answer – Mr Allen Ma: I think the role of a content provider is the same whether you are in Hong Kong or you are outside Hong Kong. I really don’t see any big difference. The role of a content provider has two parts. Firstly, it is really to meet a certain requirement for a certain type of information. The second one, which is being used by the Internet websites a lot, today, is really to attract your attention. Whether you really want to or not, they want to push you or pull you to a certain website. And if you have some Canadian content, I think you should really ask yourself which part of the world you want to play and find your partner to promote it. I do not see any difference between a foreign content provider and a local content provider. Both of them are welcome to participate in e-commerce trade here. Where do you see the specific opportunities for foreign content and service providers in the development of e-commerce in Hong

Answer – K.C. Kwong: If I may add a little bit. As a provider, there might be no big difference. But in terms of the content to be provided, there will have to be quite a lot of adaptation to meet local tastes. Of course, at the moment something like over 85% of the content on the Internet is English based, but as the Internet becomes used by more and more people in non-English speaking communities, the demand for local content or locally adapted content will be increasing much faster, I think, than English based content. of their content to suit local tastes. Answer – Mr Anthony Au: I can give you an example that, some of the companies I know from Malaysia are in fact selling advertising to Hong Kong

So, for Canadian content providers which wish to

find opportunities in Hong Kong or in Asia, I think they do have to look at adaptation

Internet users, so that is one of the areas they are also selling the content, actually through some of the local ISPs. And, in fact, I was invited down to Malaysia to give them a talk on advertising in Hong Kong – which is not really my area. Answer – Ms Tan Poh-lee: I agree with K.C. that language is an important issue, and not just for Hong Kong or Greater China, but if you take Thailand or Indonesia or any of the Asian countries, I think the man in the street would far prefer to see content in his or her own language. And I think the collaboration between more advanced jurisdictions, like Canada and the US, the content providers there, with local content providers, would be a great thing to see develop and I am sure will benefit us all. Question – John Dibble, Humana: We’ve heard much about the infrastructure of Hong Kong, how it is world-class with regard to the technical side of networks and things like that, but I am interested to know which sectors of our business world here are really world-class in the use of e-commerce, as a result? of the ones we need to promote? Answer – Mr Anthony Au: Actually, everybody says Hong Kong’s tele-communications is world-class, but on the other hand, I think on the business side, if you look at a number of our small industries, small item industries like the watches – actually, Hong Kong has the largest number of output in terms of quantity in the world; and number two, we are talking about the number of instant-cameras, Hong Kong is actually OEM in the world, and actually we are also the biggest producer – so, there are a number of those items that Hong Kong is leading the world. And even on the cultural side, Hong Kong is the biggest exporter of movies outside Hollywood. So those are the areas that we can find areas that we can be thinking about. If you look at the USA, they are talking about a lot of the watches which is a high-profit area, not as a watch but more as a novelty item, it is being sold intensively on the network and there is no reason why you cannot do the same thing. So I think we should be looking closely at what we are good at. Answer – K.C. Kwong: I think there is probably a peculiarity in Hong Kong in that we have a number of very big companies, like HKSBC, like our Container Terminal Operators, and so on, who rely heavily on both IT in-house as well as the telecommunications with their offices overseas.

And who are the

laggards, who are the ones that really are behind and could give us a clue as to which

