Following is a speech "Commitment to the Future" by the Secretary for Trade and Industry, Mr Chau Tak Hay, at Young Entrepreneurs Development Council's "Hong Kong - Building a Technology Frontier" forum today (Monday): (English only)
Ladies and Gentlemen,
I am most grateful to the Young Entrepreneurs Development Council for inviting me to speak at this lunch. It gives me great pleasure to be able to share my views with so many of our young entrepreneurs.
Today's forum features a number of distinguished speakers. Whilst their backgrounds may be diverse and therefore their concerns are different, they all point to the importance of technology in shaping our future. I would like to complement their contribution with a Government perspective.
I am keenly aware that I am expected to talk about the future. But I would ask for a little indulgence to just go back to some recent history. It was only a little over two years ago when the Chief Executive, Mr Tung Chee Hwa, first set out his vision of turning Hong Kong into a centre for innovation and technology. Strange as it may seem today, this vision was at first met with quite a bit of skepticism. Many doubted the relevance of technology to Hong Kong's economic well being. Others were not sure if we could ever catch up with our competitors.
I am glad that since then, the community has increasingly come to share and embrace the vision of building Hong Kong's future on the foundation of innovation and technology. There is now general acceptance that Hong Kong must broaden and upgrade its economic base if we are to remain competitive. There is increasing interest in technology investments from both local and overseas investors. We see real estate and public utility companies branching out to technology ventures, for example, and well-established firms and start-ups alike entering the world of e-commerce.
This significant shift in attitude has been accomplished with relative ease and amazing speed. This is due in no small part to the strong fundamentals of our economy, which form a good foundation for us to launch our drive into the future. Our commitment to the future therefore starts with these fundamentals.
First, the free market principle. I am aware that there is the perception in some quarters that the Government is intervening more in the economy. I would not dispute the fact that the Government considers that it should play a more proactive role in providing an environment that is conducive to doing business. We have an important role to play as a promoter, supporter and facilitator for our businesses to develop and prosper. I will elaborate more on this later.
But we firmly believe that business decisions are best left to our business people. Over the years, through our observance of this well-tried principle of free market and its twin, free competition, we have nurtured generations of dynamic, flexible and resilient entrepreneurs. This entrepreneurial spirit has been the key to the success of our economy in the past. It will continue to be critically important in our pursuit of excellence in the future. The technology deals that increasingly dominate the financial news pages have been made with no Government involvement, and we have every intention of keeping it that way.
Recently the US Heritage Foundation has, for the sixth consecutive year, found Hong Kong to be the freest economy in the world. This is a good test of our success in adhering to the free market principle.
Another fundamental factor is our sound legal system. The rule of law underpins our free market and safeguards our level playing field. It is a prerequisite for the proper functioning of the market mechanism. Where innovation and technology are concerned, for example, the legal regime for the protection of intellectual property rights is of immediate relevance. I am glad to say that our legislative provisions already meet the highest international standards. And our rigorous enforcement action makes us one of the best places in the Region to pursue creative work. We will certainly re-double our efforts in this regard.
The development of our capability in innovation and technology depends on the quality of our people. Our firm commitment to education and training gives us important headway here. Education is the single biggest item of the Government's annual budget. We have eight universities producing 15,000 first degree graduates and 6,000 higher-degree graduates each year, many of whom in the science, engineering and business management fields. With the rapid expansion of tertiary education and the substantial resources being put into university research in recent years, a robust research culture is also taking hold in our universities.
We are fortunate to have invested heavily in our infrastructure. We have excellent transportation and telecommunications facilities. Our port and airport are world-class. Our telecommunications infrastructure contributes significantly to ensuring Hong Kong's leading position within the Region or indeed the world in terms of the free flow of information. Indeed, we are well poised to be the e-commerce hub of the Region.
In addition, we have a vibrant, well-developed capital market which is second to none in Asia. We have the largest venture capital market in Asia. This again puts us in a favourble position in our development as a knowledge-based economy, as access to finance is crucial to the commercialization of innovative ideas or research results.
These fundamentals have no doubt set a positive scene for our development into an innovation and technology centre of the 21st century. However, in today's highly dynamic global economy, we cannot remain competitive by simply doing what we have been doing before. More has to be done if we are to stay ahead of the competition.
