State Council publishes plan for development of the Hainan Free Trade Port
On 1 June, the State Council published the Overall Plan for the Construction of the Hainan Free Trade Port. Following the success of free trade zones in other provinces, Hainan will be the first free trade port in China and will implement a series of policies that are open and beneficial to foreign investment.
According to the plan, Hainan will formulate policies to facilitate the secure and orderly flow of data, and boost the development of a digital economy. As part of its supportive measures, new international Internet data-exchange pilot projects, international submarine optical cables and landing points, and international communication gateways could be launched in Hainan in the near future.
In the telecom sector, Hainan has promised to expand value-added telecommunications services, and gradually remove restrictions on foreign equity ratios in the operation of online data processing and transaction processing services (which are usually needed by e-commerce businesses). In addition, the plan suggests that certain categories of basic telecommunication services might be open to foreign investment, although no further details specifying categories or foreign investment ratio restrictions are provided.
Please click here for the full text (Chinese only) of the plan.
New policies published to support export e-commerce businesses
The General Administration of Customs published a policy supporting cross-border export sales using e-commerce platforms, which will take effect on 1 July 2020.
According to the policy, export sales can either be conducted via a direct B2B model (i.e. the domestic seller first exports goods and then delivers to the foreign buyer after the sales contract is concluded online) or via a foreign warehouse delivery model (i.e. goods are delivered to the foreign buyer directly from a foreign warehouse after the contract is concluded online). All transaction-related data will be shared with Customs in real time, so that tax, quarantine, inspection, and customs clearance matters can be handled while the online transactions are being conducted.
This policy generally follows the mature model of import retail sales via e-commerce platforms, which was formally launched in China three years ago. Unlike import sales, however, there is not a “white list” restricting the categories of goods that can be sold via this export e-commerce sales model. Currently, the policy only applies in a few pilot cities including Beijing, Tianjin, Nanjing, Hangzhou, Ningbo, Xiamen, Zhengzhou, Guangzhou, Shenzhen and Huangpu.
Legislative Counsel publishes discussion paper on development of financial technologies
On 1 June 2020, the Legislative Council Panel on Financial Affairs published a discussion paper on development of Financial Technologies in Hong Kong. The paper has summarised the current measures recommended to promote and facilitate fintech development in Hong Kong. These measures include the SFC's decision to begin granting virtual bank licences last year, a new licensing framework for the virtual assets trading platforms published by the SFC in November 2019 and the implementation of a Fintech Supervisory Sandbox and Chatroom by the Hong Kong Monetary Authority to promote the use of technology in customer onboard processes.
The paper also introduces new measures and initiatives and – regarding regulations – anticipates the following updates:
- Open AIPs: the Hong Kong Monetary Authority aims to publish a set of technical standards for account information and transaction Open APIs in 2020, followed by an implementation timetable.
- Cybersecurity: the Hong Kong Monetary Authority has further enhanced the existing Cybersecurity Fortification Initiative in light of changes in the global cybersecurity landscape and has started a consultation to seek industry feedback on the proposed enhancements.
The COVID-19 pandemic may have accelerated financial institutions to embrace Fintech and provides a window of opportunity to many fintech companies including virtual banks. The ZA Bank, one of the eight virtual banks that obtained a virtual-bank licence in Hong Kong, became the first fully operational virtual bank in Hong Kong in March 2020. Ping An OneConnect, another virtual-bank licence holder, also announced its pilot trial under the Fintech Supervisory Sandbox of the HKMA this month, which allowed selected SME customers to experience expedited account-opening services.
Japan amends Data Protection Law
On 18 June 2020, Japan published an Amendment Act to the Act on the Protection of Personal Information (APPI), which was based on a bill drafted on 10 March 2020 and approved during a parliamentary session on 17 June 2020. The amendments are based on “The Every Three Year Review” provision in the APPI, where the Japanese Personal Information Protection Commission (PPC) engages in activities to test practical and current issues in data protection, and consider technological innovation and the necessity to manage risks associated with cross-border data flow. The key amendments are in line with the EU's GDPR and other global data-protection trends, which is appropriate since Japan has been a recipient of the European Commission’s adequacy decision since January 2019.
Data subject rights have been expanded, allowing data subjects to exercise their rights when data processing has infringed their rights and legitimate interests. These rights include allowing data subjects to obtain any processed personal data, including personal data that was supposed to have been erased within six months after collection. (This information was previously exempted from data-subject rights).
The new amendment also introduces a mandatory data-breach notification requirement (which is stricter than the previous “duty to make an effort” standard) to report data breaches to the PPC and notify affected data subjects where their rights and interests are likely to be infringed. A new concept of “pseudonymised information” has also been introduced. Lastly, the bill also increases statutory penalties for the violation of an order of the PPC to a JPY 1 million fine or imprisonment with labour for up to one year, and has increased the statutory penalty for submitting a false report to the PPC to a fine of JPY 500,000. A corporate body violating a PPC order can receive a fine of up to JPY 100 million. The PPC will also be able to publish the names of companies (including overseas companies) that did not follow a PPC order.
The bill currently sets out only general amendments with some details (e.g. mandatory data breach deadlines) to be defined later under the rules of the PPC. The amendment is scheduled to come into force within the next two years, with detailed rules and guidelines to be issued in late 2021 or early 2022.
