Hong Kong pressed to accelerate digital trade shift, amid mounting regional competition - Trade Treasury Payments

Hong Kong has long been considered a leading global trade and logistics hub. However, one of the key takeaways from “Digital Trade Masterclass”, a joint initiative of the Hong Kong Trade Development Council (HKTDC) attended by more than 200 small and medium-sized enterprises (SMEs), is that this position will find itself under renewed scrutiny. 

Industry leaders at the event warn that Hong Kong’s continued reliance on paper-based systems could undermine its competitiveness in an increasingly digital world. Other economies, including mainland China and emerging ASEAN players like Thailand, are now moving to digitise trade processes, with implications for speed, cost, and trust.

That momentum is leaving Hong Kong exposed.

The HKTDC event coincides with preparations for a legislative proposal (expected next year) to give legal effect to electronic trade documents, drawing on the UNCITRAL Model Law on Electronic Transferable Records (MLETR). If enacted, the law would bring Hong Kong into alignment with evolving global norms and remove a key regulatory bottleneck for paperless trade.

Pamela Mar, managing director of the ICC Digital Standards Initiative, and TTP editorial board member said, “Finance, trade, and logistics account for over 45% of Hong Kong’s economy. Accelerating digitalisation in these sectors will have a positive, economy-wide impact.”

Yet digitalisation is about resilience as much as it is about infrastructure.

Around 60% of regional traders are now facing tariff rates of 20% or more, many the result of shifting US-China trade policies. For Hong Kong-based firms, these added costs are colliding with legacy systems that remain slow and opaque.

In response, the Hong Kong Monetary Authority (HKMA) is developing “Project CargoX”, a logistics data platform for banks to access real-time supply chain information. In parallel, technology providers showcased platforms that use blockchain and artificial intelligence to digitise trade documentation and create verified digital footprints, particularly for SMEs seeking finance.

Many experts question whether this progress is occurring fast enough. 

Andy Lam, Deputy Secretary for Commerce and Economic Development of the HKSAR Government, said, “The HKSAR Government is committed to fostering an efficient business environment and maintaining the international competitiveness of Hong Kong. Facilitating the digitalisation of trade documents is part of this strategy. We anticipate that the industry would actively provide feedback and allow the Government to formulate a legal framework that is in line with the needs of the industry, on which basis the industry may propose different technical solutions.”

While Hong Kong has strong institutional foundations, several speakers at the event warned that institutional strength alone does not guarantee relevance. “We cannot afford complacency,” Mar said, pointing to the growing number of jurisdictions that are already experimenting with fully digital trade corridors. 

As the legal and technical scaffolding for paperless trade begins to take shape, the Masterclass echoed the common message that the tools for trade digitalisation are already available. Now that the stakes are rising, the window for action is narrowing.