Hong Kong’s finance chief has said the city should look beyond online entertainment in embracing the next generation of the internet, known as Web3, as part of efforts to spur growth in the economy.
Financial Secretary Paul Chan Mo-po on Sunday called on the city to not waste any time in seizing the opportunities offered by cutting-edge technology in the area.
“The next wave of breakthroughs is very likely to be driven by Web3 and blockchain technology,” he wrote in his weekly blog post.
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Chan said the application and evolution of Web3 had helped accelerate the development of the online entertainment industry in recent years by offering high-quality and immersive experiences to users.
He cited an overseas study that stated the global online entertainment market could grow to about US$653 billion in 2027, up from about US$184 billion in 2021.
“The likes of NFTs, GameFi, Play to Earn and immersive entertainment are directions many global entertainment enterprises are putting in resources to explore,” he wrote, citing the Digital Entertainment Leadership Forum held at Cyberport over the weekend.
The first generation of the internet emerged in the 1990s, referred to as Web1. It was mainly made up of static web pages with content used to display information.
Web2 describes the current state of the internet, which is believed to have begun around the turn of the new century and is characterised by the rise of social media platforms and e-commerce.
Web3 is the hypothetical next-generation version of the World Wide Web that is decentralised and distributed through the use of blockchain and similar technologies.
Chan stressed that Web3 technology would not only be confined to online entertainment or virtual assets.
“Through technological innovation and application innovation, it can be applied to solve many difficulties and pain points encountered in finance, business operation, trade, supply chain management and even day-to-day life.”
He said the government was looking for ways to apply Web3 technologies, adding the Hong Kong Monetary Authority had issued the world’s first government-backed tokenised green bond in February.
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“This brought together bonds and other financial instruments, participants and related activities on one single digital platform. This resulted in the enhancement of efficiency, cutting the processing time of bond issuance from the usual five business days to one,” Chan said.
Officials have pledged to invest more in the Web3 digital economy to make the city a global hub.
The financial secretary announced in the 2023-24 budget the establishment of a task force to provide recommendations on the sustainable and responsible development of Web3 in Hong Kong.
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Chaired by Chan, the task force was formally set up in June and features 15 industry experts as non-official members. Chan said the group had already convened.
The finance chief allocated HK$50 million in the 2023-24 budget in February to speed up the development of the Web3 ecosystem, including organising international seminars, promoting cross-sector business cooperation and arranging workshops for young people.
He noted that more than 180 Web3-related firms had set up offices in Cyberport, of which more than a fifth were from mainland China or overseas.
Francis Fong Po-kiu, honorary president of the Hong Kong Information Technology Federation, urged the government to speed up the development of a comprehensive regulatory framework for Web3 and increase public education.
