Subject: economic development, technology, digital transformation, COVID-19

  • The outbreak of Coronavirus Disease 2019 ("COVID-19") has brought unprecedented disruptions to everyday life. Digital technologies came to the fore amid various social distancing measures, much of the world switching online, keeping the society functioning through enabling remote working, automating the business and production processes and facilitating contactless e-commerce or e-services. Observers often considered the accelerated digital transformation, which is likely to persist in the post-COVID world, as a silver lining of the pandemic.
  • Yet acceleration of digital transformation is not without challenges. For small and medium-sized enterprises ("SMEs"), they may be constrained by limited financial resources and technical knowledge to "go digital", specially under the prevailing negative business environment brought by COVID-19. For workers, business digitalization would re-define the employment landscape in the post-COVID world, and some workers might not have the necessary digital skillsets to stay relevant and employable in a more digitalized and automated work environment. These challenges, if not addressed, may widen the productivity gap between digital adopters and digital laggards, gradually affecting the pace of COVID-19 recovery.
  • This issue of Essentials studies the role of digitalization during and after COVID-19, and looks into digital programmes in selected places since the outbreak of pandemic. This is followed by a discussion of measures adopted by Hong Kong to accelerate digital transformation since the outbreak of COVID-19 and the similar experiences in Singapore and South Korea, with both places rolling out specific measures to help businesses "go digital" and to upskill workforce in the digital world of work.

Digital transformation in post-COVID world

  • The COVID-19 pandemic has changed how people live and businesses work. For example,

    (a)online shopping: according to industry data, retail e-commerce sales increased from US$3.35 trillion (HK$26.1 trillion) in 2019 to US$4.21 trillion (HK$32.8 trillion) in 2020, with e-commerce's share of global retail trade increasing from 14% to 18% over the same period;1Legend symbol denoting See eMarketer (2021).

    (b)remote working and virtual meeting in the business world: a survey conducted during May-June 2021 on 12 500 workers from 29 countries revealed that about 40% of the respondents had arranged to work from home after the outbreak of COVID-19, up from 24% before the pandemic.2Legend symbol denoting See World Economic Forum (2021). The wider adoption of remote working also stimulated the demand for virtual meeting software, with a video conferencing system provider reported that daily traffic increased by 30 times within four months following the outbreak of COVID-19 in December 2019;3Legend symbol denoting Daily traffic here refers to the number of virtual meeting participants on daily basis. According to Zoom Video Communications Inc. (2021), daily meeting participants was about 10 million in December 2019, the figure reached 300 million in April 2020. and

    (c)process re-engineering: evidence from around the world shows that digitalization can play a key role in the post-COVID-19 manufacturing recovery (i.e. resuming operations), diversification (i.e. exploring new products and new markets) and resilience (i.e. preparing for supply/demand shocks and operational risks).4Legend symbol denoting See Cambridge Industrial Innovation Policy (2020).
  • Indeed, global surveys show that the world leapt five years forward in terms of consumer and business digital adoption in a matter of eight weeks during the COVID-19 pandemic.5Legend symbol denoting See Baig, A. et al. (2020).
  • While the mass rollout of vaccination programme can help people resume face-to-face interactions, digital transformation is likely to endure in the post-COVID world as noted by the McKinsey Global Institute ("MGI"). In addition to the growth of online transactions and the shift to a hybrid mode of working (i.e. part physical, part virtual) for some workers, MGI's study pointed out the faster adoption of automation and Artificial Intelligence ("AI") to reduce workplace density as another digital trend that may continue after the pandemic recedes.6Legend symbol denoting See McKinsey Global Institute (2021).
  • Recognizing the new digitalization trend, a number of developed places have placed digitalization at the core of their post-COVID recovery plans, with accelerating efforts on using digital technologies to grasp growth opportunities once the pandemic subsides and build preparedness for similar future global emergencies. Although these recovery plans may be different in terms of package size, policy tools and delivery timeline, some of their digital elements are in common. These include (a) strengthening digital infrastructure; (b) stimulating new technologies innovation; and (c) promoting business digitalization with specific measures to support SMEs in bridging their digital gap. Meanwhile, some places also rolled out programmes to keep their workers competitive in the digital era (Figure 1).

