Myanmar Digital Rights Forum 28 February 2020 - Hong Kong as a Smart City

Hong Kong is emerging as a relatively digitally sophisticated city, being named by The Digital Evolution Index as the third most advanced digital economy in Asia Pacific, and the ninth in the world and named as one of just 10 digital elites, characterised by high levels of digital development and a fast rate of digital evolution.

Further, according to the Asian Digital Transformation Index, Hong Kong is recognised as one of the top thriving economies in Asia thanks to new-age, digital capabilities, behind Singapore, South Korea, and Japan.[1]

In December 2019, the Hong Kong Government published the Smart City Blueprint for Hong Kong and in February 2020 it was announced by the Financial Secretary, Mr. Paul Chan Mo-po, GBM, GBS, MH, JP[2] in the 2020/2021 Budget Speech that the Innovation and Technology Bureau (ITB) would publish the Smart City Blueprint for Hong Kong 2.0 later this year, which will report on the latest progress of initiatives and set out new proposals to further promote smart city development.

The current blueprint sets out measures (for the short, medium and long-term) to build Hong Kong into a world class smart city, with focus on six key areas:

Smart mobility
Smart living
Smart environment
Smart people
Smart government
Smart economy

A summary of the Smart City Blueprint can be found below.

The Smart City Blueprint for Hong Kong
1. Smart Mobility
  
  Hong Kong sees over 12.9 million passenger journeys made through different public transport services every day,[3] accounting for over 90% of the total passenger trips each day, which is the highest in the world,[4] and with vehicles saturating the roads, smart mobility is hugely important to Hong Kong not only in terms of developing as a smart city, but in addressing urban challenges and improving quality of living and efficiency.
  
  A number of initiatives are in the works, including:
  - The development of in-vehicle units (IVUs) allowing motorists to pay tunnel tolls without stopping at toll booths;[5]
  - The Electronic Road Pricing (ERP) pilot scheme, a traffic management tool to address congestion;[6] and
  - The trialing of autonomous, zero-emission vehicles in West Kowloon cultural district.[7]
  Further, the implementation of the IoT-Augmented Airfield Service System (AS2), which is a cloud-based, service-oriented system, in the Hong Kong International Airport (HKIA), also contributes to developing Hong Kong as a smart city and big data analysis allows HKIA to better utilise various resources to enhance the airport’s operational efficiency.[8]
  
  As regards the digital engagement in travel, this year we have seen an 11% increase,[9] with increased smartphone usage across all stages of journeys. Albeit, it is important that we see industry stakeholders in Hong Kong collaborate to further enhance travelers’ experiences.
2. Smart Living
  
  Hong Kong has over 20,000 free Wi-Fi hotspots and a mobile subscriber penetration rate of 242.5% and a household broadband penetration rate of 92.5%.
  
  Additionally, more Hong Kong residents are using ride-hailing apps (6% increase) and subscription digital entertainment services (5% increase), albeit e-commerce has been slightly slower to take off, with the convenience of Hong Kong’s brick and mortar stores still favourable among residents.
  
  In terms of digital technology applications in daily life, there are 9 major digital wallets in Hong Kong including PayMe, WeChat Pay, Alipay HK, Tap & Go, TNG Wallet (TNG), O! ePay, Apple Pay, Google Pay and Union Pay Quick Pass, which allow Hong Kong residents to live more conveniently.
  
  Further to that, technology is reshaping healthcare industry. For instance, the Hospital Authority in Hong Kong has developed web-based clinical management systems such as the electronic prescription system and the filmless operating theatre to streamline the workflow process. In addition, they have created electronic record sharing systems and clinical databases to improve the consultation process for medical personnel and facilitate cross-disciplinary coordination and communications.[10]
  
  Moreover, the following initiatives have been developed to further facilitate smart living:
  - The provision of eIDs for all Hong Kong residents to allow them to use a single digital identity and authentication to conduct government and commercial online transactions;[11]
  - The launch of the I&T fund, supporting the trial use of technology products in elderly and rehabilitation service units;[12] and
  - The establishment of the Big Data Analytics Platform by the Hospital Authority to support adoption of a smart hospital approach.[13]
  Despite this, the majority of Hong Kong residents do not currently consider the city to be a smart city,[14] with less than a third recognising it as such, and this percentage has not seen year on year improvement. This may however be improved with the launch of 5G, with the possibility for innovative applications across many sectors.
  
  It was announced in the 2020/2021 Budget that the government would be implementing measures to facilitate the development and application of 5G, including:
  - a subsidy scheme for mobile operators to expand optical fibre networks to remoter villages; and
  - opening more suitable government properties, sheltered bus stops and phone kiosks for setting up radio base stations by operators.[15]
3. Smart Environment
  
  In developing as a smart city and in pursuit of the commitment to reduce Hong Kong’s carbon intensity by 65-70% by 2030, the following initiatives have been put in place:
  - Remote sensing devices to monitor air pollution and excessive emissions;[16]
  - The installation of electric vehicle charging facilities;[17] and
  - The promotion of retro-commissioning to improve building energy efficiency.[18]
  HK Electric also undertook an education campaign, “the Happy Green Campaign”, in support of the Hong Kong Government’s smart city vision which has committed to allocating HK$5 million per year to organising green education activities and sponsoring community initiatives to promote energy efficiency and low-carbon lifestyles.[19]
4. Smart People
  
  Hong Kong noticeably could absorb more students studying science, technology, engineering and maths (STEM) subjects and resultantly, a significant proportion of corporates (64%) are finding it difficult to find such talent locally, which is problematic given STEM talent is necessary to power the digital ecosystems of a smart city.
  
