By going digital, we can shape future trade landscape

We write concerning the Digital Economy Development Committee’s 12 recommendations released earlier this month.

We think the focus should be on areas of strength where business readiness is high, notably finance and trade and logistics which together account for about 45 per cent of the city’s GDP.

On finance, we are in good hands with the Hong Kong Monetary Authority’s fintech strategy launched in 2021. On trade, Hong Kong made a decent start with the trade single window, updated in its second phase last May.

But today trade is being driven by new factors which weren’t around when the single window was conceived.

The first is the geopolitics around trade which mandates traceability within supply chains, especially for products entering the US and Europe. The only way to establish robust traceability is to digitalise and track key points across the entire chain.

The second is the need for speed, occasioned by the rise of mobile and e-commerce. While it is difficult to manufacture or sail ships faster, we can reduce administrative clearance time by digitalising key trade documents and securing the data chain. Traders in the UK have experienced versions of this – with border processing time reduced 80 per cent following the introduction of the Electronic Trade Documents Act in September 2023.

The French legislature has conducted hearings on legislation to legalise the use of electronic records in trade, while individual US states are considering amendments to the Uniform Commercial Code to allow the same.

What does this mean for Hong Kong? The Electronic Transactions Ordinance was recently amended to allow government notices to be sent electronically. Why not give business the same support by protecting trade documentation in digital formats?

This could be done by aligning with the Model

Law on Electronic Transferable Records under the UN Commission on International Trade Law. Putting MLETR on the legislative agenda would send a clear signal to business to make the transition, for instance, to use electronic bills of lading. It would keep Hong Kong in step with the mainland, which is already experimenting with an MLETR pilot in Shanghai, and whose civil servants have been studying MLETR for more than a year.

Nine economies have aligned with MLETR globally, with many others readying themselves for the digital trade era through MLETR. Going digital will boost trade for Hong Kong and position it to shape the future trade landscape.