FS' "Letter to Hong Kong" on Budget (English only)

     Following is the "Letter to Hong Kong" on the 2014-15 Budget by the Financial Secretary, Mr John C Tsang, broadcast on Radio Television Hong Kong this morning (March 9):

Good morning, Hong Kong,

     It's been a week and a half since I delivered the 2014-15 Budget. During that time, I've seen a lot of news stories and read a lot of emails on my initiatives. One of the main topics of discussion has been our long-term financial prospects. I had actually expected that that would be the case.

     The academics and professionals that constituted the Working Group on Long-Term Fiscal Planning have assessed various scenarios that point to a structural deficit within seven to 15 years, if nothing whatsoever is done to prevent it from happening.

     I thought it would be appropriate here to share a few words of wisdom from a former IBM executive, Wolfgang Grulke, who said that the future is a matter of choice, not chance.

     I certainly believe that Hong Kong's financial future is far too important to be left to chance, and I have clearly indicated that I will not allow a structural deficit to surface.

     With this in mind, I have chosen competitiveness as the overriding theme for this year's Budget. Maintaining and even boosting our competitiveness is crucial to ensuring the long-term stability and well-being of our economy and finances.

     One of the most effective ways to add value to our economy is to develop our innovation and technology capabilities. Hong Kong is considered one of the most innovative places on earth, ranking seventh in last year's Global Innovation Index, and top in Asia. Yet, I believe there is still plenty of scope to promote innovation as an economic driver, and to help propel businesses from different sectors of our economy into an even more productive, efficient and smarter future.

     The Government will continue to refine our approach to promote innovation and technology in our schools and universities, and between research institutions and businesses, large and small.

     In the Budget, for example, I proposed setting up an Enterprise Support Scheme to replace the Small Entrepreneur Research Assistance Programme. Under this new Scheme, private sector companies of all sizes can receive funding support for research and development (R&D) activities.

     Maximum funding will be increased from the current $6 million to $10 million. Companies will still have to put up half of the R&D costs, but they will be able to retain all the intellectual property rights of the project.

     We shall also extend the scope of funding beyond R&D, to support businesses integrating technologies into new products, which has been a key strength of many Hong Kong firms, so that the results and returns from innovation can be felt sooner.

     No doubt, some potentially great ideas fail to get off the drawing board due to the hurdles that new technology start-ups face in the initial period. That is why I have set aside $24 million in the Budget for designated universities to provide seed money for recommended R&D projects. This will encourage more students and academics to get their innovations out of the testing laboratories and into the marketplace.

     We have already seen a number of successful local collaborations between industry and academia. Sengital Limited is a technology company which has evolved some 10 years ago from an R&D programme at the Chinese University of Hong Kong (CUHK). Today, it is part of the incubation programme at Hong Kong Science Park with a complement of some 30 employees and net profit of around $10 million.

     Another CUHK-based project, with funding support from Government, saw a handful of engineers develop a Chinese electronic news company. The company now has some 700 staff and operations in the Mainland.

     Hong Kong Polytechnic University teamed up with Rehab-Robotics to create an award-winning robotic hand which can assist stroke patients with their recovery. Other local health-care inventions are helping Alzheimer's patients, the hard of hearing and the elderly.

     Our logistics industry has also become more efficient since the Customs and Excise Department adopted an innovative e-lock system that reduces cargo clearance times.

     These are just a few recent success stories in Hong Kong, and I know that there are many more examples, and, certainly, I am confident that many more will follow.

     Never before have people had such readily available advanced tools for innovation as we do now, and with the power to tap into new ideas and markets around the world via the Internet.

     As one of the world's freest economies, and with well-developed smart city infrastructure, Hong Kong's industries have great potential to become even more innovative and productive and contribute further to our economic growth.

     Under the Government's Digital 21 Strategy, we plan to double the number of Wi-Fi hotspots across the city. We plan to further digitise government operations and services, increase access to government information for public consumption, and develop a safe platform for e-commerce in order to implement initiatives such as e-cheques and electronic health records.

     The Government will continue to use new technology to provide more efficient, cost-effective and user-friendly services to the public and the business community.

     We must also give our students every opportunity to be creative and innovative. IT talents start to emerge at a relatively young age, and some young entrepreneurs can even afford to retire before their parents do!

     We must encourage and nurture our gifted young people to fulfil their potential and push the boundaries of 21st century innovation.

     The Government will work closely with tertiary institutions and industry to align IT education with the needs of our economy. We shall incorporate enrichment programmes in schools that excel in IT to help identify gifted young people early and give full play to their ideas and talent.

     After all, today's secondary students and school leavers are the first full-fledged generation, exposed from birth to all the modern-day fixtures and fittings of the Internet era. This experience will no doubt have a profound effect in influencing their thinking.

     If history were any guide, our iPhones and iPads would, in the not too distant future, become as outdated as black-and-white televisions and Walkman are today. Hong Kong must stay competitive in our rapidly changing world. We must make the most of our city's advanced IT infrastructure and highly open economy, and we must find new and more productive ways to expand the capacity of our economy and secure a bright and prosperous future for Hong Kong.

     Thank you, and have a great Sunday.


John Tsang
March 9, 2014

Ends/Sunday, March 9, 2014
Issued at HKT 08:30