Even if I can’t say for sure that they

are the best in the world, they are among the best in the world in terms of use of the combination of IT and telecommunications. Whether you say that is electronic commerce or not, is a definitional problem. It is definitely electronic transactions. And then we have a large number of SMEs, and where the opportunities lie, really, as a government official, is not for me to say. It is for the industry itself to say. Answer – Mr Allen Ma: If I may add some comment, as a practitioner. I think the companies that have gained more in the last two years are those companies who focus on cost-reduction, namely the big corporations who make use of the websites to reduce their servicing costs or post-sales costs. The people who are falling behind, today, are the SMEs who have the opportunity to enhance their market reach very quickly, and that is part of the presentation I covered. Answer – Ms Tan Poh-lee: In terms of what businesses of Hong Kong are world class, one that comes readily to mind that K.C. has touched on, is, of course, Hutchison and its container terminal business. If you look at the different elements of that business all over the world, it is possibly the largest in the world right now and I’m sure, using e-commerce will greatly enhance that particular business. Question – Tracey Yu, Standard Chartered Bank: I think my question should be directed to Anthony, as it is about the Nike sports shoe. Do you think of e-commerce as the Nike sports shoe for the SME so that they can run faster or even challenge the big guys in traditional retail and other business? And if this is the case, do you see a fundamental change in the role of SMEs in the coming decade or even over a few years time, because it is indeed happening in the States as Amazon is now challenging the survival or even the business of …? Answer – Anthony Au: I, personally, think that SMEs have a lot of advantages. One example I can give to you is the selling of toys on the Internet, and there is one particular company in Hong Kong which is extremely strong. They are possibly one of the number-one in the world in selling collector’s item toys. collector’s items. So this is a very, very strong area. So, it is not the common toys that you can buy from Toys ‘R Us, but because of the Internet it can sell

On the one hand, I can see that SMEs have a lot of chances of getting their business up. But I can also see that in the medium term there will be a crisis. The crisis is because of the business capability as an SME, can they substantiate the growth?

This is number one. competition?

And on the other hand, as soon as they start the ideas,

somebody is coming in and doing something similar, so will they be able to stand the This is item number two.

So, for the SMEs, they will have to either go into two roles. The first role is to either sell your business, at least get some return and go to something new. The next role that they can build is to be competitive. easy. And at the same time, when you start your first business, you should be thinking about your second good business. But it is not I think that your chance of starting one successful business does not guarantee So this is something, like even in work hard, be innovative and be that you will have a second successful business. the normal business world, the same thing applies: successful. Question: Could you give us some hints on the after-sales service when it comes to the e-commerce side? Answer – Mr Allen Ma: Maybe, I’ll quote some of the applications that we use at Cable and Wireless HKT to demonstrate the use of it. We have a number of programmes going on and the one which I believe will be able to help all the big companies in Hong Kong reduce their billing costs is a service we call ‘Bill Presentment’. In other words, after acquiring customers how can we integrate the billing data with a number of other companies so that the customer will receive better information coming through either their mailbox or other means of electronic contact, so that they can settle their bills. And they can check what kind of services they have, they can change the sort of service they want to subscribe to, either add or amend, and at the same time they can always ask for other services outside the regular hours if they cannot get through to a certain hotline, so giving them an alternative way of contacting the supplier. All of this together is really enhancing your customer loyalty, so that you can manage your … Answer – Mr Anthony Au: I just would like to add that there is another service that has been working very, very well over the past few years but you may not know of it. It is what we call the ‘Easy Trade’, which is a system which is used by all the Most of the So, what you are really talking about is the ordering supermarkets and also the suppliers for the department stores and so on. department stores are members.

and also the invoicing and also the delivery of all these physical goods, and also the follow-ups and so on. It has been quite successful.


What I recently mentioned is also what we call the ‘Electronic Catalogue’. This is something which is already quite well established over in the United States and also a number of areas. In particular, if you talk about Wal-Mart, if you want to do So this is already what business with them you had better comply to their standards. needs to be invested further into Hong Kong. Answer – Ms Tan Poh-lee: I would like to comment on from whose perspective you are talking about after-sales service. Because if it is from the customer’s perspective, then the instantaneous delivery of whatever problem you have or a request for maintenance, if it is done in an instantaneous way and a secure way and you know that the request has been delivered and therefore the request will be dealt with, this is, of course, a very good advantage of doing it on the Net. But I guess from the service provider or the seller’s perspective there are lots of techniques that are used in terms of tracking customers after the sales have taken place, and I referred to some of them like Spamming, and Cookies, whereby you actually track your customer and what it does through means of software, and that, from the seller’s perspective is, of course, very useful. So that at any time there is a need for further product, for further services or even maintenance, then it is instantaneous - you’re there, you’re available. Question: I run a design and website company. I am in the process of setting up e-commerce, and to raise the other gentleman’s question regarding merchants, I have been looking into trying to set up a merchant account and talked to other entrepreneurs who have been doing it, and the general impression I get is that it is easier to go to a bank outside Hong Kong, either in the US or the UK. This afternoon, it has been discussed about Hong Kong policy with regard to this electronic certification, will this have a benefit for consumers who are buying from an e-commerce website internationally? banks’ policy? And what is the Government’s policy and And what are the sort of challenges Obviously, three months, if the bank is holding your money, is rather

we are talking about, the standard electronic commerce, so that is something which

too expensive for most of us running a business.