    Figure 1 – Government digitalization schemes since the COVID-19 pandemic

    PlacesKey programmesKey digital initiatives
    AustraliaDigital Economy Strategy 2030Launched in May 2021, this strategy aims at transforming Australia into a leading digital economy by (a) building up digital infrastructure; (b) fostering emerging technologies; and (c) lifting the digital capabilities of SMEs
    European UnionNextGenerationEU - Make it DigitalAdopted in December 2020 to identify a set of areas for digitalization such as quality of digital infrastructure, access to skilled labour in the digital sphere, and the penetration of new technologies in SMEs
    GermanyDigital Now - Investment Support for SMEsLaunched in September 2020 to provide financial grants for SMEs to invest in digital technologies and upskilling of their employees
    SingaporeBudget 2021Delivered in February 2021 to accelerate digital transformation through three strategies: (a) scale broad-based digitalization for SMEs; (b) develop digital leaders; and (c) catalyze new products and business models
    South KoreaDigital New DealLaunched in July 2020 and further upgraded in July 2021, this strategy aims at (a) strengthening the integration of data, network and AI infrastructure; (b) fostering the contactless industries and e-commerce, especially enabling SMEs and micro-enterprises to leverage the relevant opportunities; (c) developing advanced technologies; and (d) promoting social overhead capital(1) digitalization
    United Kingdom
    UK Innovation StrategyLaunched in July 2021 to set out the government's vision to make the UK a global hub for innovation by 2035 via four pillars "to support businesses and institutions at the cutting edge of innovation"
    Note:(1)Social overhead capital refers to basic public services and facilities such as water supply and electricity that allow for the functioning of productive activities of individuals and groups in societies.
    Source:Various government websites.

Digital transformation in Hong Kong

Digital transformation in selected overseas places


  • With the economy gradually recovering from the COVID-19 recession, Singapore has moved away from focusing on relief measures to address immediate economic challenges. There is shift towards emphasizing structural economic policies to equip local businesses and people with future-ready capabilities to thrive in the post-COVID world, particularly on digitalization, investing into new technologies and scaling up companies.
  • In the Budget 2021, under the theme of Emerging Stronger Together, the Singaporean government announced to allocate S$24 billion (HK$138 billion) to (a) help businesses digitalize, adopt new technology and innovate; and (b) enable workers secure jobs in growth sectors such as the information and communication sector. This is complemented by additional digital programmes introduced by various government agencies in subsequent months (Figure 2).

    Figure 2 – Measures supporting Singapore's digital transformation

    Measures to facilitate business digitalization
    Better Data Driven Business ProgrammeProviding businesses with free tools and guidance to use data for business analysis. This includes using business intelligence tool to analyze data for better business operation and developing new business model
    Chief Technology Officer-as-a ServiceOffering firms with funding support for access to professional IT consultancies to help them identify and adopt digital solutions
    Digital Leaders ProgrammeProviding funding support for eligible firms(1) in hiring digital teams and in developing and implementing digital transformation maps
    Emerging Technology ProgrammeCo-funding trials and adoption of frontier technologies like 5G, AI and trust technologies(2)
    Future Communications Research and Development ProgrammeEnhancing Singapore's communications and connectivity capabilities and translating such capabilities into marketable products by providing new communication testbeds, research grants and masters-level scholarships
    Open Innovation Platform Acting as a virtual crowd-sourcing platform to facilitate problem-solution matching for public and private sectors, and to co-fund prototyping and deployment of solutions
    Measures to create new opportunities for workers and redesign jobs
    Innovation and Enterprise Fellowship ProgrammeBuilding up a talent pool of 500 Fellowships to meet needs in areas such as cybersecurity, AI and health technology
    Productivity Solutions Grant – Job Redesign Scheme(3)Enhancing the Job Redesign scheme by raising the government's co-funding ratio to 80% (from 70%) till end-March 2022
    SGUnited Jobs and Skills Package(4)Extending SGUnited Skills, SGUnited Traineeships and SGUnited Mid-Career Pathways Programmes to provide up to 35 000 traineeships and training opportunities for workers looking to upskill and find new jobs
    Notes:(1)To be eligible, a firm should (a) have some level of digital maturity; (b) be able to show its development plan on integrating digital ideas into core business; and (c) be capable of exploring overseas business opportunities through digitalization.
    (2)Trust technology refers to any technology that enhances and propagates trust in personal, social and business settings.
    (3)The scheme provides funding support for enterprises to work with pre-approved Job Redesign consultants to redesign work processes, tasks and responsibilities.
    (4)The package will be extended by one year to March 2022.
    Source:Various Singaporean government websites.

