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LCQ16: Promoting development of innovation and technology as well as re-industrialisation
     Following is a question by the Hon Jimmy Ng and a written reply by the Secretary for Innovation, Technology and Industry, Professor Sun Dong, in the Legislative Council today (December 14):
     It has been reported that the Secretary for Innovation, Technology and Industry indicated in July and October this year respectively his hope that within the current Government's term of office, the gross domestic expenditure on research and development (GERD) as a percentage of the Gross Domestic Product (GDP) was not lower than 1.5 per cent, and that the percentage of the contribution of the manufacturing industry to GDP could be increased from the current 1 per cent to 10 per cent within 10 years (the two goals). However, the about 110 indicators set in the 2022 Policy Address did not include the two goals. There are proposals pointing out that the Government may set more key performance indicators in relation to the development of innovation and technology (I&T), so as to make it easier for society to review the effectiveness of policies relating to I&T and re-industrialisation. In this connection, will the Government inform this Council:
(1) of the reasons why the two goals were not included in the indicators set in the 2022 Policy Address; whether it will plan to include the two goals in future Policy Addresses; if so, of the details; if not, the reasons for that;
(2) whether it will set more performance indicators for assessing the latest development of I&T in Hong Kong, such as GERD per capita, the ratio of public sector versus private sector expenditure on R&D, the number of persons employed in the I&T sector per 1 000 labour force, the share of sales volume of I&T products, and the proceeds from I&T-related patents and technologies; if so, of the details; if not, the reasons for that; and
(3) whether it will introduce more support measures for Hong Kong-invested manufacturing enterprises doing businesses on the Mainland, such as introducing more funding schemes in the short term to assist such enterprises in promoting industrial upgrading and business transformation, as well as extending the support measures only applicable to industrial and commercial enterprises in Hong Kong currently to Hong Kong-invested manufacturing enterprises outside Hong Kong, and set performance indicators for the relevant work; if so, of the details; if not, the reasons for that?
     Promoting the development of innovation and technology (I&T) is the work focus of this term of Government. We have been dedicated to enhancing the I&T ecosystem in Hong Kong by implementing initiatives through developing infrastructure, promoting research and development (R&D), nurturing talent, and supporting the industry, etc. At the same time, we are committed to promoting re-industrialisation to inject impetus to and diversify Hong Kong's economy.
     Having consulted the Commerce and Economic Development Bureau, a reply to the various parts of the question raised by the Hon Jimmy Ng is as follows:
(1) and (2) This year's Policy Address fully implements the National 14th Five-Year Plan's vision in supporting Hong Kong to develop into an international I&T centre and puts into practice the concept of result-oriented, announcing a series of initiatives in promoting R&D, re-industrialisation, etc. It is also active in promoting the development of technology industry by attracting high-quality enterprises and talents to Hong Kong, primarily focusing on industries in which we enjoy clear advantages and with strategic significance, such as life and health technology, artificial intelligence and data science, as well as advanced manufacturing and new energy technology.
     The work indicators set by the Innovation, Technology and Industry Bureau (ITIB) and its departments in the Policy Address cover various aspects. The objective is mainly for monitoring the progress of individual projects to facilitate timely enhancements or improvements. Some of the work indicators will help increase the gross domestic expenditure on R&D and the contribution of the manufacturing industry to the Gross Domestic Product, such as increasing the commitment of private capital in R&D projects under various Innovation and Technology Fund (ITF) schemes from $800 million in 2022 to $1.6 billion in 2027; subsidising the setting up of more smart production lines in Hong Kong under the Re-industrialisation Funding Scheme, with the target of increasing the cumulative number by four times from about 30 at present to over 130 in five years. That said, to achieve results proactively, the concerted effort from other relevant government departments, as well as the full co-operation from stakeholders in the industry, academia and research institutes is required.
     The Government will soon promulgate the Hong Kong I&T Development Blueprint (the Blueprint) to lay out the general directions and major strategies for Hong Kong's future I&T development in the coming five to ten years from the perspective of a top-level planning. It will also set out major facilitation policies under four broad development directions, including, inter alia, enhancing the I&T ecosystem and achieving re-industrialisation in Hong Kong. The Blueprint will set broad development targets for Hong Kong's future I&T development in the coming five to ten years and propose relevant reference development indicators to facilitate the review on the progress of Hong Kong's I&T development. The ITIB will brief relevant panels of the Legislative Council at the soonest possible after the promulgation of the Blueprint.
(3) The ITF administered by the Innovation and Technology Commission (ITC) has all along been financing projects that contribute to the I&T upgrading in our manufacturing and services industries and projects that facilitate I&T development. The ITF funding schemes on facilitating technology adoption have always welcomed applications from eligible local enterprises/institutions. For example, the Technology Voucher Programme under the ITF provides funding support on a matching basis to local enterprises/institutions in using technological services and solutions to improve productivity, or upgrade or transform their business processes. As at end October 2022, about 17 000 applications were approved for funding, over 95 per cent of which are small and medium-sized enterprises, involving total funding of around $2.8 billion.
     The Government's policy objective is to promote local R&D activities, thereby driving vibrant I&T development in Hong Kong. At present, the various R&D funding schemes under the ITF stipulate that the majority of the R&D work funded by the ITF should be conducted within the territory of Hong Kong. Given the close ties between Hong Kong and the Mainland, the ITC has allowed up to 50 per cent of the R&D work of an ITF project to be conducted (and the relevant expenditure to be incurred) in the Mainland. To match the pace of social and economic developments, the ITC will continue to closely monitor the implementation of the funding schemes and maintain close communication with stakeholders to provide support in different areas in order to inject impetus into the future development of the local I&T ecosystem.
     Apart from that, the Dedicated Fund on Branding, Upgrading and Domestic Sales (BUD Fund) and the SME Export Marketing Fund (EMF) under the Trade and Industry Department (TID) provide support for Hong Kong enterprises to expand their businesses and participate in marketing activities on the Mainland. The BUD Fund provides funding for Hong Kong enterprises (including the manufacturing industry) to set up offices and production lines on the Mainland, procure or lease machinery and equipment, carry out various publicity and promotion activities as well as develop their own brands. The EMF provides funding for enterprises to participate in export marketing activities to expand the Mainland market. In addition, the Trade and Industrial Organisation Support Fund under the TID provides funding for non-profit distributing organisations such as chambers of commerce to promote Hong Kong products and services on the Mainland, with a view to enhancing the overall competitiveness of the industries. The Government has set a key performance indicator of increasing the amount of funding approved for supporting small and medium enterprises to $900 million per annum on average in 2022 and 2023, which is an increase of 5 per cent over the annual average amount approved in 2019-2021.
Ends/Wednesday, December 14, 2022
Issued at HKT 11:45
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