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Following is the full text of a speech by the Secretary for Commerce, Industry and Technology, Mr Henry Tang, at the Federation of Hong Kong Industries luncheon today (July 19): (English only)
Victor, ladies and gentlemen,
It gives me great pleasure to speak at this luncheon. I have spoken at many events organised by the Federation of Hong Kong Industries many times before, but today is the first time I am here in my new capacity as the Secretary for Commerce, Industry and Technology. I would like to take this opportunity to share with you how I see we should capitalise on innovation and technology to upgrade our industries, enhance our competitiveness, and create business opportunities.
Following the recent re-organisation of the government structure, "Commerce and Industry" and "Technology" are brought together under my purview. This not only reflects the close relationship between technology advancement and industrial and business development, but also underlines the HKSAR Government's commitment in driving innovation and technology development to facilitate our economic re-structuring and growth.
Since the advent of globalisation, global and regional competition has become increasingly severe. In the knowledge-based economy, it is obvious that innovation and technology will become the important economic drivers if we do it right. It is in our interest to fortify our competitive advantages through the shrewd and extensive application of knowledge, of our innovation, of our creativity, of our technical know-how, as well as we need skills to generate higher productivity, more effective and efficient business processes, and higher value goods and services.
As the Secretary for Commerce, Industry and Technology, I am committed to providing an environment that is conducive to innovation, technology and business development.
Our mission towards the promotion of innovation and technology must have a clear purpose. Our objective is to use science and technology to enhance the innovative capability of Hong Kong, to strengthen the competitiveness of our industry, to create knowledge-based, high value-added industries, in order to help our companies and our individuals to move up the value chain.
Over the past five years, a lot has been achieved in spearheading innovation and technology development in Hong Kong. We have established a programme of investment in Hong Kong's research and development activities, through funding schemes, provision of infrastructure and investment in human capital.
We have established two funding schemes to provide financial support for applied R&D projects undertaken by local research institutions and companies. The $5 billion Innovation and Technology Fund (ITF), which was set up in November 1999, aims to support projects which contribute to innovation and technology upgrading of our industry. So far, we have already provided funding support of up to $700 million to some 290 applied R&D projects in a very diverse range of industry and technology sectors.
In addition, the $750 million Applied Research Fund supports local technology ventures with commercial potential. This government-owned venture capital fund has invested more than $430 million in 47 companies.
Second, on technological infrastructure, I am glad to report that, under the able leadership of Victor, Phase One of the Science Park in Tai Po opened last month, I was there and it was a great spectacular building with an occupancy of 70 per cent by tenants from Hong Kong, USA, Canada, Europe and Japan. The Science Park is developed along the concept of clustering. It creates a focal point and a conducive environment for technology-based firms and activities. It is very gratifying to see the clustering of electronics and integrated circuit design companies in the Science Park. They are beginning to provide new impetus for Hong Kong's industrial development.
Phase One of the Cyberport's occupancy rate is now reaching 80 per cent with some very well known firms including Microsoft, GE Information Services, Sonera, PCCW and Sybase being the major tenants to sign on. This major information technology project creates a strategic cluster of leading IT companies and a critical mass of professional talents in Hong Kong.
Apart from the Science Park and the Cyberport, we have established the Applied Science and Technology Research Institute, or ASTRI as it is commonly called, to take on quality R & D for transfer to industry, and to help stimulate the growth of technology-based industry in Hong Kong. ASTRI has commenced its work, initially focusing on photonics, integrated circuit design, e-learning software development and wireless communication.
Innovation and technology development cannot succeed without an adequate pool of professional talents. With the building up of a respectable science base in Hong Kong over the past five years, we have been able to draw eminent and world-class scientists and researchers from all over the world to come to Hong Kong. Recent addition includes Prof Paul Chu, Dr Lap-chee Tsui, Dr David Ho, Prof Simon Wong, and Mr C D Tam.
On the other hand, we have also been attracting young talents into technological ventures through the mushrooming of start-ups, small and medium enterprises engaging in service and product development. We hope that this process will help spawn new industries and a new breed of innovation driven and technology based companies in Hong Kong.
