Budget Speech by the Financial Secretary (10)

Fostering Economic Diversification

102. To foster sustainable economic development in the long run, the Government is rolling out support measures for the six industries where we enjoy clear advantages.  Despite our economic contraction in 2009 due to global recession, the six industries in the private sector contributed over $120 billion value added to our economy, three per cent higher than that in 2008.  The share of these six industries in GDP rose from 7.6 per cent in 2008 to 8.0 per cent in 2009.  These six industries also employed over 390 000 people, representing an increase of 1.7 per cent over 2008.

103. Apart from developing the six industries, we are also committed to promoting wine trading and exploring opportunities in emerging markets to promote the diversification of our economy.  Before I touch on these, I will give a brief account of the development of these six industries.

Medical Services

104. On medical services, we reserved four sites at Wong Chuk Hang, Tai Po, Tseung Kwan O and Lantau for private hospital development, and received 30 development proposals from local and overseas institutions.  We are formulating the arrangements to dispose of the sites in phases starting from end-2011 or 2012.

105. To promote research and development in public health and medical services, the Food and Health Bureau plans to set up a "Health and Medical Research Fund".  The existing Health and Health Services Research Fund and Research Fund for the Control of Infectious Diseases will be subsumed under the new Fund.  To this end, the Government will earmark $1 billion for injection into the new Fund.  Apart from continuing to fund projects within the original research ambits, the new Fund will also finance research projects and facilities in areas of advanced medical research where Hong Kong enjoys comparative advantages, such as paediatrics, neuroscience and clinical genetics.  This will tie in with the plan for a Centre of Excellence in Paediatrics and development of other specialties in the future.  

106. Hong Kong is well-placed to develop into an international clinical trial centre and a translational research centre.  To advance the development of the pharmaceutical and biopharmaceutical industries, the Hospital Authority (HA) will set up Phase I clinical trial centres in Queen Mary and Prince of Wales Hospitals to conduct preliminary clinical trials for new drugs, with a capital cost of about $42 million.  The clinical trial centre in Prince of Wales Hospital is expected to come into operation first in 2011-12.  We will also map out our way forward for different phases of clinical trials for drugs, and strengthen the organisation, management and planning for clinical trials to promote development in this area.

107. The above measures will help attract more relevant professionals to Hong Kong, lay the foundation of advanced medical research here and provide more training opportunities.  A range of scientific research-related jobs, such as professional researchers, scientists, medical technology professionals and pharmacists, will also be created.

Education Services

108. To promote the internationalisation and diversification of our education services, we have allocated four greenfield sites for the building of international schools.  We expect that some 5 000 places will be provided in the coming few years to admit children of those who come from abroad to work in Hong Kong and attract more quality non-local students to study here.

109. The number of self-financing degree-awarding tertiary institutions in Hong Kong has increased to four, providing a total of about 11 000 places.  We awarded two sites at the end of last year for the development of self-financing degree programmes.  We have also reserved a site at the former Queen Hill's Camp in the New Territories and invited expressions of interest from relevant organisations.  I will consider increasing the commitment of the Start-up Loan Scheme to help institutions meet the costs of purpose-built accommodation when needed.

110. In his Policy Address, the Chief Executive proposed to establish a Self-financing Post-secondary Education Fund with a total commitment of $2.5 billion for the development of self-financing post-secondary education.  We plan to set up the Fund in the second half of this year.

Testing and Certification Services

111. The Government has accepted the three-year
market-oriented development plan for the testing and certification industry submitted by the Hong Kong Council for Testing and Certification.  The Council has selected four trades, namely Chinese medicine, food, construction materials and jewellery, for focused development of testing and certification services.  Such services include authenticity testing of Chinese herbal medicine, food safety system certification, product certification of construction materials, and development of standard testing methods for two types of jade.

112. We will step up the promotion of our testing and certification services outside Hong Kong through participation in major trade fairs.  With regard to access to the Mainland market, we have taken steps to implement Supplement VII to CEPA.  Starting from this year, testing organisations in Hong Kong can for the first time undertake product testing for the China Compulsory Certification System on a pilot basis for four types of products processed in Hong Kong (i.e. toys, circuit installations, information technology equipment and lighting apparatus).  This initiative will help create business opportunities for local laboratories, and facilitate access to the Mainland market for products processed in Hong Kong.  We will assist the industry in implementing this pilot scheme.

Innovation and Technology

113. Innovation and technology give impetus to economic development and enhance our competitiveness.  Regarding infrastructure, Science Park Phase 3 is due for completion in phases starting 2013.  We are now conducting a comprehensive review of the Innovation and Technology Fund with a view to improving its assessment criteria and application procedures, thereby encouraging enterprises and R&D institutions to conduct more research activities with good commercial potential.  We will also continue to review the work and role of R&D centres and promote collaboration among academia, R&D institutions, business community and the Government.

114. With the advent of the National 12th Five-Year Plan, we will strengthen our collaboration in scientific research with the Mainland and encourage the participation of more research personnel of Hong Kong in national science and technology programmes, complementing the development of our country.  From April, we will provide an annual sum up to $2 million to each of the 12 Partner State Key Laboratories in Hong Kong to support their operation and enhance their research capability.

115. To show the support and recognition we give to innovation and technology, I have agreed to take up the chairmanship of the Steering Committee on Innovation and Technology.  The Committee will pull together the efforts of the industry, academia and research institutions to co-ordinate the formulation and implementation of innovation and technology policies.  We hope this will generate greater synergy among various policies and programmes.

