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            Data centres are indispensible infrastructure for any knowledge-based economy, and are critical to all economic sectors, particularly Hong Kong’s pillar industries such as financial services, trading and logistics. It is the Government’s policy to develop Hong Kong as a regional data centre hub.

What is data centre and why data centre

            A data centre is a facility for housing computer systems and associated components, such as telecommunications and storage systems. It generally includes backup power supplies, backup data communication connections, environmental controls (e.g. air-conditioning, fire suppression) and security devices. According to the Uptime Institute, they are classified into four tiers according to serviceability levels and building requirements. High-tier data centres are those classified as Tier 3 and above.

            According to a consultancy commissioned by us in 2010, the data centre sector contributed HK$3.4 billion to Hong Kong’s GDP and created 4,800 jobs in 2009. Perhaps more important are the many indirect and intangible economic benefits brought about by data centres. They help enhance Hong Kong’s overall competitiveness as an international financial and logistics centre as well as an ICT hub by supporting high value-added economic activities, such as high-frequency stock trading, e-commerce and cloud computing services. Regional headquarters of international businesses are often co-located with their data centres to avoid network latency and improve efficiency.

Strategic advantages of establishing data centres in Hong Kong

            With our reliable power supply, superb telecommunications network, free flow of information, strong data privacy protection, low risk of natural disasters and proximity to the Mainland market, Hong Kong is no doubt a prime location in the region for setting up data centres. According to the Data Centre Risk Index jointly published by consulting firms Cushman & Wakefield and hurleypalmerflatt in June 2011, Hong Kong is the safest place in Asia for setting up data centres, and ranks fourth among the 20 global economies surveyed. We are glad to see that a number of international companies have set up their data centres in Hong Kong in recent years, and I am sure that there will be more to come in the years ahead.

Government facilitation initiatives

            Growth in eCommerce, continuous development of financial services, advent of cloud computing and blossoming of media and contents business both in Hong Kong and in the region all drive up the demand for data centre space in Hong Kong. According to our consultancy, it is estimated that the demand for data centres in Hong Kong will grow by a compound annual growth rate of 9.8% from 2009 to 2015. In 2011 alone, the growth rate exceeded 18%.

            To cope with this trend, we need to ride on our competitive edges and satisfy the demand for data centre development quickly, especially the unique and demanding site requirements of high-tier data centres, lest these high value-added facilities will resort to other locations.

Increasing land supply

            Since May 2001, the Science and Technology Parks Corporation has already granted about 18.5 hectares of land for high-tier data centres in the Industrial Estates at Tai Po and Tseung Kwan O. Moreover, the Chief Executive announced in the 2011-12 Policy Address that about two hectares of land in Tseung Kwan O had been reserved for data centre development, and the first site would be available for open bidding next year.

Making use of industrial buildings and industrial land

            The Financial Secretary announced in the 2012-13 Budget two new time-limited measures to encourage optimisation of existing industrial buildings or industrial land for data centre development. First, the Government will exempt the waiver fee for changing parts of eligible industrial buildings into data centre use. Secondly, the Government will assess the premium for lease modification of industrial lots for development of high-tier data centres on the basis of actual development intensity and high-tier data centre use. These two measures, to be introduced in 2012-13 for application by 31 March 2016, will help spur the supply of data centres in the short run.

Other facilitation measures

            My office set up a Data Centre Facilitation Unit in July last year to provide co-ordinated service to companies interested in setting up data centres in Hong Kong, such as searching for land and space, conversion of industrial buildings for data centre development purposes. A one-stop data centre portal (www.datacentre.gov.hk) was also launched in the same month to disseminate useful information to facilitate development of data centres in Hong Kong, such as source of land and premises, statutory requirements on land use, and supporting facilities. In the past six months, the Data Centre Facilitation Unit has received some 60 enquiries about establishing data centres and provided active assistance to 10 cases.

            My office has been working with relevant government departments to identify scope for streamlining and fine-tuning regulations to better serve the legitimate needs of data centres, and expediting the applications lodged by data centres. For instance, in December 2011, we commissioned a study in collaboration with the Transport Department to evaluate the parking requirements of goods vehicles for data centres in light of industry’s feedback. Internal guidelines with relaxed requirements will be developed for reference of the Transport Department in approving the applications in the future. We will also enrich the content of our data centre website to provide more information to interested parties.

From strength to strength

            With the effort of my office and my personal experience and connection with the ICT industry, we will continue to engage the industry in order to further facilitate the development of data centres in Hong Kong and gauge their precious views with a mission to make Hong Kong the leading city for data centres in the Asia Pacific region. In face of the intense competitions for the provision of data centre services from neighbouring cities, we are bound and determined to try our utmost to make Hong Kong the locale of choice for data centre services. With the same spirit and dedication, we are confident that the data centre sector in Hong Kong will definitely go from strength to strength.