|The notion of a revolution calls for an immediate and
rather abrupt change. A drastic change that will hopefully
bring about a better future. The ride, however, is likely
to be very bumpy, if not uncomfortably rough. 'E-revolution'
is perhaps a fitting way to describe the development of
e-commerce in Hong Kong.
However, I think changes in the e-direction are absolutely
necessary and beneficial to Hong Kong. There are some
very strong e-investors out there with clear long-term
visions and sound corporate strategies that should ensure
ultimate success. But to ensure the process of change
is effectively managed. I realise the Administration
has a lot of work to do. I also earnestly hope the HKSA
can lead the changes rather than standing back and observing
the changes that are already occurring. There is much
to gain if we adapt quickly.
The e-revolution is so important that I consider it
part of the 'millennium shift' that is happening. It
was also a central theme in my recent budget speech.
Notwithstanding, I have devoted substantial amount of
time to working with members of our Information Technology
(IT) Interest Group and WebTrust Committee to get the
Electronic Transactions Ordinance drafted in time for
the launch of our WebTrust Scheme.
I also wrote two article in leading Chinese newspaper
in March to urge the Government to establish proper
corporate governance reforms and manage the obvious
risks of emerging IT stocks - I shall be instigating
a motion debate on the subject on 3 May 2000, which
will be highly publicised.
In terms of e-commerce, it is useful to take a slightly
wider perspective of Hong Kong when considering it for
a platform from which to conduct e-business. We should
try to capitalise on our existing strengths and also
remind ourselves of the many weaknesses that must be
It is a common fallacy to assume that the start up
of e-commerce is simple and that it requires little
capital. True enough, some small shops with bright ideas
do sometimes make it to the big time. But for a city
such as Hong Kong to compete successful as an e-commerce
centre, it takes careful planning and huge infrastructure
In promoting e-commerce, we need to develop electronic
communication systems that deliver and receive data
in a safe and secure manner; we need to update legislation
to include the e-commerce environment; there has to
be comprehensive coverage of the banking system with
easily accessible credit facilities (e.g. credit cards);
a highly efficient and accessible transportation systems;
sufficient and well-placed warehouses with fast, low-cost
delivery services to replace the numerous retail outlets
we now have; professional IT investors and a volatile,
high-volume GEM market; and an IT-skilled workforce
to invest, create, manage, promote, market and handle
the data processing of e-services and e-products. We
need the right propositions of all of these ingredients
for e-commerce to really flourish.
Hong Kong's strength lies in its abundant financial
resources and well-developed financial markets. We also
have the necessary management skills to organise and
manage the change needed to satisfy fidgety markets.
Our weaknesses, however, include our slow response
in rationalising our infrastructure, the physical limitations
of our e-commerce markets (unless we can penetrate the
PRC market as well) and our severe lack of skilled IT
These weaknesses require bold and conscientious government
policies if we are to overcome them. We must not underestimate
the importance of management and capital because even
highly advanced economies like the US's still depend
heavily on foreign scientists and technicians. With
a good legal system to protect proprietary rights, it
will always be the investors and managers who ultimately
reap the lion's share of the created wealth.
Notwithstanding these long-term visions. Hong Kong
has more financial resources than technological ones.
This imbalance is already filling our stock markets
with 'conceptual' IT stocks as a frantic pace.
The risks must, therefore, be higher than those encountered
in other more mature markets. As such, accountants have
a dominant role to play in acting as front-line guardians
of financial accounts.
In a way, higher risks are unavoidable in any highly
competitive emerging market. The ideal management culture
ensures that corporations with growth potential are
not being fettered. However, we should also leave room
for the weaker corporation to be eliminated to avoid
any sudden market collapse.
As we explore a new market order for e-commerce and
IT stocks, the accountancy profession needs to take
a lead in establishing a corporate governance structure
where management is held accountable in reasonable and
transparent manner, due diligence is closely monitored
and the endless risk factors associated with IT shares
are updated regularly to give investors important advance
I also hope accountants will be keen to adopt accounting
and auditing standards which help avoid possible disputes.
The Government should also give direction in regulating
share valuations and aggressive valuer, as well as providing
investors with more objective and regular market information
It is only then that the responsibilities, risks and
rewards for all e-commerce investors, both large and
small, as well as for professional intermediaries (such
as accountants), will be well balanced.