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Hong Kong’s ambitions to be an international data-center hub are a potential casualty of the city’s mass protests. Privacy brea-ches stemming from a summer of clashes between demonstrators and police threaten to erode confidence in the city as a base for foreign companies to set up storage facilities. To alleviate concerns, the government needs to improve security and regulation in the handling of sensitive data.
Last month, dozens of protesters were arrested after being treated in the emergency ward of a public hospital following battles with riot police. The city’s Hospital Authority subsequently denied leaking patient data — despite the discovery of an internal document labelled “for police†that listed names of protesters seeking medical treatment, according to the South China Morning Post. At around same time, the personal information of more than 800 police officers was hacked and released online.
Data centers are a fast-growing market, valued at $31 billion globally in 2017 and forecast by Zion Market Research to grow 14 percent annually to reach $105 billion by 2026. In Hong Kong, total revenue for data centers is expected to reach $1 billion this year, with three firms sharing 55 percent of market: Japan’s NTT Communications Corp; Sunevision Holdings Ltd, a unit of local developer Sun Hung Kai Properties Ltd; and Silicon Valley-based Equinix Inc.
The Hong Kong government has targeted the industry for growth, and the city has many advantages that make it an attractive location. The former British colony has a common-law legal system that’s recognised and trusted across the Western world, and its data-privacy laws are among stri-ctest in Asia. In addition, Hong Kong sits at the mouth of the Greater Bay Area, a grouping of 11 cities with a population of 69 million and annual GDP of $1.5 trillion that China plans to develop into an economic bloc. For multinationals, storing data in Hong Kong bypasses red tape and potential legal minefields in mainland China.
Besides its legal system and geographic position, Hong Kong is well equipped with a highly reliable power supply — averaging only 1.5 minutes of unplanned power outages per year, according to one of the city’s two main electricity providers. This compares with 17 to 28 minutes in other major cities such as New York, Sydney and London.
Hong Kong needs to strengthen its data-security laws or risk international companies abandoning the city for more privacy-oriented locations, according to Padraig Walsh, a partner at legal firm Tanner De Witt who focusses on fintech and data privacy.
To remain competitive, the government should consider amending the Hong Kong ordinance to require data users to report breaches and to give the Privacy Commissioner stronger enforcement powers. Singapore will update its privacy laws next year, according to Walsh. If Hong Kong doesn’t adapt, companies will go elsewhere.
—Bloomberg