Budget Speech by the Financial Secretary (7)
112. The business and professional services industry has always been one of Hong Kong's pillar industries, accounting for 12 per cent of GDP and employing a total of about 520 000 people. In the world's ever-changing business environment, we have been actively promoting Hong Kong's role as a major business platform in the global market, so as to enhance our business ties and trade flows with economies around the world. With the global economic development gravity shifting towards the east in recent years, Mainland enterprises have been active in making investments overseas and tapping overseas markets. Capitalising on its quality professional services, socio-cultural advantages and rich international business experiences, Hong Kong can capture the business opportunities so created and strive for further development.
113. We have been implementing a combination of measures to support the development of professional services. These measures include pursuing negotiations on FTAs to secure more favourable market access for our industries; promoting our strengths in professional services through the Hong Kong Trade Development Council (HKTDC), and providing various kinds of assistance. In November last year, the $200 million Professional Services Advancement Support Scheme was launched to specifically support Hong Kong's professional services sector in undertaking activities relating to external exchanges, publicity and enhancement of service standards and competitiveness. I encourage the sector to make the best use of the scheme.
Exploring New Markets
114. To help the local commercial sector and professionals open up new markets, we established our 12th overseas Economic and Trade Office (ETO) in Indonesia last year to strengthen our ties with ASEAN countries. While actively preparing for the setting up of an ETO in Korea, we are commencing preliminary work to establish ETOs in India, Mexico, Russia, South Africa and the United Arab Emirates so as to enhance our trade and cultural exchanges with other economies.
115. The current-term Government has been actively expanding the network of our offices in the Mainland. In particular, a total of four liaison units will be set up in Tianjin, Zhejiang, Guangxi and Shaanxi in the first half of this year. This will bring the total number of ETOs (including the Beijing Office) and liaison units in the Mainland from seven in June 2012 to 16 in the near future, enabling a more even geographical spread throughout the entire Mainland.
Asian Infrastructure Investment Bank
116. We will continue to work with the Central Government and the Asian Infrastructure Investment Bank (AIIB) for early completion of the procedures for Hong Kong to participate in the AIIB as a non-sovereign territory. With extensive experience in implementing, managing and operating infrastructure projects, a mature financial market and a wide range of professionals, Hong Kong can contribute to the AIIB and further reinforce its position as an international financial centre.
Infrastructure Financing Facilitation Office
117. Riding on the Mainland's implementation of the Belt and Road Initiative, Hong Kong can play an important role in facilitating infrastructure investment and financing in the region. Established by the Hong Kong Monetary Authority (HKMA) last year, the Infrastructure Financing Facilitation Office (IFFO) is tasked to pool a cluster of key stakeholders in various fields and enhance their knowledge and interest in investing in infrastructure and related projects. The IFFO will continue to work with the key stakeholders in a bid to promote and develop Hong Kong as an infrastructure investment and financing centre.
118. Hong Kong is a pluralistic and liberal society, with a unique blend of Chinese and Western cultures. It is well placed to develop diversified industries by leveraging its wealth of talent, strong capability in scientific research, advanced information network and abundant supply of capital. While strengthening our pillar industries, we will seize the opportunities and strongly support the development of industries over which we have advantages as well as emerging industries to further diversify our economy. By so doing, Hong Kong can better respond to the world's ever-changing economic environment and competition. This will also generate more quality opportunities for our younger generation and entrepreneurs with sharp business acumen to unleash their creativity, and display their talents and fulfil their aspirations.
Innovation and Technology
119. I&T is a new engine to power the sustainable and diversified economic development of Hong Kong. Since the establishment of the Innovation and Technology Bureau in November 2015, the Government has been actively working with industry stakeholders to further enhance our I&T ecosystem. Various measures, amounting to a total of $18 billion, have been launched to promote I&T development.
Development of Industries
120. As a result of economic restructuring, the contribution of the manufacturing industry to our economy declined from 2.7 per cent of GDP, or $39.7 billion, in 2006 to 1.2 per cent of GDP, or $27.2 billion, in 2015. As the manufacturing industry relates to technology in different areas as well as different types of products and processes, we believe that I&T can drive Hong Kong's re-industrialisation, thereby facilitating the development of a high-end manufacturing industry conducive for Hong Kong, promoting economic growth and creating quality jobs.
121. To this end, the Government fully supports the Hong Kong Productivity Council (HKPC) in facilitating industrial upgrading and transformation for a shift towards high value-added production. On hardware, we have provided funding of $8.2 billion for the Hong Kong Science and Technology Parks Corporation (HKSTPC) to build an Advanced Manufacturing Centre and a Data Technology Hub in Tseung Kwan O Industrial Estate. We have also commissioned the HKPC to establish an Inno Space to turn innovative and technological ideas into industrial designs or products, with a view to expanding the start-up culture in Hong Kong and supporting re-industrialisation.
122. I will set up a new committee on I&T development and re-industrialisation to co-ordinate the I&T development and re-industrialisation of Hong Kong. The tax policy unit will also explore enhanced tax deductions for I&T expenditure.
123. A “start-up wave” has emerged in recent years. With creativity, technology knowledge, entrepreneurship and hard work, many young people have succeeded in starting up their own businesses. The HKSTPC and Cyberport provide support including facilities and financial, technical and business advisory backup for start-ups, which is most helpful to young entrepreneurs lacking in capital and experience. To encourage private investment in local I&T start-ups, we are setting up a $2 billion Innovation and Technology Venture Fund (ITVF). The ITVF will co-invest in local I&T start-ups with venture capital funds on a matching basis of about one to two, thereby injecting new capital and energy into technology start-ups in Hong Kong.
