Remarks at Internet Economy Summit 2018

Delivered at Internet Economy Summit 2018 in Hong Kong

Your Excellency
Chief Executive, Hong Kong Special Administrative Region, Mrs. Carrie Lam

Distinguished Guests

The Internet Economy Summit and UN ESCAP’s members’ Private Sector led Asia Pacific Business Forum under leadership of George Lam, Chief Executive of Cyberport together showcase Hong Kong’s strength as a leading Asian dynamic hub for technology, innovation and finance. It underpins Hong Kong’s creative economy and offers opportunities for others to draw on its experience and knowledge.

Your Excellency, we count on Hong Kong’s vision, strong leadership, and enabling policy and institutional support to foster innovation for the benefit of Hong Kong and larger regional landscape.

Industrial revolutions, from the age of mechanization to mass production to digital revolution have spurred economic growth, but at a cost to the environment and society. As we enter the Fourth Industrial Revolution, technological breakthroughs such as Artificial Intelligence (AI), robotics, 3D printing, the Internet of Things, FinTech, Big Data and quantum computing are increasingly supporting growth.

But they are likely to be accompanied by broad-based societal change. There are three critical challenges for the economies of the future.

First, jobs and the future of work. The World Economic Forum study predicts that in 15 developed and emerging economies alone, frontier technology will result in net loss of over 5 million jobs by 2020. In the coming decades, the jobs of 785 million workers, that’s equivalent to over 50 per cent of total employment in the Asia-Pacific region could be automated. The nature of work will also change rapidly. Close to 65 per cent of today’s children will eventually hold jobs that do not exist today.

Second, despite the rapid penetration of the internet the world over, several billion have been left behind. As ICT infrastructure is the backbone of many frontier technologies, there is a risk of its triggering a new frontier technology divide, compounding an already existing digital divide.

Third, frontier technologies pose trust and ethical questions. What rules should dictate the algorithms deciding how much we can borrow or which services we opt for? Should driverless cars prioritize the life of the driver or pedestrian? There are risks of calibrating AI algorithms based on biased data that may yield biased AI learning outcomes. Government-owned satellites, telecommunications multinationals, social media start-ups, all have real-time information at their fingertips. In this information and data revolution age, open and big data movements of varying quality, combined with advancements in computing, machine learning and behavioral economics, fuel the growth of AI technology. Technology per se is not the problem, but there are ethical issues surrounding privacy, ownership and transparency.

Frontier technologies offer a multitude of opportunities.

First, the adoption of technologies and innovation in production processes and deploying the Internet of Things will enhance productivity and produce intelligent and environmental friendly solutions. Embracing the Internet of Things in China’s manufacturing chain could add up to $736 billion to GDP by 2030.

Second, technologies have the potential to lift the sustainable development curve. For instance, improved application of frontier technologies to transportation and logistics could reduce carbon emissions by an estimated 4.5 billion tons by 2020. Image recognition allows researchers to scan more than 50,000 images of plants to identify crop diseases using smartphones with a success rate of over 99 per cent.

Third, frontier technologies can help anticipate and respond to the effects of climate hazards and air pollution through the adoption of state-of-the-art technologies to address environmental impacts. In the Republic of Korea, the smart city of Songdo is built around the Internet of Things to reduce traffic pollution, save energy and water, and create a cleaner environment.

Fourth, innovative policy action to utilize technologies in the delivery of public services is gaining ground. Hong Kong’s e-government services is a great example of how a Government is embracing technology.

Asia-Pacific is forecast to emerge as the future’s prominent market. China introduced a comprehensive AI development policy to emerge as “the front-runner and global innovation center in AI” by 2030. China’s venture capital investments in FinTech, virtual reality, robotics, drones, AI, EdTech and autonomous vehicles standout already. President Xi’s exemplary leadership in implementation of sustainable development across China is expected to further gain momentum as the investments in frontier technologies offer newer sustainable solutions.

The policy framework for the next generation of technology and innovation should focus on creating an enabling environment for frontier technologies to positively impact economy, society and environment, and to reduce inequalities. A few prerequisites for the development and application of frontier technologies are

  1. a developed ICT infrastructure;
  2. a workforce fit for the emerging scale and speed of technological revolution – in this context, there is need for promoting lifelong learning and reskilling and entrepreneurship development to develop cadre of job creators;
  3. a responsive regulatory framework. The Fintech Supervisory Sandbox, launched by the Hong Kong Monetary Authority in 2016, is an example of this which allow banks and tech firms to conduct pilot trials of their FinTechs without the need to achieve costly full compliance with supervisory requirements;
  4. incentivizing private sector to pursue responsible frontier technology development to tackle social and environment concerns and to strengthen the quality and sustainability of growth by creating “shared value” through focus on corporate sustainability;
  5. encouraging public private partnerships in the tech sector to enhance the business case for the SDGs. With SDGs representing a $12 trillion business opportunity, this offers a huge market opportunity for governments and businesses to tap innovative solutions for service delivery. Governments could play the role of market maker and shaper. Here in Hong Kong, the government has embraced the digital revolution through the implementation of e-government services and have established the Hong Kong Social Innovation and Entrepreneurship Development Fund to catalyze social innovation and responsible frontier technology development.

To conclude, in context of the emerging advancements in frontier technologies’ we should listen to historians, not just futurists. The disruptive nature of technology is nothing new. We must learn from the past to anticipate and address the challenges of the internet economy effectively, while exploiting opportunities for development.

There is no doubt that frontier technologies will have far reaching consequences throughout the region and across the globe. While there are questions over the scale and pace of the frontier technological transition, governments need to put effective policies in place. Regional and cross-government and technology developers cooperation will be critical to ensure frontier technologies have a positive impact on sustainable development. Here, ESCAP can play a critical role.