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The Chief Executive, Mr Tung Chee Hwa, said today (Wednesday) that he has accepted the Commission on Innovation and Technology's recommendation to establish an Applied Science and Technology Research Institute to support and stimulate mid-stream research. An Innovation and Technology Fund, in addition, will be set up with an injection of $5 billion.

Presenting the Policy Address in the Legislative Council, Mr Tung said innovation and technology were important drivers of economic growth. "In a knowledge-based global economy, they are essential in adding value, increasing productivity and enhancing our overall competitiveness," he said.

"I believe that a focused approach in this field, together with our sophisticated capital-raising markets, our rich market experience and our well-established international business links, will provide us with the potential to turn innovative ideas into commercial products on a far greater scale than at present.

"We need now to strengthen our support for technological development, build up a critical mass of fine scientists, engineers, skilled technicians and venture capitalists, and encourage the development of a significant cluster of technology-based businesses."

Mr Tung said the Institute, recommended in the first report of the Commission, would support and stimulate "mid-stream" research.

He said the Commission had identified mid-stream research and development, a pivotal step between basic scientific research and its commercial application, as an area of weakness in Hong Kong.

All the links in the research and development chain must be in place to ensure that technological research could add the highest degree of value to economic activity.

Mr Tung said the Fund would finance specific projects which would contribute to innovation and technological upgrading in manufacturing and service industries.

"This upgrading of our technological infrastructure will provide the basis for taking forward other important recommendations of the Commission," he said.

"One is that we stimulate the collaboration of academic institutions and industry in research and development. We shall do this by, for example, awarding matching grants for co-operative research between tertiary and other institutions and industry.

"Another recommendation is that we strengthen our industries' links to the technological institutes on the Mainland to make best use of the Mainland's research strengths and turn them into commercial products.

"In order to build a critical mass of expertise, we will consider measures which will enable employers to recruit the best professionals from the Mainland and elsewhere in the world. We will also more vigorously promote technological collaboration through various fora."

Mr Tung said Hong Kong was setting out on an important strategic course.

The Government would do its utmost to provide an environment conducive to the development and application of innovation and technology, and he looked forward to receiving in mid-1999 the Commission's final report, which would contain recommendations for moving forward on all fronts.

"We will study all these recommendations carefully, and will consider how to take them forward so as to create a favourable environment for business, in which we hope the private sector will capitalise on the opportunities which we seek to create.

"Certain industries in particular rely on advances in innovation and technology, and these sectors provide obvious scope for developing or further enhancing our competitive edge," he said.

End/Wednesday, October 7, 1998

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