Speech by S for IT at dinner hosted by HKETO in San Francisco (English only) (with photo)
Distinguished guests, friends, ladies and gentlemen,
Good evening to you all. It is my pleasure to be back in the Bay Area. As the Secretary for Innovation and Technology of the Hong Kong SAR Government, there is no better place to begin my first official visit to the United States. I was educated at Caltech and Stanford, and started my career with Intel in 1978.
Business ties between California and Hong Kong are strong. Among all the states, California was the second largest exporter to Hong Kong, after New York. And Hong Kong was California's fifth largest export destination and accounted for about 24 per cent of the total US exports to Hong Kong.
Traditionally, Hong Kong is known worldwide as a business and trading hub, an international financial centre and a wonderful tourist destination where East meets West. We are also the premier gateway to the Mainland if you want to do business with China.
Tonight, I am here to tell you our plans to turn Hong Kong into an innovation and technology hub of the region, and your opportunities. Since the establishment of the Innovation and Technology Bureau in November last year, my team and I have been pressing on at full steam to drive the transformation of our economy, develop high value-added industries, create diversified employment opportunities, and improve people's daily living.
The Government's approach to promoting innovation and technology development is underpinned by several core strategies: providing world-class technology infrastructure; offering adequate financial support to the industry, particularly start-ups, academia and research sector to develop and commercialise their R&D results; nurturing and attracting international talent; and strengthening collaboration with the Mainland and other economies.
The role of the Hong Kong Government is two-fold: to connect and facilitate. As a connector, we connect the Government, the academia, businesses and the research sector, both locally and overseas.
Hong Kong enjoys the combined advantages of the "one country, two systems" arrangement of China, a strategic location in the Asia-Pacific region and proximity to the huge Mainland market. We pride ourselves with a robust intellectual property protection regime, a sound legal system based on common law with an independent judiciary, and world-class ICT infrastructure and financial systems. We also boast one of the lowest profits tax rates in developed economies, at 16.5 per cent.
That's why Hong Kong is the "super-connector" between the Mainland of China and the rest of the world. This applies not only to financial services, trade and culture, but also to science, innovation and technology. We are able to attract top-tier research institutions and companies from all over the world, such as the Massachusetts Institute of Technology and Karolinska Institutet of Sweden, which decided to set up their first overseas innovation centre and R&D centre in Hong Kong outside their own country. We encourage and welcome more research and innovation organisations from the US coming to Hong Kong.
As a facilitator, the Government will provide the initial resources to kick-start a vibrant innovation and technology ecosystem. The business sector of Hong Kong will continue to take the lead in driving innovation and technology in Hong Kong. This year, we are investing an unprecedented amount, a total of US$2.3 billion, in both resources and infrastructure to boost our ecosystem.
These include dedicated funding programmes to strengthen the capability of our universities in midstream research and a new Innovation and Technology Venture Fund to co-invest with private venture capital funds in local start-ups.
Hong Kong has six universities with world-class research capability. We believe their active involvement in midstream R&D would add fresh impetus to commercialising their R&D outcomes. That is why we will launch a US$260 million Midstream Research Programme to encourage our universities to conduct more midstream and translational research. Better articulation with downstream R&D will bring more commercial opportunities. This will be augmented by other measures that help nurture local talents and to inspire their interests in innovation and technology, especially young people.
Start-ups play an important part in our ecosystem. According to San Francisco-based research firm Compass, Hong Kong ranked as the top five fastest growing start-up ecosystem in the world, and one of the world's top 25 start-up hubs. Last year, the number of start-ups has increased by 46 per cent from a year ago to some 1 600. The number of incubation and co-working spaces was over 40, and most of them are privately run, including a few from Silicon Valley. According to Compass, the number of start-ups continued to increase to some 2 000 this year.
To address a funding-gap in the pre-Series A stage, the Government will launch a new US$260 million Innovation and Technology Venture Fund to co-invest with global venture capital funds in our local start-ups on a matching basis. Apart from capital, we hope to also bring in the professional knowledge and business network of VCs (venture capitalists). In addition, the Cyberport, home to the largest cluster of creative and ICT companies in Hong Kong, has recently launched a US$25 million Cyberport Macro Fund to assist its start-ups in attracting more investment from private and public investors.
Another key priority of the new bureau is to promote the "re-industrialisation" of Hong Kong. The objective is to develop new and high-valued industries which can adopt innovative technologies such as cloud computing, big data, robotics, artificial intelligence and Internet of Things in smart production. We will be focusing on the key technology directions where Hong Kong has an edge or the demand, such as robotics, healthy ageing and smart city. These industries do not require a substantial amount of land, one of the scarcest resources in Hong Kong.
Among them, we will invest US$560 million to expand the Hong Kong Science Park, home to some 600 technology start-ups and companies. Under our revised industrial estate policy, we are going to invest over US$1 billion to build specialised multi-storey industrial buildings. Two pilot projects include an Advanced Manufacturing Centre and a Data Technology Hub in the Tseung Kwan O Industrial Estate. Together, these new projects will provide an additional gross floor area of over 130 000 square metres for high-value manufacturing and data technology operations.
Our support to the business sector does not end here. Small and medium enterprises, or SMEs, account for over 90 per cent of the business establishments in Hong Kong. We will soon launch a Pilot Technology Voucher Programme to provide funding assistance to SMEs to adopt technology services and solutions. Apart from improving SMEs' productivity and business processes, this will also create additional business opportunities for local technology solution service providers. We have also raised the level of cash rebate for companies engaging in R&D to 40 per cent, roughly equivalent to 300 per cent of tax deduction.
The Hong Kong Government is also committed to developing Hong Kong into a smart city - with the dual objective of driving Hong Kong's economic development and also improving our citizens' quality of living. We are now formulating a blueprint for smart city development in Hong Kong up to 2030, covering policy objectives, strategy, development plans and infrastructure. In terms of implementation, we will explore more innovative approaches such as crowdsourcing of ideas and collaboration with businesses through public-private partnership.
I am here to tell you, and encourage you to, either as professionals, as businesses or investors, to take advantage of the opportunities arising from the latest policies and initiatives, as well as the booming innovation and technology scene in Hong Kong. Let's not forget that Hong Kong is the ideal springboard to expand into the Asia-Pacific and the huge Mainland market. Hong Kong will be where the action is for the next five years.
The Hong Kong Government always ensures a level playing field for all businesses, wherever they come from. For instance, for you to enjoy the above support measures and funding schemes, all you need to do is to set up a company in Hong Kong, a surprisingly friendly and easy process, which I understand can be done in less than a day! Our colleagues in the San Francisco Economic and Trade Office and Invest Hong Kong will stand ready to assist you.
Lastly, my thanks to the Hong Kong Economic and Trade Office in San Francisco for organising today's gathering.
Thank you very much.
Ends/Tuesday, October 4, 2016
Issued at HKT 13:26
Issued at HKT 13:26