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LCQ8: Statistical classification of manufacturing industry
     Following is a question by the Dr Hon Lo Wai-kwok and a written reply by the Secretary for Innovation and Technology, Mr Alfred Sit, in the Legislative Council today (June 15):
     There are views pointing out that quite a number of production activities of Hong Kong's manufacturing industry are already conducted outside Hong Kong, and the various types of production service industries arising from the manufacturing industry are also becoming more mature and diversified. However, when compiling statistics on the economic data of the manufacturing industry, the Government generally only takes into account those production activities conducted locally, whereas the total value of production of other segments of the entire industry chain (e.g. product design, research and development (R&D), quality testing, trading, and logistics and transportation) comes under the service industry, resulting in a serious underestimation of the contribution of the industrial output value of the manufacturing industry to Hong Kong's economy. In this connection, will the Government inform this Council:
(1) whether it will update the method of compiling statistics on the total value of production of the manufacturing industry, such as making the total value of production of the production service industries relating to the manufacturing industry come under the manufacturing industry, and bringing the production activities of Hong Kong's manufacturing enterprises outside Hong Kong into the scope of statistics compilation, so as to reflect more accurately the value of the manufacturing industry; if so, of the details; if not, the reasons for that;
(2) in the light of the developments in innovation and technology as well as advanced industries, whether the Government will expeditiously update the industrial classification under the manufacturing industry, so as to reflect in a timely manner the share of the advanced manufacturing industry in the overall manufacturing industry as well as its changes; if so, of the details; if not, the reasons for that; and
(3) whether it has plans to formulate a blueprint and performance indicators for re-industrialisation based on the relevant statistical outcome after refining the statistical classification of the manufacturing industry; if so, of the details; if not, the reasons for that?
     The Government has been actively promoting re-industrialisation in five areas, namely infrastructure, talent, capital, technology and scientific research to develop the advanced manufacturing industry, which is less land- or labour-intensive, based on new technologies and smart production. It is conducive to creating quality employment opportunities, and fostering the diversification of economic development. The 2021 Policy Address suggested re-organising the Government structure, including renaming the Innovation and Technology Bureau (ITB) as the Innovation, Technology and Industry Bureau to highlight the role of innovation and technology (I&T) in promoting the development of re-industrialisation in Hong Kong.
     Having consulted the Census and Statistics Department (C&SD), our reply to the various parts of the question is as follows:
     The ITB has accepted the key performance indicators put forth by the Advisory Committee on Innovation and Technology in 2017, which includes reversing the declining trend of the manufacturing sector's contribution to the gross domestic product (GDP) by 2020. In fact, the trend on the manufacturing sector's contribution to the GDP has remained largely stable in recent years, as opposed to the continuous decline in the past two decades or so. Not only does I&T and the development of re-industrialisation provide direct and quality job opportunities, it can also encourage relevant enterprises to set up other business operations in Hong Kong (such as marketing and promotion, sales and accounting, supply chain management), thereby driving the demand in other services sectors, creating more jobs and further diversifying Hong Kong's economy.
     There have been voices indicating that industries in Hong Kong are not limited to traditional manufacturing, and a broader perspective should be taken by including supporting services for the manufacturing sector to better reflect the industry's contribution to Hong Kong's economy. From C&SD's experience, services that support the manufacturing sector also support other industries at the same time. Respondents may not keep separate statistics on its revenue that comes from the manufacturing industry. The ITB and Innovation and Technology Commission will continue to maintain close liaison with the C&SD to review the industrial classification under the manufacturing industry and explore the feasibility of developing such metrics, while keeping abreast of the latest development in international practices on measuring the contribution of the manufacturing industry to the economy, in order to ensure that the statistics can reflect the actual situation.
     Many enterprises have implemented re-industrialisation successfully in recent years, and some others have also expressed interests in investing in smart production, and have been proactively upgrading their existing production lines. These momentums demonstrate that our work in promoting re-industrialisation is on the right track, and is gradually bearing fruits. As the development of various land sites and facilities for supporting advanced manufacturing are in the pipeline, we can foresee that the development of re-industrialisations will continue to gain traction.
     The National 14th Five-Year Plan and the development of the Greater Bay Area provide Hong Kong with endless opportunities. With our strong R&D capabilities and advantages of internationalisation and marketisation, we will continue to work in close collaboration with the industry, the academia and research institutes, to proactively integrate Hong Kong into national development, and enhance our work in promoting I&T and re-industrialisation.
Ends/Wednesday, June 15, 2022
Issued at HKT 11:40
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