124. The Public Sector Trial Scheme has been extended to include the incubatees of the HKSTPC and Cyberport since the end of last year. The scheme will provide each eligible project with a maximum subsidy of $1 million, seeking to encourage the public sector to conduct trials on the start-ups' products and services. We have also enhanced the Internship Programme by increasing the monthly allowances and extending the programme to benefit the incubatees and SME tenants of the HKSTPC and Cyberport, with the aim of nurturing more I&T talent. The Government will continue to support the development of local start-ups, so that more young people can realise their aspiration for entrepreneurship.
125. To promote the use of I&T in our daily lives, we will soon launch a $500 million Innovation and Technology Fund for Better Living to finance I&T projects that improve people's daily lives and benefit the elderly or the underprivileged.
126. E-sports has been developing rapidly in Hong Kong and other cities over the past few years. It has even become a form of international sports competition. E-sports is a new sector with economic development potential, which can help boost the local gaming industry and I&T development such as application of virtual reality technologies. We will invite Cyberport to study the latest technology and products development and explore further promotion of e-sports in Hong Kong.
127. Financial technologies (Fintech) make transactions and financial management easier, faster, safer and more cost-effective. It has transformed conventional financial services and brought convenience to people. Electronic payment is one of the examples. With the granting of 13 Stored Value Facility (SVF) licences by the HKMA last year and the commencement of the Payment Systems and Stored Value Facilities Ordinance last November, the electronic and mobile payment ecosystem in Hong Kong is maturing. A variety of payment options are now available to the public, including mobile payment, peer-to-peer (P2P) transfer, e-Cheque, and the Electronic Bill Presentation and Payment Service.
128. To further enhance the payment infrastructure, the HKMA is developing a new Faster Payment System (FPS). When the FPS is completed next year, it will provide a round-the-clock inter-bank real-time payment platform allowing banks and SVF service providers to offer their customers faster, more convenient and comprehensive payment and fund transfer services. Meanwhile, the Government will actively explore new payment channels for settling government bills and fees. In addition to facilitating the use of government services, the new channels will encourage more people to make use of innovative payment products and services.
129. The combination of biometric authentication and financial services has helped consumers manage their finances. To enhance transaction security, many financial institutions offer consumers with authentication options involving biometric features such as fingerprints and voiceprints. To speed up the launch of their new services, some financial institutions using biometric authentication have leveraged the Fintech Supervisory Sandbox (FSS) launched by the HKMA last September to test their biometric authentication services in a risk-controlled environment and under flexible arrangements. We hope that the industry will make good use of the trial environment provided by the FSS, so as to deliver more products and services based on different kinds of new technology. The development of the FSS has also demonstrated the possibility of striking a balance between consumer protection and promotion of innovation with appropriate supervision.
130. Looking ahead, distributed ledger technology (DLT), including Blockchain, and cyber security will be two major development clusters in Fintech. We will continue to encourage the sector to develop and apply Fintech which has immense potential, and promote Hong Kong as a hub for the application and setting of standards for these technologies. The Applied Science and Technology Research Institute (ASTRI) has been collaborating with the HKMA and a number of banks to explore the feasibility of applying DLT, and published the White Paper on Distributed Ledger Technology in November last year on the first stage of the research project, covering the feasibility of employing DLT on property valuation information management, trade financing and digital identity management. At the same time, the Fintech Innovation Hub jointly established by the HKMA and ASTRI last September offers its IT environment and support to the banking sector for developing prototypes for the use of DLT in trade financing and other aspects, so as to test how the concept can be applied in different operational scenarios. ASTRI will publish the findings in the second White Paper on DLT in the latter half of this year. Furthermore, financial institutions and start-ups in Hong Kong have implemented and actively explored initiatives to apply Blockchain technology in services such as insurance claims and cross-border remittance, with a view to reducing costs and fraud risks as well as enhancing transparency of transactions.
131. Cyber security is becoming increasingly important amidst the wider adoption of Fintech. The Cyber Resilience Assessment Framework, Professional Development Programme and Cyber Intelligence Sharing Platform under the HKMA's Cybersecurity Fortification Initiative were recently implemented in December last year. Apart from enhancing protection for consumers in e-banking services, these projects will strengthen Hong Kong's expertise and capability in cyber security.
132. I envisage that these projects can dovetail with the R&D efforts of the industry to achieve synergy, leading to refinements of Fintech solutions for the benefit of financial institutions, start-ups as well as the community, and offering consumers and enterprises in Hong Kong and around the world a comprehensive range of quality financial services.
(To be continued.)
Ends/Wednesday, February 22, 2017
Issued at HKT 12:24
Issued at HKT 12:24
Budget Speech by the Financial Secretary (1) (with photo/video) Budget Speech by the Financial Secretary (2) Budget Speech by the Financial Secretary (3) Budget Speech by the Financial Secretary (4) Budget Speech by the Financial Secretary (5) Budget Speech by the Financial Secretary (6) Budget Speech by the Financial Secretary (8) Budget Speech by the Financial Secretary (9) Budget Speech by the Financial Secretary (10) Budget Speech by the Financial Secretary (11)