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Following is the full text of the speech (English only) by the Financial Secretary, Mr Donald Tsang, at a Strategic Information Technology Summit today (October 19):
High-Tech Development in
Hong Kong and Silicon Valley
Mrs Alker, Directors of Hong Kong - SV.com, Ladies and Gentlemen,
I am very happy to be here this morning to address this Strategic Information Technology Summit hosted by Hong Kong-SV-dot-com.
The theme of the conference, 'Post Dot-com Reality: Prosperity for the Fittest' could not be more timely and relevant. It reminds me of a headline I saw in Monday's Financial Times, concluding a series on the 'The Wild Wild Web'. The headline read 'Only the strong survive after the storm'. So how should we understand the 'post dot-com' situation and what are the opportunities out there for us? A number of prominent businessmen will be speaking on this. I'm sure they will give you a great deal of insight into the latest developments in both the 'real' and 'virtual' world of innovation and technology. This morning, I simply want to make three observations.
I remain optimistic and positive about the future in Hong Kong and Silicon Valley in the wake of the 'dot-com' stock crash earlier this year. The Internet, its applications, broadband services and wireless and mobile communications will continue to help drive the world economy. Indeed, the FT series was even more unequivocal; 'the internet', it said, 'has turned out to be one of the most powerful forces shaping business for decades'. Since April, there has been a major readjustment of Internet based businesses worldwide. But does this mean that the dot-com boom has just been a bubble? My answer to that lies in Silicon Valley itself.
First, Silicon Valley is a source of inspiration for the rest of the world. To an unusual degree its economy relies on what Joseph Schumpeter, an Austrian economist, called 'creative destruction'. Some modern writers have re-christened the phenomenon as 'flexible recycling', but the basic idea is the same: old companies die and new ones emerge, allowing the reallocation of capital, ideas and people.
An essential ingredient in this is the presence of entrepreneurs and a culture that attracts them. A culture that embraces such things as innovation, tolerance of failure, risk seeking, reinvestment in the community, enthusiasm for change, equal opportunities for all and government non-interference. These attributes are just as familiar in Hong Kong as they are in Silicon Valley. So the adjustments notwithstanding, the momentum towards a digital New Economy will continue, with all the opportunities and challenges that go with it.
Second, the strength of innovation and technology in both Hong Kong and Silicon Valley goes much deeper than just the dot-com phenomenon. I think we all know the achievements of Silicon Valley. But here in Hong Kong, the Chief Executive's clear vision, expressed in new initiatives and their successful implementation, coupled ironically with the Asian financial crisis, have been largely responsible for a paradigm shift in the business community. Innovation and technology are vital components in the development of our economy and our businesses. Traditional companies are making serious efforts to find business opportunities in the New Economy. The bigger corporations, particularly those in financial services and property development, are keenly aware of the need to meet the challenges of the New Economy and are becoming serious participants in it.
This overall interest has generated a great deal of activity in what I call 'techno-preneurship'. New start-ups are mushrooming in a variety of fields, in service and product development, e-commerce, internet, multimedia based technologies, application software and even in biotechnology. In this particular sector we are seeing activity such as the cultivation of stem cells, the design of gene chips and pharmaco-genomics. And our capital markets are playing a much greater role in developing and supporting technology based ventures. In this way we are enhancing the breadth and depth of the innovation and technology culture in Hong Kong so we can take advantage of the opportunities and meet the challenges of a knowledge based global economy.
The third observation I want to make is that innovation needs to manifest itself in the form of new business opportunities, the creation of jobs, increased consumer demand, improved productivity and business efficiency. These are the ingredients an economy needs to benefit from innovation. They are largely market driven and private sector led. Silicon Valley, of course, is the role model, although to be fair, Hong Kong business is quite innovative and certainly entrepreneurial. However, as a government we in Hong Kong believe we have an important part to play. There are a number of external factors that the market alone cannot take on such as basic research, clustering, networking, competition, regulation or deregulation. In this context, we can play a useful role in providing strong support and as a facilitator. With your indulgence, I'll give a few examples to highlight aspects of our system of innovation.
Our system of education and training is undergoing major reforms to ensure that we have a formidable knowledge base and that our human resources are dynamic, creative and resourceful. We are placing greater emphasis on basic science and technology. Our education programme in information technology is a case in point. This five-year strategy is designed to turn our primary and secondary schools into dynamic learning institutions where our students will be able to process information more effectively.
The exchange of ideas and information flourishes in Hong Kong's free and open environment. This applies not only to academic and intellectual freedom, but to our way of life in a pluralistic society that respects the rule of law and operates an open market economy with a level playing field for all. As part of this free flow of information over the years, we have built up a complex network of international links of which Hong Kong-SV-dot-com is a fine example. Internally, we are also developing an effective network linking up our research agencies, mainly the universities, with industry so the results of R&D flow to the commercial sector. We are doing this through industrial sponsorship of projects financed by our Innovation and Technology Fund and the various university-industry collaboration schemes.
We are also providing more support for R&D by allocating better resources through the Research Grants Council and the Innovation and Technology Fund. And preparation work is under way for the Applied Science and Technology Research Institute which will focus on mid-stream research. We believe these steps are in the right direction to help us keep pace with global developments in this field.
But, for R&D activities to bear fruit it is not just funding that is required. The availability of quality infrastructure to facilitate technology transfer and development is essential. That's why the Science Park, the Industrial Technology Centre, the Cyberport, and other initiatives are taking shape. But, we have to be very careful that public sector policies designed to stimulate innovation encourages rather than stifles competition in the private sector. In other words, we have to reduce the barriers to competition. We are catching up on this front with greater attention to competition issues. The deregulation of the telecommunications market is a case in point.
We also need to foster an environment and culture to encourage creativity and risk-taking in the deployment of R&D results. Silicon Valley is a classic example of a culture that thrives on a combination of technology and entrepreneurism. In Hong Kong, we have the entrepreneurs, and we are now doing more to encourage their interest in technology-based ventures. Funding is being provided through the Applied Research Council, the Small Enterprises Research Assistance Scheme and start-ups can raise capital through our Nasdaq-style Growth Enterprise Market.
However, even with funding and the necessary infrastructure, the rewards from innovation can still be greatly diminished without strong and vigorously enforced intellectual property rights. The public must also be educated to respect these commercial rights. And in both these areas, Hong Kong has made impressive advances in recent years. This was emphasised earlier in the week when the US Under Secretary of Commerce for Intellectual Property, Todd Dickinson, applauded our customs department for its efforts to curb piracy and counterfeiting activities.
Mrs Alker, ladies and gentlemen, while Hong Kong is focusing on innovation technology, we have so much to learn from Silicon Valley. We are indebted to you and the Directors of Hong Kong-SV-dot-com, which has been instrumental in fostering closer ties between our two communities. I wish to assure you that the Hong Kong government attaches great importance to this partnership and the contribution you are making to further our cause as an innovation and technology hub in Asia. I am sure this summit will be the first in a series of similar events to follow and I wish you every success in the future.
Thank you.
End/Thursday, October 19, 2000
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