Following is a question by the Hon Paul Tse and a written reply by the Secretary for Innovation, Technology and Industry, Professor Sun Dong, in the Legislative Council today (June 25):
 
Question:
 
     The Innovation and Technology Commission (ITC) launched the Technology Voucher Programme (TVP) in 2016 to subsidise enterprises in using technological services on a matching basis to enhance their productivity. It has been reported that since the launch of TVP, a total of nearly 35 000 projects involving a total of over $6.2 billion of public funding have been approved. However, suspected abuse cases have been found in a number of projects, including: (i) individuals with the same name registering with different companies and repeatedly applying for subsidies for the research and development of the same projects, (ii) nearly 2 000 projects and over 1 000 projects being approved with the same funding amount (accurate to one decimal place and some economists have described the figures as rather "statistically odd"), (iii) some applicant companies are suspected of having no actual operational activity or having already closed down, and (iv) there are doubts about the time taken to complete the development of the approved projects (e.g. $180,000 was granted to a company that updated its website and developed its mobile phone application in a speedy manner within two days; there was also a case in which a company developed an "Intelligent Anatomical Model Measurement System" in 27 days and was granted $480,000), etc. This has aroused suspicion that there are loopholes in the monitoring of TVP. In this connection, will the Government inform this Council:
 
(1) whether the authorities have conducted random checks for subsidised projects granted under TVP in the past three years; if so, of the number and content of the random checks conducted and, among them, the respective numbers of applications suspected and confirmed to be abusive; if not, whether it will expeditiously activate the investigations in the light of the aforesaid media reports;
 
(2) in respect of each application involving abuse of public subsidies or even fraud under TVP, of the follow-up actions actually taken by the authorities and the respective amounts of subsidies successfully and unsuccessfully recovered in such cases;
 
(3) as the aforesaid reports have pointed out that some companies funded under TVP closed down shortly after receiving grants, of the measures put in place by the authorities to eradicate this situation; whether enterprises receiving approved grants will be required to regularly submit data on the use of technology projects/systems for monitoring purposes; and
 
(4) whether the authorities will conduct a comprehensive review of TVP's effectiveness since its implementation; if so, of the details; if not, the reasons for that; whether they have assessed the actual increase in productivity, competitiveness and entrepreneurial return achieved by enterprises that applied for subsidies after upgrading their technological level?
 
Reply:
 
President,
 
     In response to the Hon Paul Tse's question, our consolidated reply is as follows:
 
     The Government ceased accepting new applications for the Technology Voucher Programme (TVP) after December 31, 2024. To ensure proper use of public funds, the Hong Kong Productivity Council as the TVP Secretariat (the Secretariat) has been rigorously reviewing the applications, final project reports and supplementary information submitted by the applicants, and conducting random on-site checks on individual projects in order to ensure that the applications are eligible for funding and that the project deliverables conform to relevant requirements. When submitting TVP applications, every applicant must provide documentary evidence proving its substantive business operations in Hong Kong. Relevant documents include information on business operations, financial operations and employment. If any suspicious cases are identified, Innovation and Technology Commission will immediately withhold processing the relevant cases, cease disbursing any payments, and refer them to law enforcement agencies for follow-up. 
 
     After rigorous review by the Secretariat, each eligible TVP application will be assessed based on individual merits and considered on a case-by-case basis. According to the TVP Guidance Notes, the TVP Committee/the Secretariat will assess whether the project budget is reasonable by making reference to market prices of the technologies as known to them. If a project is worthy of support in principle but the project budget is higher than the estimated price, the Secretariat will, on a modular basis, adjust the level of funding with reference to the project cost approved by the TVP Committee. Therefore, projects/technological solutions of similar nature and scale (e.g. Enterprise Resource Planning System) will have the same approved amounts after the aforementioned adjustments. In addition, since the amount of funding is calculated on the basis of the funding ratio, there may be odd cents after the calculation.
 
     TVP has established rigorous checking mechanism to verify whether the approved projects are implemented. Applicants are required to implement the project in accordance with the approved application and funding agreement, and submit a final project report to the Secretariat upon completion of the project, together with evidence of deliverables (such as hardware photos and system screen captures), copy of invoice(s) and corresponding receipt(s) in relation to the payment for each expenditure item, an audited statement of income and expenditure for the project from an independent auditor (if the approved funding exceeds HK$50,000)/a final income and expenditure statement prepared by the applicant (if the approved funding is HK$50,000 or below). The Secretariat will also conduct random on-site checks on individual projects, requiring applicants to demonstrate the developed technological solutions on the spot so as to verify whether they comply with the requirements of the approved application and the TVP. Taking the cases with "progress issues" mentioned by media report and quoted in the question as an example, the final reports failed to pass the Secretariat's assessment and no funding was disbursed.
 
     According to the TVP funding agreement, applicants are required to keep the relevant hardware and software for at least one year after project completion, and keep a proper and separate set of books and records for the project for seven years after project completion for checking. The Secretariat will conduct random checks on applicants to see if they comply with the relevant requirements.  
 
     In the past three years, the Secretariat has conducted random on-site checks on 1 860 projects and referred 15 suspicious cases to law enforcement agencies for follow-up. The Secretariat will recover the funding from applicants convicted in the cases. As the investigations/judicial proceedings by the law enforcement agencies are still ongoing, we have no record of funding recovery for the time being.
 
     To assess the effectiveness of the TVP on the funded enterprises/organisations, we require enterprises/organisations to submit evaluation reports six months after project completion on whether the project could achieve the objectives of improving productivity, or upgrading or transforming their business processes. As at end-2024, 8 587 of the funded enterprises/organisations with completed projects had submitted evaluation reports to the Secretariat. Ninety-nine per cent of them were of the view that the projects were conducive to enhancing their competitiveness. Specific benefits include saving manpower, time and/or cost, increasing revenue, and upgrading/transforming/streamlining business processes.
 
     The Government conducted a fundamental review on the TVP in 2024 and considered that the programme has achieved its original intent. In recent years, the Government has continued to strengthen support measures for different industries, and many bureaux and departments have introduced more targeted funding schemes dedicated to the specific conditions or operational needs of individual industries. It was therefore decided that TVP would cease accepting new applications after December 31, 2024.
 
     The Secretariat will continue to review and enhance the vetting procedures of TVP so as to process the outstanding cases. In view of the large number of applications received before the deadline on December 31, 2024, the Secretariat has adopted a stringent vetting approach, requiring applicants to provide documents to prove that they have substantive business operations, the procurement procedures meet the requirements, and the budget and other details of the proposed technological solutions are reasonable and realistic. The Secretariat will continue to rigorously review the documents submitted by applicants for each application to ensure proper use of public funds.

Ends/Wednesday, June 25, 2025
Issued at HKT 11:30

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