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Budget Speech by the Financial Secretary (10)
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Promoting Innovation and Technology
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97. Innovation and application of technology are the most effective ways to add value to products and services.  In the past 10 years, the Government has been supporting the development of innovation and technology in Hong Kong by providing the necessary hardware and software.  These include the construction of the Science Park and the Cyberport as well as the establishment of the Innovation and Technology Fund.

98. With the concerted effort of the Government and the industry, the contribution of business organisations to the total expenditure on research and development (R&D) in Hong Kong increased from 24 per cent in 1999 to 43 per cent in 2008.  This reflects that the business community is increasingly aware of the importance of strengthening R&D.  The number of R&D personnel in Hong Kong also more than doubled from about 10 000 in 1999 to some 22 000 in 2008.

R&D Cash Rebate

99. To encourage business organisations to increase their investment in R&D and strengthen their co-operation with R&D institutions, the Legislative Council approved in January this year a funding of $200 million to set up a "R&D Cash Rebate Scheme". We will launch the scheme in April this year.

Hong Kong Science Park

100. The Hong Kong Science Park has become a scientific research hub in Hong Kong and the home to more than 300 science and technology companies from Hong Kong, the Mainland and around the world.  Through the development of five areas íV electronics, information technology and telecommunications, precision engineering, biotechnology and green technology íV the Park has created a clustering effect for companies engaged in these technology fields.  It also provides a range of professional and technological support services to small and medium enterprises, helping them flourish through the Incubation Programme.

101. At present, the overall leasing rate of the two phases of the Hong Kong Science Park is close to 85 per cent.  To further promote the development of innovation and technology, boost the development of green technology and attract more high-tech companies to establish a presence in Hong Kong, we have decided to implement the development of Science Park Phase 3.  The project will entail an estimated expenditure of $4.9 billion.  Proposals covering the scope of development as well as financing arrangements will be announced later.  Construction works are expected to start next year for completion in phases between 2013 and 2016.  We expect that an additional 4 000 R&D-related jobs or so will be provided upon completion, and that around 5 000 construction-related job opportunities will be created during the construction period.

Encouraging Creativity and Innovation
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Create Hong Kong

102. Create Hong Kong was set up last year to support local creative industries.  Apart from continuing to tap the Mainland market through CEPA, it will explore strategies to promote the development of creative industries.  Further support to this sector will come from the revitalisation of the former Hollywood Road Police Married Quarters, which will be converted into a centre for promoting creative industries.  We will invite proposals from interested organisations shortly.

103. The $300 million CreateSmart Initiative launched last June was well received by the industry.  Some projects approved under the scheme have provided our young people with job opportunities to give play to their creativity.  Highly resourceful and in tune with world trends, young people in Hong Kong enjoy a competitive edge in creative industries.  I hope that the industry and our young people will make good use of the scheme and contribute to the development of creative industries in Hong Kong.

Shanghai Expo

104. The World Expo to be held in Shanghai this May is a golden opportunity to showcase our creativity and to promote the revitalized Brand Hong Kong.  Highlighting the theme of "Potential Unlimited", the Hong Kong Pavilion will display our advantages in connectivity and creativity.  We will also take part in the Urban Best Practices Area Exhibition (UBPA), where we will demonstrate our achievements under the theme of "Smart Card, Smart City, Smart Life".

105. During the Expo, we will join hands with local creative industries to showcase our creativity and distinctiveness.  For example, Create Hong Kong will support the local design sector in holding a six-month exhibition in Shanghai.  During this period, a number of exchange forums on the Hong Kong design industry will be held to introduce our design talent to the Mainland business community.  We are building a virtual pavilion and exhibition to enable people to visit, on the Internet, the Hong Kong Pavilion and Hong Kong's UBPA exhibition.

Intellectual Property Rights

106. Under the existing tax arrangements, capital expenditure by enterprises to purchase patent rights and industrial know-how is deductible under profits tax.  To promote the wider application of intellectual property by enterprises and the development of creative industries, I propose to extend the deduction to cover registered trademarks, copyrights and registered designs.  The Inland Revenue Department will formulate detailed proposals.

107. The Patent Application Grant under the Innovation and Technology Fund provides funding support to Hong Kong companies and inventors in their first patent applications so as to help them capitalise and protect their intellectual work.  To further encourage creativity and innovation, we will raise the grant ceiling for each case from $100,000 to $150,000.  The expenditure ceiling in respect of patent applications in R&D projects funded by the Innovation and Technology Fund will also be raised to $150,000 correspondingly.

(To be continued)

Ends/Wednesday, February 24, 2010
Issued at HKT 12:04

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