Our drive towards technology-based and high value-added economic activities received a significant boost when, in early 1998, the Chief Executive appointed the Commission on Innovation and Technology chaired by Professor Tien Chang-lin. I understand that Professor Tien also spoke at this forum this morning on his insight on how to re-engineer Hong Kong. The Government is indeed most grateful for the work of Professor Tien and other members of the Commission on Innovation and Technology. The Commission has made a number of very important recommendations for promoting innovation and technology in Hong Kong. I am glad to say that the Government has accepted all the Commission's recommendations and is implementing them step by step.
A good example is the establishment of the Innovation and Technology Fund in July this year with an initial injection of $5 billion. Applications were invited last month and the response so far has been enthusiastic. The Fund provides a sizeable and secure funding source to support projects that contribute to innovation and technological upgrading of our industries. There are a number of programmes operating under the Fund which aim to promote different aspects of innovation and technology. Here I would like to mention in particular the Small Entrepreneur Research Assistance Scheme as a case in point.
As the majority of our entreprises are small and medium sized, they have an important role to play in shaping our future. However, there is usually a funding gap at the initial stage of a fledgling technology firm. The entrepreneur needs only a relatively small amount of capital to develop an innovative concept or to produce a prototype, but is still unable to secure the necessary funding.
The Small Entrepreneur Research Assistance Scheme is intended to fill this gap at the "pre-venture capital" stage of research and development. To qualify for funding support, the proposed project must have an innovative technological content and has a good chance of developing into a new product or service that can be brought to the market. Qualified projects will be given a grant of not exceeding $2 million, on a matching basis. We hope that the Scheme will help to cultivate a vibrant spirit of technological entrepreneurship among our budding companies.
We are also following up on the recommendation by the Commission on Innovation and Technology to set up an Applied Science and Technology Research Institute. Focusing on mid-stream research and development, the institute will provide an important link between basic research and eventual product commercialization. We intend to locate the institute within the Science Park, which is being developed to provide a focal point for commercial research and development activities. The institute should be a natural complement to the clusters of technology-based enterprises which will be tenants of the Science Park.
The Commission has made important recommendations on the institutional arrangements to steer policies on innovation and technology and to oversee their implementation. We are now in the process of establishing a standing advisory body reporting direct to the Chief Executive and a policy group headed by the Financial Secretary to ensure the best policy-making effort at the highest level of the Government. We are also taking steps to merge the Science Park, the Industrial Estates Corporation and the Industrial Technology Centre Corporation so as to streamline the service delivery structure and create synergy among these organizations.
I mentioned earlier the importance we accord to building up our human capital. We will continue to invest heavily in education and training. In this regard, I am encouraged to note a renewed interest in science and technology-related subjects among our young people. A critical mass of technological talents is indeed critical to the development of higher value-added and more technology-intensive economic activities. We need to attract top-notch technological talents from around the world to work in Hong Kong.
We already have a liberal regime for admitting professionals from outside Hong Kong. However, our immigration restrictions on entry of Mainland talents have up until now been very stringent. We have therefore recently launched a scheme to facilitate the admission of talents especially from the Mainland to work in Hong Kong. The success of this new policy will significantly reinforce our talent pool, spurring technological and economic development. It will also further strengthen our symbiotic relationship with the Mainland.
For our current efforts to promote innovation and technology to be sustainable, we need to foster a pro-innovation and technology culture. This requires long term commitment from the Government and the community at large. Specific initiatives such as the Innovation and Technology Fund, and the Applied Science and Technology Research Institute, the Science Park, the Cyperport of course, will play their part in building the right culture. Promotional and publicity events will also be relevant. But to be successful we need the full cooperation support and involvement of the whole community. I would therefore encourage our business people to help spread the message as well.
The Government is firmly committed to playing a role which will contribute towards building an even more successful future for Hong Kong. We will spare no effort. The concerted effort of our community is equally, if not more, important in ensuring our success.
Organisations like the Young Entrepreneurs Development Council and people such as the members of this council will play a vital role in tackling the challenges and exploiting the opportunities of the knowledge-driven world of the 21st century. I am heartened to see that although the Council has been established for no more than two years, it has already made industrious efforts to help cultivate entrepreneurship and leadership among our younger business people.
Today's Forum is a good example of your contribution towards the promotion of innovation and technology in Hong Kong. I look forward to your continued participation in this worthy cause in the years to come.
End/Monday, December 20, 1999