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Budget Speech by the Financial Secretary (4)

Expanding Business and Professional Services

61. With some 470 000 employees and accounting for 12 per cent of GDP, business support and professional services are another pillar industry of the Hong Kong economy.  They comprise a wide range of professional and supporting services for business activities, such as legal, accounting, architecture, engineering, planning, surveying, human resources, management consultancy, technical testing, product development and distribution, market research, conference and exhibition, and information technology.

62. Apart from serving local enterprises, Hong Kong's business and professional services are also exported to the Mainland and other areas in Asia.  We shall continue to assist these service industries through relevant G2G platforms.  Under the National 12th Five-Year Plan, the Mainland will devote greater efforts to developing modern service industries to lift the share of the service industries in the economy by four percentage points by 2015.  Such scale of expansion far exceeds Hong Kong's GDP in one year.  This will present vast business opportunities to the sectors concerned in Hong Kong.  For continuous enhancement of the CEPA mechanism, the Chief Executive has announced that the HKSAR Government and the Ministry of Commerce will set up a joint working group to assist the sectors concerned to solve problems they encounter in gaining access to the Mainland market under CEPA.

Nurturing Emerging Industries

63. Apart from building on our traditional strengths, we also give strong support for the development of emerging industries to further diversify our economy, so that Hong Kong can better respond to the world's ever-changing economic environment.  Over the past couple of years, the Government has promoted six industries where Hong Kong enjoys clear advantages.  These industries employ 420 000 people, or 12 per cent of the total workforce, and contribute to 8.5 per cent of GDP.  The Government will keep an eye on the development of new industries and proactively provide appropriate support for emerging industries with the potential to flourish.

64. On nurturing emerging industries, the efforts of the Government and the industries concerned have borne fruit.  Among the emerging industries, the cultural and creative industries, employing 190 000 persons, have been taking up an increasing share of GDP, which now approaches five per cent.  To the credit of these practitioners, they have won numerous international awards and accolades.  Apart from the film industry, other industries in the sector also made impressive achievements.  Despite the global economic slowdown over the past few years, our design and architecture sectors have, during the five years leading up to 2011, achieved an average annual growth rate of 20 per cent in terms of value added and five per cent in terms of the number of practitioners.  Another notable achievement is that local advertising companies scooped a total of 60 awards in three different international advertising competitions.  In 2011, local enterprises spent more than $35 billion on advertising, an increase of 16 per cent over the previous year.  The local advertising industry continues to boom, employing 18 000 people and bringing $6.8 billion worth of economic benefits.  With the huge domestic demand in the Mainland as a result of sustained economic growth, our cultural and creative industries have great development potential.  We shall continue to provide strong support for the industries with a view to opening up more business opportunities and markets.

65. In recent years, Hong Kong has played host to a number of art fairs which have attracted many well-established art galleries from different corners of the world.  We shall host a number of world-class art fairs again this year, including Art Basel - Hong Kong, inaugural show in Asia.  These major events will help pool overseas and local art-related participants and foster interaction and exchanges among them.  Successful art fairs will also facilitate art and cultural development in Hong Kong, and highlight our potential as an international art metropolis.

66. To foster the development of visual arts and nurture local talent in the field, we are converting the club house of the former Royal Hong Kong Yacht Club in Oil Street, North Point into a visual arts exhibition and activity centre.  I also propose additional funding of $50 million for the Leisure and Cultural Services Department to acquire local visual artists' outstanding artworks, and to commission works for exhibition under public art schemes.  These are set to promote the profile of local artists and bring their works to the attention of the art market.

67. Today, many internationally renowned scholars work in local universities to conduct research.  Their efforts contribute to the development of Hong Kong's research and development (R&D) capabilities.  Top researchers working in our universities and enterprises have won numerous awards.  Last year, 56 Hong Kong scientists were approved by the State Ministry of Science and Technology for inclusion in the National Science and Technology Programmes Expert Database.  They are now qualified to participate in the compilation of the application guide and in project assessment for national science and technology programmes.  Internationally, the "Interactive Intention-Driven Upper-Limb Training Robotic System", a project under the Innovation and Technology Fund (ITF), was awarded the "Grand Prix Du Salon International Des Inventions De Genˆove" in the 40th International Exhibition of Inventions of Geneva in 2012, making it the first invention from Hong Kong to receive the grand prize.

68. In my view, if we can transform technology research outcomes into products with market potential, coupled with industrial production, our technological development can make an even greater contribution to Hong Kong's economy.  To facilitate technology transfers and the realisation of R&D results, six local universities have set up their own technology transfer offices to deal with the complicated process of commercialising R&D results.  I propose that these six universities be each provided with a subvention of up to $12 million through the ITF for a period of three years from 2013-14 onwards to support the work of their technology transfer offices.

69. Technology and product R&D will stimulate the development of intellectual property trading.  Hong Kong has a sound regime for the protection of intellectual property rights, and is well-equipped to develop into a regional intellectual property trading hub.  The Secretary for Commerce and Economic Development will lead a working group to study the overall strategy for promoting Hong Kong as a hub for intellectual property trading.

Supporting Small and Medium Enterprises

70. SMEs are an important pillar of Hong Kong's economy and employment market.  They form the majority of enterprises in Hong Kong and employ over 1.2 million people or half the private-sector workforce.  In the face of persistently weak export markets and a challenging external environment, we shall assist SMEs in six areas to help them raise capital and tap new markets:

(a) I propose to extend the application period for the special concessionary measures under the SME Financing Guarantee Scheme for one year to the end of February 2014.  Last year, the Government provided a total guarantee commitment of $100 billion for the Hong Kong Mortgage Corporation Limited to introduce special time-limited concessionary measures to offer guarantees with a higher guarantee ratio of 80 per cent at a concessionary fee rate.  Introduced in May 2012, the measures have been well received by the trade.  Up to end-January, over 5 400 applications have been approved, benefiting more than 4 000 enterprises with total loan guarantee of more than $24 billion.

(b) We shall continue to make use of the $1 billion BUD Fund set up last June to assist Hong Kong enterprises to enhance their competitiveness in the Mainland through upgrading and restructuring, developing brands and promoting domestic sales in the Mainland.  The Fund has since received more than 500 applications.

(c) The HKTDC will set up more Design Galleries in Mainland cities other than Beijing and Guangzhou to offer platforms for Hong Kong enterprises, especially SMEs, to showcase their products.  This will help Hong Kong enterprises gain access to the Mainland market and build up greater awareness of Hong Kong brands there.

(d) I propose to increase the cumulative amount of the grant for SMEs under the SME Export Marketing Fund from $150,000 to $200,000, subject to the meeting of relevant additional conditions.  The Fund subsidises SMEs' export promotion activities, including trade fairs, exhibitions, business missions and advertising.

(e) On 1 March, the Hong Kong Export Credit Insurance Corporation (ECIC) will introduce a "Small Business Policy" (SBP) scheme for Hong Kong enterprises with an annual business turnover of less than $50 million, providing exporters with more flexibility in taking out insurance cover.  Within a period of two years from 1 March 2013, SBP policyholders will enjoy waiver of the annual policy fee and up to 20 per cent premium discount.

(f) On 1 March this year, the ECIC will upgrade the ratings of Turkey and the Philippines following the rating upgrades of countries including Russia, Indonesia and Peru last year.  The ECIC will raise the insurance limits of these countries accordingly, and provide higher credit limits and lower premium rates for exporters to these countries.

71. I hope that these six support measures for SMEs will help keep their business running, create more employment and enhance our people's job security.

(To be continued)

Ends/Wednesday, February 27, 2013
Issued at HKT 11:45


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