that are being dealt with and how is the Government approaching this? Answer – Mr K.C. Kwong: On the question of the relationship between banks and prospective providers of e-commerce, we have in fact spoken to a number of banks and it all boils down to the credit rating, and that is not something in which the Government can or should intervene.

Answer – Ms Tan Poh-lee: I guess where the Government is helping is in the area of security, in putting in place the legal framework that can assist the security of these transactions so that banks would feel more comfortable. Answer – Mr Anthony Au: what is e-commerce. I hate to say it but I think the banks do not know

Question: Allen asked for suggestions for alternatives to PNet charges, and K.C. also mentions in his presentation about this very innovative term called the ‘Facilitated Regulating System’. example. Now, I think the problem with PNet charges is that it is inhibiting the free use of the Internet, especially among youngsters – students, for I think, of course, there is a need to charge for this. Now, can we not use Say, slapping $5 or $10 on all telephone subscribers. Is that feasible to you? And an alternative system?

then let us have a community whereby after slapping this extra $5 or $10, then everyone can use the Internet for free.

Answer – Mr K.C. Kwong: It would mean the non-Internet telecommunications users subsidising the Internet users. Is that a fair way to charge? I think that is the question we all have to address. talking about? And what is the level of the PNet charges we are About three cents per minute, if I remember correctly.

Answer – Mr Allen Ma: I think there are two issues here. One is about cross-civilisation that K.C. has just mentioned. The other one, which is really a more practical issue in terms of capacity planning – Hong Kong has benefited a lot in the last 20 or 30 years through the flat-rate system we have and also the very high And at the time when voice-communication But if rate of growth of telephone penetration.

dominated the usage, it was not really an issue in terms of capacity planning.

you look at the future world of data communications, then how are you going to configure a network that you think will be kind of a hundred per cent because of data links such as Internet access, where people will have no incentive to disconnect because it is free? at all the issues. It is a practical issue we are facing. I don’t have a solution, to be frank with you, but I can assure you that K.C.’s people and my people are looking This is just one example of the issues that we are trying to address.

Answer – Mr Anthony Au: To me, I think it is a more mindset problem than really three cents. But you see that if you are looking at the administration work that the ISP has to do to calculate the three cents and give it back to the Telephone

Company, it’s their accounting system which has to handle the three cents. three cents? need to pay the three cents.

What is

Let’s look at it from the angle that we are using our fax and we do not So because we are having the Internet, then we are So I think that all we need now is

taking the burden out from the fax-machine, our local fax-machines which we don’t have to pay, and that may compensate something. to find some creative way of saying that let’s do it this way and everybody save face. Answer – Mr K.C. Kwong: And the creative way will have to be such that it will not clog up the whole system. Because if it is free and because we have a flat-rate of charges for telephone lines, then anyone will log-on for 24 hours a day, seven days a week, and that would clog up the telephone lines. Question – Mr Tan, Midland Realty: I have two main issues. The first one is addressed to Ms Tan on the electronic transactions. An application from the real estate side, the legal documentation for real estate is usually very thick and there is actually, recently, a case in which the two parties to the same contract agreed to resort to a CD ROM in keeping that piece of document. heard from speakers, exempted from the law. But as far as I know, recently, as I this sort of documentation on land transactions is to be So, what if both parties agree to resorting to an electronic

