MR CHAN CHUN-YING (in Cantonese):
President, the Government released the Hong Kong Smart City Blueprint in December last year, with the vision to build a smart Hong Kong that is world-renowned and economically prosperous with a high quality of living. While this new smart era is still at an initial stage, Hong Kong fell out of top ten in the World Digital Competitiveness Ranking 2018 announced on 20 June by the International Institute for Management Development based in Lausanne, Switzerland. Hong Kong’s ranking slipped drastically from 7th last year to 11th this year, throwing a cold blanket on Hong Kong.
According to Prof WONG Kam-fai, Associate Dean, Faculty of Engineering of the Chinese University of Hong Kong, the main reason for the decline of Hong Kong’s ranking in global digital competitiveness is that many countries and regions are actively promoting technology development. On the contrary, Hong Kong’s progress in various innovation and technology projects, such as electronic payment and smart city development, is relatively slow, which affected the competitiveness of Hong Kong. Hence, my speech today will focus mainly on the development of Fintech and electronic payment in Hong Kong.
According to the Report on Monthly Survey of Retail Sales, the value of total retail sales in May 2018 was provisionally estimated at $40.5 billion. As estimated by the industry, 50% of the total transaction value was made through credit cards, followed by cash (about 40%), while electronic payments and Octopus card payments accounted for 5% of the market respectively. Currently, mobile payment is used mainly in small-value transactions. These statistics fully illustrated that there is a lot of room for turning cash payments into electronic transactions in Hong Kong.
The Hong Kong Monetary Authority (“HKMA”) will launch a Faster Payment System (“FPS”) in September this year, which provides an inter-bank real-time electronic fund transfer platform, to accelerate Hong Kong’s progress towards a cashless society. At present, inter-bank fund transfers are made mainly through cheques or e-cheques, or via transfer instructions issued at branches or online, which generally take two days. With the introduction of FPS, banks and store value facilities can be linked up to form a comprehensive network of mobile payment chain. Users may perform inter-bank real-time transfers and mobile payments through options other than credit cards or Octopus cards. In this way, the financial sector will not fall too far behind other regions in the course of smart city development.
President, in response to questions at the meeting of the Panel on Financial Affairs in May, HKMA stated that the development process has been completed and the system is under testing. I have asked the Government on different occasions whether it will launch a large-scale publicity and education campaign to promote the soon-to-be-launched FPS so that the public will be familiarized and prepared to use the new payment method. However, it seems that the Government has no clear publicity plan so far. I wish to reiterate that without widespread public support and usage, any new measure is merely empty talk.
FPS will help open up Hong Kong’s payment system and lay the foundation for future cross-border electronic payment services. There are currently no provider in the market which covers both overseas and Mainland cross-border mobile payment services. If wallets can be used cross-border and fully linked to the global service network in future, coupled with P2P transfer function, a one-stop integrated electronic payment service platform can be formed and ultimately, an environment can be created where users can make purchases and perform transactions and fund transfers through diversified channels.
HKMA has indicated that some local banks are developing cross-border payment systems, although the technology is still immature. In addition to system development, policy approval is also an issue. I hope a completed cross-border payment system can be launched as soon as possible. As I said at the beginning, the latest World Digital Competitiveness Ranking by the International Institute for Management Development has clearly demonstrated that Hong Kong is lagging behind others. We should seize the opportunities presented in the Bay Area expeditiously through the development of a cross-border payment system and the further development of cross-border cross-regional payment methods.
Financial Secretary Paul CHAN has pointed out earlier that the development of Fintech in Hong is quite prosperous. At Cyberport alone, there are more than 250 Fintech companies, covering such segments as big data, blockchain and mobile payments. The cumulative investment in Hong Kong Fintech companies in the past three year has exceeded US$940 million, way higher than that in Australia and Singapore. Having said that, in the face of the competition for Fintech talents in the Bay Area, the Government should actively ensure talents cultivated in Hong Kong will stay in Hong Kong.
Take the Silicon Valley in the United States as an example. Nearly 40% of the total population of 3 million in the region were born not in the United States. Caucasians and Asians each account for more than 30% of the population in the region. The demographics of the Silicon Valley have made it a world-renowned cradle of innovative talents. To become the Silicon Valley in Asia, Hong Kong must attract talents regardless of their race, nationality or gender.
In addition, as I have repeatedly stressed in the past, competitive edges which do not seem directly relevant, such as a housing plan for talents and sufficient international school places, can actually be key factors in attracting Fintech professionals. Promoting research and development is also the key to Hong Kong’s future success. For the time being, Hong Kong is not capable of inventing an elixir of immortality, but we can develop an immortal and innovative spirit of research and development, so as to maintain the competitiveness of Hong Kong.
I so submit. Thank you, President.