  • Apart from building the foundation for digitalization through measures such as encouraging applications of data science, adoption of frontier technologies (including 5G and AI), and fostering problem-solution matching, Singapore put efforts into supporting SMEs in their digitization journey as well given many such enterprises may not only be unfamiliar with new technologies, but also do not have the scale or resources to hire a full-time IT professionals to roll out relevant digitalization initiatives. Some programmes mentioned in Figure 2 provide specific support for SMEs to "go digital". For example, Chief Technology Officer-as-a Service ("CTOaaS") helps SMEs identify and access resources they need to digitally transform. It includes a one-stop self-help Web application for SMEs to assess their digital needs and gap. They can then be given customized recommendations on digital solutions. For SMEs that need more in-depth advice, CTOaaS will provide them an opportunity to tap into a shared pool of CTO-equivalents or Digital Consultants at no charge or affordable rate.
  • In addition, SMEs might lack strong digital leadership at the top as well as clear and compelling digital vision and roadmap. Digital Leaders Programme ("DLP") is particularly useful for SMEs with plans to infuse digital technology into their core businesses, as DLP offers funding support for up to 70% of costs related to the following areas (a) building an in-house digital team;16Legend symbol denoting The team will comprise a Leader (i.e. Chief Technology Officer/Chief Digital Officer or equivalent), as well as a team of up to five digital talents (e.g. enterprise architects) to execute the digital transformation initiatives for the enterprise concerned. (b) engaging consultancy services related to digital projects; and (c) developing new digital products or services.
  • To complement initiatives that help SMEs bridge their digital gap, the Singaporean government also rolled out measures to strengthen workers' employability in the digital era as successful digital transformation also requires the supply of specific talents and redesigning jobs. Indeed, many SMEs would have difficulties in re-skilling and transitioning existing staff to adopt to a more digitalized world. As announced in the Budget 2021, they can tap into the Job Redesign Scheme under Productivity Solutions Grant, which the Singaporean government has slightly enhanced its co-funding ratio from 70% to 80% till end-March 2022.
  • There are also programmes to prepare different groups of workers for the digital transformation:

    (a)for fresh graduates and technology talents, some of the trainee positions under SGUnited Traineeships are offered by technology companies for fresh graduates whereas the Innovation and Enterprise Fellowship Programme aims to build up 500 Fellowship positions in cybersecurity, AI and health technology; and

    (b)for mid-career individuals and more mature workers, the SGUnited Mid-Career Pathways Programmes provide company-attachment opportunities and re-skilling courses to enhance their digital literacy, and each half-year programme will be supported by monthly allowance offered by the Singaporean government.

South Korea

  • South Korea was among one of the earliest places that initiated digital strategies for the post-COVID world, announcing in July 2020 a Korean New Deal that outlines the direction for the country's post-COVID economic policy over the coming five years. In July 2021, the South Korean government announced an upgraded plan based on the 2020 New Deal (the revised plan is now known as New Deal 2.0), increasing its investment pledge to a total of 220 trillion won (HK$1.45 trillion) and aims at creating 2.5 million jobs opportunities by 2025.17Legend symbol denoting The New Deal 2.0 represents an increase in total investment from 160 trillion won (HK$1.06 trillion) to 220 trillion won (HK$1.45 trillion), with an additional 600 000 jobs being created on top of the original programme – New Deal in July 2020.
  • The Digital New Deal, alongside the Green New Deal (promoting an environment-friendly economy) and the Human New Deal (strengthening the employment and social safety nets),18Legend symbol denoting The respective investment amount for Green New Deal and Human New Deal are 61 trillion won (HK$403 billion) and 50 trillion won (HK$330 billion). The remaining 60 trillion won (HK$394 billion) investment of the New Deal 2.0 will be made by local governments and private sector, which is known as Local New Deal. constitutes the three policy pillars under the New Deal 2.0. Valued at 49 trillion won (HK$323 billion), the Digital New Deal aims at transforming the country into a leading digital economy by strengthening its digital infrastructure, fostering contactless industries, developing data science and cutting edge technologies (such as 5G, AI and cybersecurity), and making its infrastructure smart (Figure 3).