means in storage, would that piece of document be illegal? Answer – Ms Tan Poh-lee: This is not a question of legality. As K.C. pointed out, land transactions, property transactions, are going to be exempted from, I think it’s Schedule One in the Electronic Transactions Bill. So what that means is that if you have an on-line contract it does not have the same validity as a paper contract. But having said that, if you want to, between the two of you, store it either in a server or store it in a CD ROM, that is up to you. But when a dispute occurs and when you need to prove it, when you need to actually admit any evidence in a court of law, then the Electronic Transactions Bill, at the moment, with that exemption in place, will not help you. K.C. is that correct? Answer – Mr K.C. Kwong: Yes. I think you have to look upon the Electronic Transactions Bill’s provisions as making it easier for transactions which comply with the provisions to be proven in court in case of dispute. So, for those transactions which are exempted, we are not saying that the two parties to the transaction cannot mutually agree a form for the transaction to be taken, whether it is electronic or paper

or some other form. But it only means that where a dispute arises, the onus of proof will be on the parties concerned because there is no application by the provisions of the Electronic Transactions Bill, to simplify matters. That’s all. Question: I have a second issue, and this one is addressed to Mr K.C. Kwong. As far as we are concerned, e-commerce could lead to a reduction in demand for commercial accommodation. resources or manpower. types of human resources. Answer – Mr K.C. Kwong: In all economic transformation there will be changes in supply and demand, be it in human resources, in types of accommodation and so on. The experience of Hong Kong is that we can adapt to those changes. And I do think that with the onset of electronic commerce and things like that, there is, of course, going to be a transformation, a change in the type of, for example, skills that will be required, accommodation that will be required. Actually, the providers, the universities, the real estate developers and so on, will have to rise to the challenge. Answer – Mr Anthony Au: Actually, I think that you can take the example that we have all been talking about, the paperless office. It’s never happened. Answer – Ms Tan Poh-lee: I would like to add that this is, of course, no different from any other part of the world. And the Internet is a great leveller. If you think of the need to re-skill yourself or you need to pick up new skills, it is actually a great opportunity and that is why this seminar is entitled ‘Opportunities and Challenges’. Of course there are threats to traditional business models and And if you look traditional skill sets but there are also great opportunities out there. attraction to the young people. Answer – Mr Allen Ma: Can I also add some comments. I think there are two issues again. The security issue that Poh-lee just mentioned, it is not really about a headcount – whether you are going to have X-per cent of unemployment rate – it is really the misfit of skills between the people we have and the people we need to grow the business in the future. And this is a very, very serious issue. That is why I suggested that both the educators, the parents and businessmen need to start working together to come up with a good manpower plan for Hong Kong.

I don’t know whether that is true or not.

And there is

also a threat that e-commerce could lead to a redundancy in some types of human So it does really pose a threat to accommodation and some

at the millions and billions that are made in Silicon Valley, that will be a huge

The second issue is that in any industrial revolution or transformation there will be businesses being displaced, they will be lost permanently. But at the same time, luckily, there are also new businesses being created. The key for Hong Kong is will those new businesses come to Hong Kong and will we be able to displace old businesses sitting elsewhere outside Hong Kong today? A big question mark.

Question – Central Policy Unit: There has been a lot of discussion about PNets but it seems to me that if we are talking about transformation, that broadband is surely the main issue, the role of the broadband. And I wondered whether the panel would like to comment, given that in the UK, the Government is now requiring that British Telecom is going to make their broadband infrastructure available for any Internet service provider, whether, given the slow roll-out of broadband in Hong Kong, we might see something similar here? Answer – Mr K.C. Kwong: Well, in fact, on broadband we have decided, as a policy, that the broadband network of Hong Kong Cable can be used to provide telecommunication services, subject to their giving an acceptable commitment on network roll-out. So that would provide, in fact, a significant increase in broadband capacity in Hong Kong right away. The bigger question really is, if we require the broadband networks to be opened up for interconnection what are the principles that will have to be followed in terms of the connection, especially the charging principles? We are working on a consultation document right now within the telecommunications authority and we hope to be able to release the document in about two months time, so that we can consult the industry as well as those who have got an interest in the issue, and at the end of the day try to work out an arrangement which takes into account the interests of both the users as well as the investor in the infrastructure. It is easy for people to But if say, why don’t you open up a broadband and let us use it at a very low rate. four years, he would like some money back anyway.

you ask the investor, and he has invested something like HK$10 billion in the past


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