Hong Kong Government 'Endorses' Accenture Digital Logistics Plan

by Mary Swire, Tax-News.com, Hong Kong

29 January 2003

The Hong Kong government has 'endorsed' a report from consultancy Accenture, said to have cost the taxpayer HK$5m, which proposes the HK$3bn development of a digital trade transport network (DTTN) to be used by transport service providers, financial institutions and the government to manage trade documents and processes online.

The endorsement came from the Hong Kong Logistics Development Council, a quango chaired by Secretary for Economic Development and Labour Stephen Ip Shu-kwan. The report predicts that Hong Kong will reap HK$11.8 billion in tangible benefits brought by driving efficiency into the local supply chain, and all its regulatory requirements. John Hammond, head of the council's e-logistics team, said: "The quality of the report is extremely good, good enough to take to Logscouncil and get a quick endorsement."

Many local logistics executives believe that a state-of-the-art digital logistics network would give Hong Kong a major competitive advantage in dealing with mainland China, which is very backward in terms of its materials handling facilities, spending as much as 16% of product cost in shipping and handling - several times more than in efficient, developed economies.

The report envisages an e-hub in which the regulatory services of a company such as Tradelink and the trade management services of OnePort, Hactl or the shipping lines can be offered side-by-side with financial institutions and government information bureaus such as Census and Statistics. But there is no clarity about who will be involved in the development.

John Hammond said: "If we can use existing infrastructure, we will. We don't want to be competing with or repeating any of the products or services already in place." This may indicate a preference for involvement on the part of Tradelink and OnePort - but these two firms are involved in a private-sector coalition which says it can develop a DTTN for Hong Kong using existing technology in preference to the green-field solution proposed by Accenture. The coalition told the government in December that its alternative proposal could be up and running "by the second half of 2003" at a cost of HK$120 million in the first two years, as against a development cost of up to HK$1 billion for the Accenture plan (now revealed to be HK$1.5bn), which would take up to three years to implement.

Tradelink, which currently has a monopoly on the electronic transfer of regulatory trade documents in the SAR, will shortly complete a share swap with Logistics Information Network Enterprise (LINE), a Hutchison subsidiary which provides supply chain solutions for mainland trade.

Tradelink Electronic Commerce Ltd is a joint venture between the Hong Kong SAR Government and other private sector shareholders who are all key players in the international trade cycle in Hong Kong, either directly or as representative organisations. The Government's shareholding, through the Commerce, Trade & Industry Bureau, is just under 42% and other shareholders include HSBC Holdings, Pacific Century CyberWorks, China Resources (Holdings), Swire Pacific, Modern Terminals and Hongkong International Terminals.

Under an agreement signed with the Government in 1992, Tradelink provides a 'single electronic gateway' between the trading community and the Hong Kong SAR Government for a range of specified trade transactions. The current franchise runs from January 1997 to December 2003. As well as providing an electronic link to Government, Tradelink's services offer a number of value-added transaction management facilities including message checking, matching and validation; message authentication and security; electronic billing and payments; and message archiving and audit trail services.

The Government is thought to want to dispose of its holding in Tradelink once its current franchise runs out.

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