Hong Kong Fears Y2K Infection From Neighbors

Updated 1:00 AM ET August 13, 1999By Tan Ee Lyn

HONG KONG (Reuters) - Hong Kong may be ready for the Y2K bug but it risks catching the potentially damaging computer glitch from less-prepared Asian trading partners, expert Roy Ko told Reuters in an interview.

China, Thailand and the Philippines are viewed as vulnerable and any havoc there could mean problems for the territory, said Ko, a Year 2000 (Y2K) expert at Hong Kong's Productivity Council.

Most Hong Kong companies have rid their computers of the Y2K bug but do not have contingency plans to deal with the fallout if their offshore business partners catch it, he said this week.

The Y2K bug stems from an old programming practice of using only two digits to represent the year. Older computers could mistake 2000 for 1900 and crash at the start of the New Year.

Experts have predicted disruptions to essential services ranging from electricity and water supplies to transportation, as well as problems for accounting, inventories and insurance.

"If there are problems in Hong Kong, they would probably come externally, from our international trading partners," said Ko, head consultant of the council's Information Technology Division.

"This is the most important risk area at this stage for Hong Kong because internally we are quite well prepared. It's the external parties that we are worried about."

The council oversees Y2K readiness of some 300,000 small and medium-sized firms, which form the backbone of Hong Kong's economy.

China has tried to remedy the problem as best it can in the last year but it is lagging, Ko said. "China is probably one of the areas we need to address."

"But China is not the only one we are concerned about. Within Southeast Asia, there are other countries, like Thailand and the Philippines, which are not doing very well," he said.

Hong Kong's status as an Asian hub means trading partners must be just as efficient as the territory to ensure smooth cross-border flows of services and goods.

Painting a possible scenario for havoc, Ko said a stoppage of vital services such as electricity on mainland China would disrupt hundreds of thousands of Hong Kong-owned factories.

"We rely on the re-export of these goods to other parts of the world. If the production part can't produce the goods on time, and we cannot deliver according to our commitments, that will affect our business," he said.

"A second area relates to essential supply -- food and raw material from China for example," he said.

Hong Kong's government and companies need to have contingency plans to insulate themselves from the Y2K fallout from their trading partners, Ko said.

Measures such as building up stockpiles, assessing risks of their business partners, and even going on site to check that their partners have tackled the bug, should be taken, he said.

A productivity council survey in June of 3,014 organizations -- representative of all firms in Hong Kong -- found 58 percent had no such contingency plans, Ko said.

As for Hong Kong's own internal Y2K defenses, the survey was reassuring: by June, 83 percent had either completed or were in the process of completing their Y2K readiness programs.

"Many (organizations) replaced computers and software with Y2K compliant ones," Ko said.

"I would say Hong Kong is ready for Y2K."

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Let's see who can we blame for our y2k problems??? Oh, I know, our neighbors!!

Ray

-- Ray (ray@totacc.com), August 13, 1999