    Figure 3 – Key programmes of the Digital New Deal (As at July 2021)

    Initiatives Investment during 2020 to 2025
    (a) Promoting the integration of data, network and AI(1) 33.5 trillion won (HK$221 billion)
    (b) Making infrastructure (so-called "Social Overhead Capital") smart(2) 9.7 trillion won (HK$64 billion)
    (c) Strengthening infrastructure for contactless industries 3.2 trillion won (HK$21 billion)
    (d) Promoting metaverse(3) and other information and communication technologies 2.6 trillion won (HK$17 billion)
    Total 49.0 trillion won (HK$323 billion)
    Notes:(1)One key project is the building of Data Dam, which collects data from public and private sectors to support big data development, paving the way for the development of digital economy.
    (2)This includes the establishment of digital management system for core infrastructure such as transportation, underground structures, and early alert systems to monitor water supply, flood and drought.
    (3)Metaverse is a virtually connected platform, allowing digital content to be laid over the real world, so that users can access to information in the real world through a hardware connected with the metaverse.
    Source:Various South Korean government websites.

  • Similar to the programmes to promote digitization in other developed places, South Korea's Digital New Deal also offers measures to specifically support digital transformation of SMEs and strengthen digital capability of its workforce. In connection to the rising trend of e-commerce and remote working following the outbreak of COVID-19, Digital New Deal supports SMEs and micro-enterprises by:

    (a)promoting remote working: additional videoconferencing facilities will be established to support operational needs of SMEs and venture companies. For instance, in areas where SMEs and venture companies are concentrated such as start-up parks, about 1 600 videoconferencing rooms will be established;

    (b)supporting online businesses: AI and 5G technologies will be utilized to support the setting up of smart stores (such as convenience stores with fully automated checkout systems), thereby creating a new digital channel for small companies to grasp online business opportunities;

    (c)providing AI Vouchers: in order to encourage SMEs to adopt AI solutions, the South Korean government provides AI Vouchers for SMEs (selected SMEs can each receive up to 300 million won (HK$2 million) of vouchers) to purchase relevant AI solutions from companies who offer such solutions. The AI Vouchers not only helps SMEs go digital, but also creates new market opportunities for SMEs developing AI solutions; and

    (d)establishing Smart Korea Fund: the Ministry of SMEs and Startups, in collaboration with other government agencies, established a 1 trillion won (HK$6.6 billion) worth Smart Korea Fund to invest in, among other things, zero-contact industries with funding support for start-ups developing contactless products.19Legend symbol denoting The fund at an initial capital of 1 trillion won (HK$6.6 billion) will be reportedly expanded to 6 trillion won (HK$39.6 billion) by 2025. See Pulse by Maeil Business News Korea (2020).
  • As for measures to help workforce bridge digital gap, Digital New Deal plans to train up 100 000 AI and software experts by supporting 40 universities to focus on software knowledge. Added to this, a curriculum that integrates new technologies will be established to provide trainings for 10 000 university students, so as to build talent pool for innovation.
  • Furthermore, aiming at facilitating job transition in the digital era, the South Korean government will establish a "future-oriented job training system" which, among other things, providing trainings on digital integration for 90 000 trainees by 2022. Meanwhile, under Digital New Deal, university lectures related to AI and robotics will be made available to general public through the Korean Massive Open Online Course ("KMOOC") by 2025.20Legend symbol denoting Established in 2015, KMOOC is an open learning platform, transforming course available only for students in classrooms into auditable online video lectures for the public.

