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The Government announced today (Thursday) the detailed framework for the establishment of the $5 billion Innovation and Technology Fund (ITF).

"The Fund will provide a secure source of funding to finance projects that contribute to innovation or technology upgrading in the manufacturing and service industries to be undertaken by Government or non-Government entities," the Secretary for Trade and Industry, Mr CHAU Tak Hay said.

"The projects to be supported should be relevant to the needs of the economy, focussing on areas where Hong Kong can do well, so as to optimise the impact of public investments."

Under the Government's proposal, the ITF will support four broad categories of projects. They are:

(a) innovation and technology support activities undertaken by

organisations such as universities, industry support organisations, and

the Applied Science and Technology Research Institute when it is set up;

(b) university-industry collaboration activities;

(c) general support activities that may not be directly related to innovation

and technology upgrading, but will nonetheless be beneficial to the upgrading

and future development of our manufacturing and service industries; and

(d) technology entrepreneurship promotion activities.

The existing Industrial Support Fund and Services Support Fund will be subsumed under the ITF.

Mr CHAU said that a robust and credible mechanism would be put in place to assess and monitor ITF projects.

"A suitable advisory structure will be set up, comprising businessmen, academics and Government officials. We will also review the ITF periodically to ensure that it continues to meet its mission and operate efficiently," he said.

The ITF will be set up as a statutory fund under the Public Finance Ordinance to ensure public accountability and clear identity.

"We propose to make an initial injection of $5 billion to the ITF. Investment income earned from the $5 billion grant and all proceeds received from any disbursement from the Fund will be retained in the Fund's balance for meeting its future use," said Mr CHAU.

"We believe that the ITF will contribute to increased productivity and enhanced competitiveness, and hence will be conducive to the long-term economic development of Hong Kong."

The Administration intends to seek the Legislative Council's adoption of the resolution for the establishment of the Fund on June 30, 1999. Funding approval from the Legislative Council Finance Committee will be sought thereafter.

The establishment of the ITF is a major recommendation of the First Report of the Chief Executive's Commission on Innovation and Technology. The Chief Executive in his 1998 Policy Address accepted the Commission's recommendation and pledged an injection of $5 billion into the ITF.

End/Thursday, June 17, 1999

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