CURRENT PERFORMANCE INDICATORS

Information technology (IT) and computer services underpin Hong Kong's success as a major international services centre. With the highly sophisticated service industries of Hong Kong as a user base, the computer services sector has enjoyed an impressive growth. This sector includes mainly software firms which develop custom and packaged software, professional service providers such as system integrators, and support service providers. According to a consultancy study on Hong Kong's software industry conducted in 1994-95,

• The software and related services market grew by 25% and 19% in 1993 and 1994 respectively and is expected to continue to post double-digit growth until 1997. The growth rate of the local computer market in 1995 (11%) compared favourably with that of Singapore (11%) and Taiwan (9%).

• The per capita expenditure (US$144) on IT in Hong Kong in 1993 was the third highest in the region, after Japan and Singapore.

• In 1994, there were some 500 software firms in Hong Kong, employing over 8 000 people.

• The total earnings of the computer and related services sector was $2.2? billion in 1993.

• In 1994, 70% of the custom software used in Hong Kong was locally developed. Nearly all software developers in Hong Kong are engaged in providing custom software services.

• There is an abundant supply of quality software engineers in mainland China. In 1994, more than 20% of Hong Kong's software firms were operating in Southern China, employing over 7?00 people there.

• Software firms in Hong Kong are more responsive to the needs of end-users than their counterparts in other Asian countries. In addition, their technology level is on a par with the other advanced countries in the region.

THE GOVERNMENT'S COMMITMENT

The Government is committed to :

• enabling the computer and related services sector to develop fully its potential;

• providing high quality manpower training through tertiary institutions and the Vocational Training Council;

• promoting quality awareness among the computer and related services sector and the community at large;

• maintaining a modern, independent and internationally accepted framework to protect intellectual property rights (IPR) and stepping up enforcement against IPR infringement, particularly copyright piracy; and

• increasing efforts to enhance public awareness of the importance of protecting IPR.

To achieve these objectives,

• We will formulate, in consultation with the business sector and tertiary institutions with expertise in IT, a strategy for promoting the more extensive use of IT to facilitate the movement of information and goods, as well as to introduce new ways of providing services and accessing customers and markets.

• We will help Hong Kong's software industry maximise its export potential in the light of the recommendations in a recently completed consultancy study on Hong Kong's software industry.

• We are preparing new legislation and administrative systems for the protection of patents, trade-marks, copyright and registered designs. We hope to introduce the relevant bills into the Legislative Council within 1996.

POLICY DIRECTIONS

We propose to :

• establish a Software Industry Information Centre by early 1997 to enable local software developers to have quick access to the latest information on the business trends and new requirements in the user industries so that they would be able to respond to those needs efficiently;

• set up a Cyberspace Centre by the end of 1996 to promote and facilitate the usage of cyberspace (international information networks such as Internet) among software developers;

• expand by mid-1996 the existing pilot programme conducted by the Hong Kong Productivity Council to promote local awareness of quality assurance in software development; and

• formulate a strategy for promoting the use of IT, including electronic commerce, in consultation with tertiary institutions, the user industries, as well as the information, telecommunications and computer service sectors.

THE PRIVATE SECTOR'S CONTRIBUTION

Currently the firms in this sector are of small size and only one association exists in the industry, namely, the Hong Kong Information Technology Federation (HKITF), which has a membership size below 100. The private sector, spearheaded by the HKITF, can make its vital contribution by :

• establishing a membership system for qualifying vendors within the HKITF so as to promote the quality and performance of its members;

• enforcing the code of ethics for practitioners, particularly IT professionals, so as to increase their awareness of quality and standards; and

• upgrading the quality of technical and manpower resources through investment in technology and training.

The worldwide software market is projected to grow at a compound annual rate of 12% in the coming three years. Hong Kong should be able to benefit from this growth if we can successfully develop the packaged software sector to compete in the international arena.

The market potential in China and other countries in the region is enormous, although copyright piracy in some economies may still be a deterrent to Hong Kong software firms wishing to access their packaged software markets.

Whilst committed to facilitating the development of this sector and to maintaining close dialogue with the private sector, the Government remains of the view that support measures undertaken by the Government should focus on providing the necessary infrastructure and a favourable environment for its growth, leaving business decisions to be taken by the industry itself.

Secretary for Trade and Industry

March 1996