Following is the speech by the Secretary for Commerce, Industry and Technology, Mr John Tsang, at the Hong Kong Institution of Science 11th Annual Conference today (November 8): (English only)
Professor Young, Professor Ng, Victor Lo, distinguished guests, ladies and gentlemen,
It is my great pleasure to speak at the 11th Annual Conference of the Hong Kong Institution of Science.
The theme of this year's Conference is "Made in Hong Kong". For those of you who belong more or less to my vintage, you will recall that "Made in Hong Kong", like "Made in Japan", was not something that attracted favourable recognition in the international consumer market half a century ago. Tortuous jokes were made about the durability and sophistication of our products. That did not, however, discourage Hong Kong's drive to excel, and excel we did. Our industrialists toiled away tirelessly to improve the quality of their products, dedicating decades of hard work to polish our brand. Hong Kong products have now established a solid reputation among consumers worldwide. The "Made in Hong Kong" brand is now cherished as a valuable sign of achievement. This is a clear and powerful testimony to the quality, creativity and ingenuity of the Hong Kong industry.
Since the late 70s, Hong Kong enterprises have moved most of their production capability to the Mainland, while their Hong Kong offices continue to play a key role in product development, quality control, management, marketing and logistics support. They have extended their value chain from Hong Kong to the Mainland, utilising the efficient production resources there and maximising the comparative advantages of Hong Kong and the Mainland.
Today Hong Kong companies have established solid and mutually beneficial relationships with their counterparts and contacts in the Pearl River Delta (PRD) region. It is estimated that some 60,000 Hong Kong companies are now engaged in manufacturing activities in PRD employing some 10 million workers. You will note that this number is even higher than the total number of our entire population.
Hong Kong is also the largest source of Foreign Direct Investment (FDI) to the Guangdong Province, accounting for 71% of cumulative FDI in Guangdong from 1979-2001, estimated at US$79 billion.
This solid foundation of co-operation between the Mainland and Hong Kong will be further enhanced by the implementation of the Closer Economic Partnership Arrangement. CEPA will open new opportunities for Hong Kong manufacturers and service providers. CEPA will provide new impetus for the deepening and broadening of Hong Kong's partnership with the PRD.
From the beginning of next year, 273 Hong Kong product items will enjoy zero import tariffs when they are exported from Hong Kong into the Mainland. Together with China's commitments upon accession to the WTO, about 90% of the total value of our domestic exports to the Mainland will then be tariff-free. In addition, 18 services sectors, many manufacturing related, will be given preferential access to the Mainland market.
The zero import tariff preference under CEPA will no doubt make Hong Kong products even more competitive compared with those produced elsewhere, and will increase the incentive for industrialists to manufacture these products in Hong Kong. CEPA will also attract foreign companies wishing to enter the Mainland market to invest in Hong Kong companies. The greatest interest would most likely be the manufacturing of brand name products, or products with high-value added content, or those with substantial intellectual property input conducted in Hong Kong.
In calculating the value-added percentage for certain products, we have included in the formula the costs of product development, including design, development, intellectual property rights, etc, that are incurred in Hong Kong. This arrangement will further help to encourage high value-added activities to be undertaken locally. Therefore, we anticipate that CEPA will help promote Hong Kong's traditional industries as well as facilitate the spawning of new industries that are characterised by a substantial amount of technological and intellectual property input required in their value chain.
The Government has a pivotal role to play in providing a conducive environment for the development of innovation and technology and in helping our industries to focus on high value-added activities. With concentrated efforts in infrastructure development and funding support over the past years, Hong Kong has indeed built up the applied research and development (R&D) capabilities necessary to support strong innovation and technology development.
The HK$5 billion Innovation and Technology Fund (ITF) has helped support more than 460 projects at a total funding of more than HK$1.3 billion. Many of the project outcomes have already found their way into industries. For example, an ITF project on new LCD technologies has led to inventions for micro-display and shadow-less reflective display, which have been commercialised into production.
Recognising Hong Kong's strength in consumer electronics products, we launched in April this year a new Innovative Product Development Assistance Scheme under the ITF to support the design and development of consumer electronics products. Response from the industries has been enthusiastic. As of end September 2003, we have approved 11 projects under the new Scheme at a total funding of more than HK$8 million.
In terms of infrastructure, we have developed the Science Park, the Cyberport as well as the Applied Science and Technology Research Institute (ASTRI) to support applied R&D and to facilitate the transfer of research outcomes into expertise in technologies and products for commercialisation. It is worth noting that ASTRI has successfully commercialised one of its internet software projects, Sonic Ranger, through licensing arrangements with six industry partners.
I am glad to have Victor joining me here today in officiating this meaningful Conference at the Science Park. As you know, Victor is the Chairman of the Hong Kong Science and Technology Parks Corporation, and he has been tireless in lending his own time and resources to support the growth of Hong Kong industries. And I would like to extend my full appreciation to this community-minded industrialist.
Ladies and Gentlemen, Hong Kong's strong fundamental research capability is one of our strengths for developing new and innovative technologies, and our local universities and research institutions have been pivotal in this regard. Our local scientific talent has contributed significantly to building up our R&D capability. And we have in our midst distinguished scholars and researchers who have achieved membership of the Chinese Academy of Sciences and also local scientists who have been conferred the State Science and Technology Awards.
I am proud to have these scholars working in our community, and I am sure that they will continue to contribute to our overall well being. But today, I am delighted to have the opportunity to witness young scientists and engineers who show great promise in their respective fields of study honoured by the Young Scientists Awards 2003. These young people will play an important role in the enhancement of our science and technology capabilities in future. I look to the Institution to further develop our local talent with a view to securing our supply of local expertise and talent to industry.
Finally, I wish to thank the Hong Kong Institution of Science for its continuing efforts to foster the advancement of science in Hong Kong and to promote the importance of science to our community. The conference today is an excellent occasion to showcase our innovative capabilities and facilitate sharing of experience and insights among industry players, the academia and the community at large. I wish the conference every success.
Ends/Saturday, November 8, 2003