Concluding remarks

  • The COVID-19 pandemic has brought forward much progress in the global digital transformation, and the trend of digitalization is likely to continue in the post-COVID world, albeit at a less blistering pace. Developed places have recognized promoting digitalization as a key growth driver in the post-COVID world, but also acknowledged the potential challenges posted on businesses and workers with limited digital proficiency. Both Singapore and South Korea offered insights on measures on helping such stakeholders in the digital era. For Singapore, it adopts a holistic approach to help local companies (particularly SMEs) in digitalizing, with measures ranging from offering free technical advices to providing funding support to strengthen digital capability. It also provides targeted programmes for workers with different background to cope with digital transition. Meanwhile, South Korea has mapped out a comprehensive five-year national digital agenda that facilitates remote business operation, helps SMEs in leveraging AI and contactless technology, and nurtures digital talents.

Prepared by Gary NG
Research Office
Information Services Division
Legislative Council Secretariat
27 October 2021


1.See eMarketer (2021).

2.See World Economic Forum (2021).

3.Daily traffic here refers to the number of virtual meeting participants on daily basis. According to Zoom Video Communications Inc. (2021), daily meeting participants was about 10 million in December 2019, the figure reached 300 million in April 2020.

4.See Cambridge Industrial Innovation Policy (2020).

5.See Baig, A. et al. (2020).

6.See McKinsey Global Institute (2021).

7.See CPA Australia (2021).

8.Separately, the issuance of the HK$5,000 electronic consumption vouchers as announced in the 2021-2022 Budget may help develop digital payment system in Hong Kong. According to the Government, following the announcement of the issuance, over 2.2 million e-consumer payment accounts were created and the number of merchants accepting digital payment also increased by 48 000 as of July 2021.

9.The Distance Business Programme provides funding support through fast-track processing for enterprises to adopt information technology solution for developing distance business. Application for the programme was closed on 31 October 2020.

10.The Technology Voucher Programme, launched in November 2016, subsidizes local enterprises to use technological services and solutions to improve productivity, or to upgrade and transform their business processes.

11.The Re-industrialisation Funding Scheme, launched in July 2020, aims to encourage manufacturers to develop advanced manufacturing industries in Hong Kong that are based on smart production to promote re-industrialization and identify new growth points for the local economy.

12.The data provided via CDI can facilitate banks in making more accurate predictions about the sales and operation of SMEs, thereby reducing the need for some SMEs to provide collateral. CDI is expected to commence operation in 2022. See GovHK (2021d).

13.RTH was introduced in July 2020, providing funding for companies undertaking research projects funded by Innovation and Technology Fund to engage up to four graduates in STEM related disciplines from a local university or a well-recognized non-local institution to conduct research work. The maximum monthly allowance is HK$18,000 for research talents with a bachelor degree, HK$21,000 for those with a master degree, and HK$32,000 for those with a doctoral degree.

14.The scheme was first launched in June 2020 on a pilot basis and was regularized as announced in the 2021-2022 Budget. It subsidizes students taking STEM related programmes in local universities to enrol in internships related to IT sectors. Each student intern will receive a monthly allowance of HK$10,500 under the Scheme. Both local and non-local undergraduates and postgraduates are eligible.

15.DTT welcomes current tertiary students or graduates from any disciplines. It offers a series of free AI and data science training sessions to enhance participants' technical knowledge in advanced technologies. See Hong Kong Science & Technology Parks (2021).

16.The team will comprise a Leader (i.e. Chief Technology Officer/Chief Digital Officer or equivalent), as well as a team of up to five digital talents (e.g. enterprise architects) to execute the digital transformation initiatives for the enterprise concerned.

17.The New Deal 2.0 represents an increase in total investment from 160 trillion won (HK$1.06 trillion) to 220 trillion won (HK$1.45 trillion), with an additional 600 000 jobs being created on top of the original programme – New Deal in July 2020.

18.The respective investment amount for Green New Deal and Human New Deal are 61 trillion won (HK$403 billion) and 50 trillion won (HK$330 billion). The remaining 60 trillion won (HK$394 billion) investment of the New Deal 2.0 will be made by local governments and private sector, which is known as Local New Deal.

