Budget Speech by the Financial Secretary (3)

New Economic Order

39. Since the 2008 financial tsunami, the global economy has undergone sweeping changes.  With the global economic gravity shifting towards the East, emerging markets are playing a much more important and influential role.  Breakthroughs in IT development have also brought about paradigm shifts in different economic and social spheres, changing our daily lives and business modalities.

40. These two new forces have changed the global economic landscape, gradually shaping a "new economic order" globally, offering new directions and providing room for developments for both traditional and emerging industries.  They have also lowered the threshold for start-ups and created a more open market ecosystem.  These ground-breaking paradigm shifts have disrupted the conventional modalities, and unavoidably impacted on existing market players.

41. We should not shy away from challenges in today's ever-changing world.  Instead, we should rise to the challenges by taking a longer perspective and keeping an open mind.  We should weigh the impact of these changes on the society and solve problems with an innovative mindset.  Government will uphold the long-held principles of technology-neutrality and protection of consumer rights in promoting the application of technology, ensuring the healthy development of the market with appropriate regulatory control.

42. Over the years, Hong Kong has sustained its competitive edge because our trade network is highly internationalised, our market is transparent and open, and our society is clean and law-abiding.  Under the "new economic order", we must act swiftly, get prepared, identify development opportunities and position Hong Kong as a key player in the competition.  Building on our strengths, together with Hong Kong people's flexibility, resourcefulness and market acumen, we shall, as always, be able to stand out in the face of stiff global competition.

Nurturing Innovation

43. The application of many epoch-making innovative technologies such as cloud computing, big data, robotics, artificial intelligence and biotechnology is growing fast, bringing us many revolutionary business models and services.  More trading is being done virtually, and is no longer constrained by geographical boundaries.  The highly-efficient global supply chains have connected markets in every corner of the world and presented different industries with a wider range of possibilities.

Application of Research and Development Results

44. Hong Kong has world-class IT facilities, research and development (R&D) institutes and personnel, financing platforms, and above all a well-developed system to safeguard intellectual property (IP) rights.  The neighbouring Pearl River Delta Region, and Shenzhen in particular, has developed into a manufacturing hub of advanced technology products in recent years.  The immense synergy effects so generated will provide powerful support for Hong Kong's internationalised corporations in material application, prototyping and production.

45. Having regard to Hong Kong's practical circumstances, comparative advantages and the direction of our urban development, we can widely apply and commercialise R&D results in the three areas of robotics, healthy ageing and smart city to boost economic development and enhance the quality of life.

46. With an ageing population and a shrinking work force, the application of smart production technologies, in particular robotics, is vital.  Robotics can enhance production efficiency and quality.  The manpower spared can be devoted to high value-added processes to increase the value of output.

47. The Hong Kong Science and Technology Parks Corporation (HKSTPC) is considering promoting smart production and research at the Tseung Kwan O Industrial Estate.  Advanced manufacturing industries using robotics and IT will be brought together to drive the development of the entire value chain, covering product R&D, design, production, testing, as well as marketing and branding.  It is estimated that this project will cost $8.2 billion and will be completed in 2021-22.

48. The use of intelligent home care equipment, Internet of Things and medical rehabilitation devices helps improve the elderly's quality of life, alleviate burden on the healthcare system and promote healthy ageing, thereby enabling the elderly to lead an enjoyable life in the community.  Many innovative technologies such as electronic wheelchair, medical image scanning system and medical equipment for stroke rehabilitation developed by local manufacturers and supported by the Science Park have come on stream.  Biotechnology, healthcare and medicine will remain the key R&D focuses of the Science Park.  Government has earmarked $500 million to set up an Innovation and Technology Fund for Better Living to encourage different sectors to apply innovation and technology to improve the quality of living.

49. In respect of the development of smart city, a locally-developed optical sensing system, which has won numerous international awards, has been in use in many countries and regions to monitor the conditions of tracks, cables and ducts to guard against system irregularities, and reduce the maintenance and operating costs of infrastructural facilities.  Government will implement the Water Intelligent Network project in phases by installing sensors in water supply networks to continuously monitor their conditions and reduce the risks of water main bursts and leakages, thereby ensuring the efficient use of freshwater resources.

50. A new desalination plant using the latest reverse osmosis technology will be constructed at Tseung Kwan O.  The design work for the first stage of the plant commenced at the end of 2015.  The output of the plant, with a water production capacity of 130 000 cubic metres per day, which can be further expanded to 270 000 cubic metres per day, will account for five to ten per cent of Hong Kong's total freshwater consumption.

51. Since last year, Government has released 5 000 datasets in digital formats free of charge through the Public Sector Information portal data.gov.hk.  This is to facilitate the industry to develop more mobile applications.  To foster IT application and development, we shall refine the existing geographic information systems and explore ways to align and integrate the spatial data in Hong Kong, including the location and relevant information of facilities that are above, on and under ground level.

52. I shall allocate an additional $200 million to install traffic detectors along some strategic routes to provide the public with more real-time traffic information and enhance transport efficiency.

53. Government is committed to promoting the use of electric vehicles.  We are actively installing more and better charging facilities and promoting the use of electric vehicles in the public transport sector.  With the growing popularity of electric vehicles, there will be more retired batteries which can still be reused for energy storage.  We shall organise an international competition this year to encourage the sector to explore ways to make good use of retired batteries.

54. According to the Global Information Technology Report 2015 published by the World Economic Forum, Hong Kong's mobile network coverage ranks first in the world.  Hong Kong is also among the world leaders in terms of the speed of broadband services and the number of Wi-Fi hotspots.  Government has earmarked $500 million to further increase the number of Wi-Fi.HK hotspots to over 30 000, bringing greater convenience to our citizens and tourists.

55. Government will introduce and enhance various funding schemes to encourage more private enterprises to invest in R&D and applied technology, and to translate outstanding local R&D achievement into products and services with commercial value.  Other than injecting a sum of $5 billion into the ITF as intended, we shall introduce five measures íV

(a) inject $2 billion to launch a Midstream Research Programme for Universities to provide funding support for universities to carry out more midstream and applied research projects in key technology areas;

(b) increase the level of cash rebate under the R&D Cash Rebate Scheme to 40 per cent to encourage private enterprises, SMEs in particular, to put more resources into R&D works;

(c) extend the Public Sector Trial Scheme to cover the incubatees of the Cyberport and the Science Park for funding their production of prototypes or samples and conduct trials of their R&D results in the public sector, with a view to facilitating commercialisation of R&D results;

(d) extend the scheme that provides funding support for the technology transfer work of six universities by three years to 2018-19; and

(e) continue with the Technology Start-up Support Scheme for Universities to assist technology start-ups established by university teams in commercialising research results.

(To be continued.)

Ends/Wednesday, February 24, 2016
Issued at HKT 11:32