But little has been done since to improve the legal framework for doing business electronically, with an amendment bill still crawling through the legislative process.

The government's intentions were good but its execution was poor, Ms Chia said. The underlying problem was an overly conservative mindset.

The plan was to create a technology-neutral and minimalist regulatory framework in line with informed opinion on how best to structure electronic business legislation. But what the government created instead fell short of the mark, according to Mr Forsyth.

For example, in terms of the ways in which electronic transactions can be authenticated, the Electronic Transactions Ordinance recognises only 'digital signatures', a technology-specific method using public key cryptography to identify the signer.

Ms Chia advocates accepting different technical methods which identify the signer, but making conditions to their reliability and appropriateness.

There are also limitations in the framework for certification authorities, the organisations that issue the digital signatures.

Ms Chia says becoming a recognised certification authority, which is voluntary under the ordinance, involves 'elaborate qualification requirements with continuing obligations', putting off potential participants.

The problem is the framework rests on these approved certificate issuers, the only organisations that can provide certificates recognised under the ordinance.

After a public consultation, changes were proposed in a bill gazetted last year, but the amendments were 'overly conservative and piecemeal', Ms Chia said.

Mr Forsyth said: 'Despite the government's proclamation that the Electronic Transactions Amendment Bill adopts a technologically neutral approach, it is substantially watered down in actual application.'

The issue is that amendments to recognise more forms of electronic signatures apply only to the private sector while government entities remain bound by the old 'digital signature' rule.

Additionally, the bill adopts a very broad definition of what a government entity is. For the legislation to be effective, technological neutrality should apply to both, Ms Chia said.

She also noted that procedural requirements for establishing certification authorities may not have been simplified enough to attract more players.

However, the fundamental deficiency was 'a lack of cross-jurisdictional recognition of locally recognised 'e-certs'', Ms Chia said.

Although much effort has been made by the government and organisations like Tradelink in joining international forums and associations that advocate cross-jurisdictional recognition, no action has been take in Hong Kong's legislation.

Across the border, Guangdong, the test bed for many new government initiatives in the mainland, forged ahead with its own electronic business regulations last year, which will serve as a model for nationwide adoption.

Guangdong had excelled in learning from its neighbour's mistakes, Ms Chia said.

'Guangdong's regulations are overall more open-minded and flexible than Hong Kong's,' she said.

With the mainland coming on in leaps and bounds in building a legal framework for conducting electronic commerce, Ms Chia said the Hong Kong legislature needed to move faster, especially as more businesses were moving their operations to the mainland.