  To tackle this, and further pursue the aim of Hong Kong as a smart city, the blueprint outlines a number of initiatives, such as:
  - Intensive STEM training programmes for curriculum leaders;
  - Enhanced IT training in secondary schools;
  - Increased R&D collaboration with renowned institutions; and
  - The provision of financial and non-financial support to young entrepreneurs to foster a strong I&T culture.[20]
  If Hong Kong is to truly develop as a smart city, it is crucial that a smart workforce is further nurtured. Accordingly, Hong Kong needs to encourage capable students to pursue STEM subjects, source talent from abroad to benefit the local market and upskill the city’s existing workforce.
5. Smart Government
  
  The Hong Kong Government has emphasised its intention to use technology in the delivery of both information and services,[21] and we now have more than 226 e-government services.[22]
  
  Notable initiatives include:
  - The government Wi-Fi programme to develop Hong Kong into a wireless city;
  - Gov-HK mobile apps, providing channels to receive information and alerts; and
  - The Electronic Transactions Ordinance, which accorded electronic signatures the same legal status as paper signatures.
  Further, the government announced in the 2018-19 Budget Speech that they would adopt Building Information Modelling (BIM) technology in the design and construction of major government capital works projects,[23] and would encourage the use in private works also.
  
  While this is great progress, it is important that the Government enhances its cyber security capability to address new security risks and likewise, stakeholder collaboration will be crucial to improve incident response capability.
6. Smart Economy
  
  On one hand significant progress has been made in Hong Kong in this area, particularly as regards mobile banking, with 61% of Hong Kong residents noting it is easier to use now than two years prior and a 14% increase in users year on year.[24]
  
  Likewise, peer-to-peer (P2P) payments have grown drastically in the last two years (with 58% now using such payments, compared to 44% in 2018 and 33% in 2017),[25] and a notable facilitator is Faster Payment System (FPS), which was launched by the HKMA in September 2018 allowing all banks and e-wallet operators in Hong Kong to participate in FPS.[26]
  
  Meanwhile, financial institutions have been innovating in light of the emergence of virtual banks, the latter of which the HKMA has somewhat embraced with the recognition of its centrality to Hong Kong’s entry into the smart banking era.[27]
  
  Indeed, in May 2018, the HKMA published a revised Guideline on the Authorisation of Virtual Banks, setting out the principles that will be taken into account in deciding whether to authorise such, and on 27 March 2019, the HKMA issued the first three virtual banking licences.
  
  For details on the requirements for operating as a virtual bank under the HKMA’s Virtual Bank Authorisation Guideline, please refer to Charltons’ June 2018 Newsletter, Hong Kong Issues New Guideline on Virtual Bank Authorisation.
  
  What’s more, AI technology is reshaping Hong Kong banking industry. Banks have used AI to analyse customer data so as to offer personalised wealth management services, as well as for reading customer information and confirming customer identify so as to offer remote customer onboarding.
  
  Another common application of AI application is for risk management. AI can help banks to better assess risk and detect fraud by combining both supervised and unsupervised learning models to build detailed individual customer risk profiles.[28]
  
  Ultimately, while Hong Kong is on its way to developing as a smart city, there remains much work to be done. Looking across the region, more and more cities are digitalising and if Hong Kong is to retain its position as an international business and finance hub in the years to come, it needs to keep pace.
Outlook for Hong Kong as a Smart City

Ultimately, while Hong Kong is on its way to developing as a smart city, there remains much work to be done, with Hong Kong currently ranking 37th in the IMD Smart Cities Index 2019.

Comparatively, Hong Kong’s rival, Singapore, is ranked as the world’s smartest city, closely followed by Zurich, Oslo and Geneva, and their number one ranking is perhaps unsurprising given Singapore’s strong digital foundations and their “no regrets” attitude to deploying AI in five main sectors in their development as a smart city:
- Transport and logistics;
- Municipal services;
- Healthcare;
- Education; and
- Border security.[29]
Looking across the region, more and more cities are digitalising and if Hong Kong is to retain its position as an international business and finance hub in the years to come, it needs to keep pace and this can be done through:
- Public-private partnerships;
- Expanding government pilots to whole districts;
- Increased government investment in city-wide smart infrastructure;[30] and
- The free exchange of big data.
The latter is a particularly important hurdle for Hong Kong if it is to develop as a smart city and compete with rival cities in ASEAN and further afield, with the relevant legislation being noticeably stretched to its limits with the emergence of new and innovative technologies.

Accordingly, focus for Hong Kong should be reform of the relevant data privacy legislation (the Personal Data (Privacy) Ordinance (PDPO) in order to ensure Hong Kong keeps up with other jurisdictions and continues to proposer as an international finance centre.

The following concerns as regards the PDPO must be addressed if Hong Kong is to foster a conducive environment for innovative technology and businesses:
- The requirement to destroy and erase data (section 26), which poses particular challenges for machine-based systems and blockchain; and
- The uncertainty around section 33 (unenacted), the prohibition on the transfer of personal data outwith Hong Kong unless conditions are met, the lack of clarity of which presents challenges for businesses in light of globalisation.