116. Hong Kong is a telecommunication hub in the region.  In the past year, the Hong Kong Science and Technology Parks Corporation granted about eight hectares of land in the Tseung Kwan O Industrial Estate for the setting up of high-end data centres.  In a knowledge-based economy, data centres constitute an essential part of the infrastructure.  The Government is exploring appropriate measures to facilitate the development of more high-end data centres in Hong Kong.

Cultural and Creative Industries

117. The $300 million CreateSmart Initiative has so far received over 110 applications for support to projects in the creative industries.  Over 40 applications have been approved with a funding of more than $70 million.

118. In 2011-12, Create Hong Kong will continue to help the industries tap into the Mainland market, support local creative talent in taking part in major overseas competitions and exhibitions, and co-operate with the film, design, digital entertainment and other sectors to organise promotion, exchange and business matching activities in the Mainland and overseas markets.  In addition to subsidising international events like Entertainment Expo Hong Kong and Business of Design Week, we will support the music, television and digital entertainment industries in organising various kinds of large-scale regional events this year.  Regarding new media, Create Hong Kong will provide funding for the establishment of a 3-D online platform to showcase local architectural works.  It will also support the local comics sector in developing a smart-phone platform to facilitate electronic publishing and distribution of comic work.

119. We have selected the service operator for revitalising the site of the former Hollywood Road Police Married Quarters into a focal point for the development of local creative industries.

Environmental Industries

120. The environmental industries, while at an initial stage of development, are growing impressively.  In 2009, the value added of the green industries rose by 12.4 per cent and the number of employees also increased by 3.6 per cent.  We have been promoting the development of environmental industries and a green economy through multi-pronged policies and initiatives.  They include enhancing building energy efficiency and promoting the use of energy-saving household appliances by legislation, setting up the Pilot Green Transport Fund, making more use of electric vehicles, and taking forward other measures such as expanding the list of products with green specifications for government procurement, piloting the use of new green materials in public works, encouraging scientific research on environmental protection and building environmental infrastructure.

121. We have been making good progress in promoting energy saving and improving energy efficiency.  With the mandatory compliance of the Building Energy Codes, which will take effect shortly, it is estimated that 2.8 billion kWh of electricity will be saved for new buildings and carbon emissions will be reduced by about 1.9 million tonnes in the first ten years.  The construction of the first district cooling system at the Kai Tak Development will commence this year.  Upon its completion, we expect to save as much as 85 million kWh of electricity and reduce approximately 60 000 tonnes of carbon emissions each year.  Participation of the environmental industries is essential to the implementation of these energy saving and emission reduction measures which will in turn create business opportunities for them.

122. On improving roadside air quality, the new Pilot Green Transport Fund, set up to encourage the transport sector to test out green and low-carbon transport modes and technology, will be open for application by end-March.  We are also preparing for a number of trial schemes in collaboration with the franchised bus companies, including the trying out of hybrid buses on busy corridors and retrofitting of Euro II and III buses with catalytic reduction devices to meet the Euro IV emission standard.  The above schemes, involving trials and retrofitting processes, will help promote a green economy.

123. Over the past two years, the Steering Committee on the Promotion of Electric Vehicles chaired by me has been actively promoting the use of electric vehicles through various policy initiatives and measures.  Currently, there are about 100 electric vehicles on Hong Kong roads and over 260 charging stations across the territory for public use.  A number of electric vehicle models have been rolled out on the market.  Subject to the availability of suitable models on the market and the operational needs of bureaux and departments, we will give priority to electric vehicles when replacing government vehicles in the two financial years of 2011-12 and 2012-13.  We expect to have an intake of close to 200 electric vehicles of various types in these two years.  In addition, we plan to install more charging facilities for electric vehicles in government car parks, and will encourage the business and non-government sectors to join hands in expanding the charging network across the territory.

Wine Trading and Distribution

124. Since wine duty was exempted in February 2008, there has been sustained growth in wine imports and related businesses.  The number of persons engaged in wine-related businesses increased by more than 5 000 in 2008 and 2009, bringing the total to 40 000.  In 2010, the total value of wine imports exceeded $6.9 billion, an increase of 73 per cent over 2009.  According to the industry, Hong Kong surpassed New York to become the world's largest wine auction centre in 2010.

125. To help the industry tap business opportunities arising from the growing demand for wine across Asia, especially in the Mainland, we signed Memoranda of Understanding on Co-operation last year with various countries and regions including the US, Portugal, Chile and the region of Burgundy in France.  This has brought the number of similar agreements between us and wine-producing countries or regions to 12.  We will continue to seek opportunities for co-operation with our trading partners, further capitalising on Hong Kong's experience and network in wine trading and distribution.

Emerging Markets

126. In view of the sustained development of emerging markets and their burgeoning economic and trade links with the Mainland, we have strengthened our investment promotion efforts in markets such as Southeast Asia, the Middle East, Russia, India and South America.  We met local corporations and encouraged them to expand their business to Hong Kong.  In addition, we organised a major business conference in New Delhi, India, with the Guangdong Provincial Government, to promote the advantages of doing business in Guangdong and Hong Kong.  We will continue to enhance investment promotion efforts in major emerging markets, encouraging corporations to establish footholds in Hong Kong.

(To be continued)

Ends/Wednesday, February 23, 2011
Issued at HKT 12:20