HK can be a neutral hub for cross-border data flows

October 06, 2017 08:49
By developing the technology to handle cross border data flows in a safe manner while complying with regulatory requirements in different regions, HK can build itself into a global data hub. Image credit:

Digitalization has become a key growth engine for the global economy, as it facilities innovation in business, improves productivity and helps nurture new industries.

Some scholars estimate that digital economy will account for anywhere between 10 percent and 50 percent of global GDP growth in the future.

That means regions offering more and faster digital connections will have a leading advantage over others.

Against this backdrop, it is no surprise that Hong Kong is keen to position itself as a global data hub.

I attended the 39th International Conference of Data Protection and Privacy Commissioners that was held recently in Hong Kong. During the conference, some participants criticized regulators, accusing them of meddling too much and hampering innovation.

As of now, at least 102 jurisdictions have implemented or will implement personal data privacy protection rules. Of this, 10 are in Asia. It shows policymakers worldwide are getting more conscious about personal data protection.

Striking a balance between innovation and data safety is a huge challenge for regulators.

Meanwhile, corporates have to deploy huge resources in order to comply with different regulations in different nations.

I sincerely believe that technology is the best solution to data-related problems.

For instance, Craig Gentry, an IBM research scientist, constructed the first fully homomorphic encryption scheme, which allows data to be processed in arbitrarily complex ways while it remains encrypted. That would mitigate the risk of data leakage during transmission or processing.

Multinational corporations will go for high-speed data transmission sooner or later. Developing a neutral international data hub could be a unique opportunity for Hong Kong.

For instance, smart technology can be utilized in handling the input and output of data, to achieve safe and controllable data flow which meets regulatory requirements in different regions.

Hong Kong has already lured a number of multi-national enterprises into setting up their Asia headquarters in the city. Therefore, the city might be affected by cross-border data transmission rules of various nations. But at the same time, it also gives the city a niche to position itself as a neutral data hub.

Hong Kong can facilitate cross-border data flows in a safe and highly-efficient manner. That will help data processing activities in order to support legitimate businesses of various jurisdictions. This can considerably improve economic efficiency in international business.

I hope Hong Kong will take initiatives in developing new technologies related to data safety and promote itself as a test zone in this regard.

This article appeared in the Hong Kong Economic Journal on Oct 4

Translation by Julie Zhu

[Chinese version 中文版

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Venture Partner of Sequoia Capital China, former head of the data committee and vice president at Alibaba Group.