19.The fund at an initial capital of 1 trillion won (HK$6.6 billion) will be reportedly expanded to 6 trillion won (HK$39.6 billion) by 2025. See Pulse by Maeil Business News Korea (2020).

20.Established in 2015, KMOOC is an open learning platform, transforming course available only for students in classrooms into auditable online video lectures for the public.


Hong Kong

1.CPA Australia. (2021) CPA Australia Asia-Pacific Small Business Survey 2020-2021.

2.GovHK. (2021a) Press Releases: LCQ8: Maintaining Hong Kong's Status and Competitiveness in International Community.

3.GovHK. (2021b) Press Releases: LCQ22: Hong Kong's Global Competitiveness in Innovation and Technology.

4.GovHK. (2021c) The 2021-22 Budget.

5.GovHK. (2021d) The Chief Executive's 2021 Policy Address.

6.Hong Kong Productivity Council. (2019) Standard Chartered Hong Kong SME Leading Business Index Quarter 4, 2019.

7.Hong Kong Productivity Council. (2020) Standard Chartered Hong Kong SME Leading Business Index Quarter 2, 2020.

8.Hong Kong Science & Technology Parks. (2021) DeepTech Talents Training Programme 2021.

9.Innovation and Technology Fund. (2021)

10.Our Hong Kong Foundation. (2019) Unleash the Potential in Science and Technology Innovation: Develop Hong Kong into an International R&D Powerhouse.


11.Emerging Stronger Taskforce, Singapore. (2021) Emerging Stronger Taskforce Report.

12.Ministry of Communication and Information. (2021) Media Factsheet: Transforming our Economy through Digitalisation and Innovation.

13.Ministry of Finance, Singapore. (2021) Budget 2021.

14.SkillsFuture Singapore and Workforce Singapore. (2021)

South Korea

15.Ministry of Economy and Finance, Republic of Korea. (2020a) Government Announces Overview of Korean New Deal.

16.Ministry of Economy and Finance, Republic of Korea. (2020b) National Strategy for a Great Transformation. Korean New Deal.

17.Ministry of Economy and Finance, Republic of Korea. (2021a) Economic Bulletin August 2021.

18.Ministry of Economy and Finance, Republic of Korea. (2021b) Government Announces Korean New Deal 2.0, an Upgrade to Properly Reflect Changes.

19.Ministry of Science and ICT, Republic of Korea. (2020) Data Dam Project Begins, Being Key to Digital New Deal (Sep.2).

20.Ministry of Science and ICT, Republic of Korea. (2021) 2021 Action Plan for Digital New Deal (Jan.6).

21.Pulse by Maeil Business News Korea. (2020) Korea to Launch 1 Trillion Won Fund This Month to Back New Deal Initiative, 16 July.


22.Australian Government. (2021) Digital Economy Strategy 2030.

23.Baig, A. et al. (2020) The COVID-19 Recovery will be Digital: A Plan for the First 90 Days.

24.Cambridge Innovation Industrial Policy. (2020) The Role of Industrial Digitalisation in Post-COVID-19 Manufacturing Recovery, Diversification and Resilience.

25.eMarketer. (2021) Global Ecommerce Forecast 2021.

26.European Commission. (2020) Europe's moment: Repair and Prepare for the Next Generation.

27.Federal Ministry for Economic Affairs and Energy, Germany. (Undated) Taking Control of Digital Transformation.

28.GOV.UK. (2021) UK Innovation Strategy.

29.HSBC Global Research. (2020) The Booming Digital Economy.

30.McKinsey Global Institute. (2021) The Future of Work after COVID-19.

31.World Economic Forum. (2021) Home or Office? Survey Shows Opinions about Work after COVID-19.

32.Zoom Video Communications Inc. (2021) Annual Report Fiscal 2021.

Essentials are compiled for Members and Committees of the Legislative Council. They are not legal or other professional advice and shall not be relied on as such. Essentials are subject to copyright owned by The Legislative Council Commission (The Commission). The Commission permits accurate reproduction of Essentials for non-commercial use in a manner not adversely affecting the Legislative Council. Please refer to the Disclaimer and Copyright Notice on the Legislative Council website at for details. The paper number of this issue of Essentials is ISE33/20-21.