Global trade goes digital: Achieving the transformation in Hong Kong

The recently released 2025 budget included a number of measures to boost Hong Kong’s position as a leader in international trade and supply chain, including a commitment to undertaking legal reforms to enable trade document digitalization, by reference to the Model Law on Electronic Transferable Records (MLETR). Victor Fung, Chairman of the Asia Global Institute, opened the event by highlighting the limited progress in digitalizing trade, despite extensive efforts and advocacy, especially in incorporating digitalization into legislation. He emphasized that digital trade offers Hong Kong and opportunity to harness its two key economic pillars—finance and trade—by prioritizing digital trade and trade finance. While the growing global trade finance gap presents a challenge to economic growth, it also creates an opportunity for Hong Kong to strengthen its competitiveness. Fung further called on a paradigm shift in the financial sector, a move from balance sheet-based lending to transaction-based lending.

Mar from the ICC Digital Standards Initiative outlined the MLETR and addressed Hong Kong's relatively delayed adoption of these digital standards. She emphasized that MLETR and other digital trade legislation is a complex and lengthy process that requires collaboration across various government departments, business sectors, and logistics network.

During the panel discussion, Wong from the Esquel Group stressed the importance of digitalizing factories and supply chains, especially in Hong Kong. He emphasized that Hong Kong's strategic position between China and the US makes it crucial to facilitate trade through digital means. As a key player in service trade, Hong Kong should leverage its strengths to maintain competitiveness, especially amidst the challenges in goods trade.

Panchapakesan from the HSBC outlined three critical considerations for Hong Kong. First, he addressed the city’s evolving global position, focusing on its legal and financial systems. Second, he highlighted the transformative potential of digitalization in simplifying business processes and expediting trade, ultimately freeing up capital crucial for businesses. Lastly, he highlighted the inclusivity enabled by digitalization, which reduces entry barriers for small businesses and allows banks to broaden their customer base.

Chen from the Global Shipping Business Network shared insights on China's digitalization efforts. He noted that China’s adoption rate of the Electronic Bill of Lading, an important legal document in digital trade, exceeds 20%, significantly outperforming the global average of 5%. He agreed that Hong Kong and other developed economies should prioritize digital trade over traditional goods trade. He also proposed that Hong Kong could serve as a strategic intermediary for companies reluctant to engage directly with China or the US.

Heiwai Tang, Director of the Asia Global Institute, discussed the restructuring of global trade, noting that an increasing volume of trade from China is being redirected to other developing countries instead of passing through Hong Kong. He advised Hong Kong to concentrate its resources on service and digital trade, arguing that reliance on a port-based economy offers limited prospect for Hong Kong’s future economic growth.