Hong Kong SAR signals ‘regulatory pivot’ on technology: expert

Laid out in the chief executive’s 2025 policy address (118-page // 865KB PDF), the changes will reshape compliance obligations, contractual frameworks and operational risk management across multiple sectors of the economy, with particular impact on financial institutions, logistics providers, technology companies and in-house legal teams, according to technology law expert Jennifer Wu of Pinsent Masons.

The changes when shaped could affect how contracts are formed, how shipping documents are authenticated and what counts as admissible evidence in a dispute. Businesses moving goods across borders will require systems that can generate, sign and store documents electronically in ways that satisfy both Hong Kong law and the legal requirements of other jurisdictions involved in the transaction.

Wu said: “The 2025 Policy Address signals a regulatory pivot towards digital trade, smart mobility and AI accountability. For businesses, this is both a compliance challenge and a strategic opportunity.”

“Electronic trade documentation will streamline cross-border transactions but requires robust systems for authentication, security and evidentiary integrity,” she said.

“The shift raises practical questions about digital signatures, system security, audit trails, and records retention. Exporters, freight forwarders and trade finance providers should map their current processes against likely legislative requirements, particularly where paper documentation is still standard practice, or where multiple parties in different jurisdictions must access the same documents.”

Under the planned legislation, from 2026, business-to-business trade documents in electronic formats will be legally recognised. Hong Kong SAR’s trade platform will link with systems in operation in mainland China and other ASEAN countries, while upcoming trials are replacing paper bills of lading with digital equivalents.

Legislation for drones, air taxis and other low-altitude aircraft, part of an action plan to develop transport and logistics by air, was also announced. The rules will cover safety standards, flight routes, landing sites and traffic management, while a regulatory ‘sandbox’ will let companies test these services under government supervision.

Wu said: “For logistics companies, the regulatory requirements may differ significantly from ground transport.”

“For technology providers, the sandbox offers early-mover advantage but requires detailed submissions on safety, cybersecurity and operational protocols,” she said.

“Multi-party contracts between aircraft operators, technology suppliers, insurers and customers, will need clear risk allocation, particularly where regulatory standards are still developing. Businesses should monitor draft legislation for detail on certification processes and liability rules.”

The framework will need to address operator licensing, safety certification, insurance cover, liability for accidents, and data protection where aircraft capture images or location data.

Wu said: “Contracts must address certification, liability, and data protection in an evolving legal landscape.”

“Meanwhile, AI governance expectations are increasing, particularly for financial services, where regulators will demand transparency, bias mitigation, and secure data handling,” she said.

“Organisations that act now - by auditing processes, updating governance frameworks, and engaging with regulatory consultations – will not only reduce legal risk but also gain a competitive edge in adopting these technologies.”

Three AI-related measures were announced in the policy address: a mechanism for transferring data from mainland China to Hong Kong SAR for research under secure conditions; new infrastructure including an AI supercomputing centre and a data facility cluster; and governance requirements including mandatory testing for government AI systems.

Wu said: “These measures point to increased regulatory expectations on AI security, transparency and accountability in the adoption of AI, especially in financial services.”

“Organisations using AI should review their governance arrangements - data protection compliance, model testing, bias checks and vendor oversight - against the standards likely to be applied by supervisors,” she said.

“The data transfer mechanism may enable new AI applications using cross-boundary datasets, but only under defined security controls.”

Regulatory details of AI governance are expected to be released in the next 12 to 18 months. Organisations should assess gaps in their current AI risk management frameworks or be aware of the needs in their existing organisation as the requirements continue to develop, according to Wu.