There were many initiatives and sustained efforts have gradually borne results. Using the ITF as a measure, in 1997, corporate contribution to public sector R&D sponsored by the Fund was only $1 to $25 from the Fund. This ratio has now increased to $1 to $5.5. It means a lot more corporate interest and contribution to R&D. In addition, we have seen a major and positive change in the attitude of the community towards innovation and technology. There is also greater acceptance and enthusiasm among our industry to embrace and harness innovation and technology.
While all of that may sound encouraging and it seems that we are seeing growing interest and investment in R&D activities in Hong Kong, we have a lot of catching up to do. Indeed, Hong Kong's total R&D expenditure lags behind our neighbours by quite a wide margin. Taking Singapore and Taiwan as examples, they spent a total of US$1.74 billion and US$6 billion respectively in the year 2000 as compared with US$0.79 billion in Hong Kong. Indeed, R&D expenditure in Hong Kong only accounted for 0.49 per cent of our GDP, as compared with 1.89 per cent for Singapore and 2.05 per cent for Taiwan.
Most of our R&D activities are Government funded and still concentrated in our universities. Such activities account for more than 80 per cent of the total R&D activities in Hong Kong. In Singapore, the situation is quite the opposite as more than 60 per cent of the R&D activities are funded by the private sector.
The HKSAR Government is fully committed and will continue to invest in R&D activities. Equally important, however, is to entice private sector participation in innovation and technology development. We need to explore all possible options to proactively encourage private enterprises to invest and engage more in R&D activities. In the months ahead, we will continue to expend our efforts and to critically examine different ways to help the industry move up the value chain and invest more in R&D.
In this regard, as Secretary for Commerce, Industry and Technology, I would not rule out any propositions, including the provision of incentives to promote private sector investment in R&D, be it the provision of land or tax incentives. I also intend to do a critical and comprehensive review of the current institutional arrangements to ensure that we achieve the best value for money and we focus our resources appropriately.
Investment in more R&D activities is not necessarily confined to the 'high-tech' segments of our economy, such as high-tech product manufacturing. In the Hong Kong context, it should apply to all sectors of the economy, including traditional or foundation manufacturing industries, as well as service industries. It certainly will not be a monopoly of large multinational firms only.
Our traditional industries, predominantly SMEs, whether in garments, watches and clocks, or toys, are very successful businesses by international standards. The question is how they may move up the value chain and take a bigger portion of the world market. Innovation increases the competitiveness of our businesses by introducing more efficient ways of performing existing activities, thereby reducing cost, or creating greater buyer value through product differentiation. Innovation includes both improved technology and better methods of doing things and higher productivity.
Keenly aware of its role as a business facilitator, the Government has launched a number of important support measures to help our SMEs innovate and move up the value chain. Among them are the four SME funding schemes set up at the suggestion of the SMEC Committee.
With a total government injection of HK1.9 billion, these four funds aim at helping SMEs secure loans for buying business installations and equipment, gain greater access to the global market by taking part in exhibitions and business missions, provide better training for company owners and employees, as well as enhance their competitiveness through private sector-initiated projects.
So far, we have approved over HK$ 660 million in funding, benefiting over 5400 SMEs. The feedback to these schemes has been very positive, but we will not be complacent about the progress made. Rather, my colleagues and I will continue to seek the views and suggestions of the business sector, including members of the Federation, on our SME support measures and how best we could facilitate the development of our industries. Time is of the essence. Time is money. I hope to receive the views of the SME Committee soon, as well as from you, on improvement measures, and implement them by the end of this year.
In order to stay ahead in this competitive global environment, to turnaround our economy and to create more jobs, we must transform our economy into higher value-added and more knowledge-based economy. We should continue to support innovation and technology as the economic drivers for Hong Kong and encourage our SMEs to think and operate in those terms. I know this is easier said than done. This requires a strong and committed attitude. This calls for a renewed mindset.
On the Government's part, we will keep up the momentum of our efforts and keep all options open. I look forward to working closely with the Federation and other members of the business community to create a better business environment and a more prosperous Hong Kong.
Thank you very much, ladies and gentlemen.
End/Friday, July 19, 2002
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