Please click here for an English translation of the PPC’s summary of the amendments.
Singapore launches FinTech Service Provider (FSP) Compliance Readiness Framework (Digital Self-Assessment Tool)
On 10 June 2020, the Singapore Fintech Association (SFA) announced the launch of its digital self-assessment framework and toolkit to fast track partnerships between FinTech firms and financial institutions by helping expedite the onboarding process. The framework includes a set of minimum base requirements outlined by the Outsourced Service Providers Audit Report (SPAR) guidelines of the Association of Banks in Singapore (ABS), and the Monetary Authority of Singapore (MAS) Technology Risk Management Consultation Paper and Cyber Hygiene Notice. FinTechs can review and assess their own compliance level using the self-assessment tool to ensure that they are already aware and have structured their business operations to meet financial institutions’ minimum compliance requirements for exploring any partnerships or outsourced arrangements.
The self-assessment tool is hosted on APIX, an API exchange run by the ASEAN Financial Innovation Network, which is a non-profit organisation established by the ASEAN Bankers Association, the International Finance Corporation, and the MAS. APIX is a forum where FinTech firms and financial institutions can integrate and test solutions via cloud-based architecture. The MAS has announced that it will provide six months free access to FinTech firms beginning April 2020. This is a key initiative that forms part of the three-part SGD 125 million support package launched by the MAS in early April 2020 to sustain and strengthen financial services and FinTech players in the economic slump caused by COVID-19. This support package also covered funding and initiatives for workforce training, digitalisation and operational resilience. PWC assisted in the development of the tool, and will also assist in various compliance-training programmes to help FinTech companies manage any compliance gaps identified.
Please click here for the official SFA press release.
Singapore launches new e-commerce national standards
On 12 June 2020, Enterprise Singapore (ESG) and the Singapore Standards Council (SSC) launched Technical Reference 76 (TR 76), the first set of practical standards that provide guidelines for e-commerce transactions. This is another initiative to support business amid the COVID-19 pandemic, but this time for the online retail industry. TR 76 was an industry-wide initiative, with contributions from e-retailers, consumer and retailer associations, and e-retailers providers.
TR 76 sets out topic-based guidelines and recommendations that span the e-commerce cycle, with an overall aim to create consumer-friendly and customer-centred processes within the e-commerce industry. E-commerce players are encouraged to use TR 76 as a checklist on top of legal compliance requirements. The specific areas covered in TR 76 covers pre-purchase activities (e.g. content creation, content delivery, content governance), purchase activities (pre-payment and payment), post-purchase activities (e.g. order confirmation, withdrawals, defects, customer support, payment security and verification), and merchant verification (e.g. initial merchant review, ongoing merchant monitoring). These customer guidelines focus on making purchase-related information more easily accessible and communication of key steps in the purchase life-cycle intuitive. The back-end operational guidelines also highlight security compliance checks and standards for e-commerce players to become incorporated and certified.
Please click here for the detailed Law-Now article on this topic.
Singapore launches IMDA digitalisation initiatives (Hawkers, Seniors, and International Partnership)
On 31 May 2020, the Singapore Ministry of Communications and Information (MCI) announced the formation of a Singapore Digital Office (SDO) under the Infocomm Media Development Authority (IMDA). As more digital and non-contact options are incorporated in the COVID-19 era, the SDO will oversee the acceleration of digital adoption in Singapore through the “Hawkers Go Digital” initiative by recruiting 1,000 digital ambassadors, focusing on providing digital tools and skills to stallholders (in hawker centres, wet markets, coffeeshops and industrial canteens) and seniors through the Seniors Go Digital programme. The digital ambassadors, comprising both full-time staff and volunteers, will be recruited and deployed by end of June 2020 to work over the next few years. The first project will be encouraging stallholders to adopt SGQR codes for e-payment, with the aim of having a minimum of 18,000 stallholders adopt a unified e-payment solution by June 2021.
More digitalisation initiatives were announced by the IMDA on 4 June 2020. In particular, the IMDA will partner with industry leaders to train up to 3,000 Singaporeans. Fresh graduates and mid-career professionals can join the IMDA’s TechSkills Accelerator Company-Led Training programme. Businesses can also make use of the Digital Resilience Bonus, which promotes the adoption of digital solutions, e-payments and e-invoicing, if the solutions are adopted by end of June 2021. The initial focus will be on the F&B and retail sectors, which COVID-19 restrictions greatly affected. Finally, the Seniors Go Digital programme targets digital literacy and access programmes for seniors, through personalised one-to-one or small-group support in libraries and community centres. Lower-income seniors who cannot afford devices will be provided with financial support.
In addition to the local digital initiatives already announced, on the international front Singapore signed a Digital Economy Partnership Agreement (DEPA) with Chile and New Zealand. The DEPA underlines opportunities in partnership in digital collaborations. Singapore is already working with New Zealand on the International Connectivity System (ICS) to help exchange e-certificates for imported animal products.
Please click here for the official IMDA press releases about new SG digital office established to drive digitalisation movement.
Please click here for the official IMDA press releases about accelerating nationwide digitalisation to build a world-class resilient digital future.
Please click here for the official IMDA press releases about Singapore, Chile and New Zealand sign digital economy partnership agreement electronically.