Chapter IV 

Industry Development and Reform

55. Industries are the cornerstone of economic development. The Government will leverage market forces through enhanced measures, such as flexible land grant arrangements, tax concessions, capital subsidies and talent grooming, so as to drive industry development.

56. The service industry accounts for a significant share of our economy. In response to an increasingly dynamic market environment and rapid technological change, the Government will pursue structural upgrades of our industries. We will consolidate our traditional strengths in sectors such as financial and legal services, while actively nurturing emerging ones, including advanced manufacturing, life and health technology, new energy, AI and data science, to create more high-quality job opportunities, increasing people's income and enhancing overall economic efficiency.

(A) Formulate Preferential Policy Packages to Attract More Enterprises

57. The Financial Secretary will lead the relevant policy bureaux, departments, and public organisations in formulating packages of preferential policies including land grants, land premiums, financial subsidies, and tax incentives, to attract high value-added industries and high-potential enterprises to set up in Hong Kong, thereby promoting high-quality development.

58. The Office for Attracting Strategic Enterprises and Invest Hong Kong (InvestHK) can use the policy packages flexibly during negotiations with enterprises on settlement details, then report to the Financial Secretary for approval. The Government will also explore the establishment of a more flexible mechanism, including allowing the Chief Executive and the Financial Secretary to introduce tax incentives that comply with international standards.

(B) Attract and Develop Industries

59. The Government attaches great importance to fostering high value added advanced manufacturing using I&T, and promoting new industrialisation. With the sustained growth in the output of new industries, the Government will step up its efforts to nurture emerging industries locally and attract those from outside Hong Kong, promoting the diversified development of our economy.

Attract an Aircraft Recycling Enterprise and Train Relevant Talents

60. The Government has reached an agreement of intent with a leading European aeronautic services company to operate in Hong Kong. The company will provide aircraft dismantling, as well as recycling and trading services of high-value parts. This will drive the development of industries such as trading, insurance, financing and leasing, creating new job opportunities through the sector's value chain. The company will also collaborate with the Hong Kong International Aviation Academy to provide talent training in relevant professions, which will in turn consolidate Hong Kong's status as an international aviation hub.

Promote the Development of the Life and Health Technology Industry

61. Hong Kong's life and health technology research is flourishing, underpinned by a mature system connecting the Government and the industry, as well as the academic, research and investment sectors. It aligns with the rise of innovative drugs through home-grown research and development (R&D) in our country and expands into international markets through patent licensing, delivering substantial economic and strategic opportunities for Hong Kong.

Attract More Top-notch International and Mainland Pharmaceutical Companies to Set up Operations in Hong Kong

62. We will attract more pharmaceutical companies to set up operations in Hong Kong to conduct clinical trials and medical treatments for rare disease drugs, high end cancer drugs and advanced therapy products. We will proactively enhance the efficiency of patient recruitment and trial initiation. We will also make use of the GBA Clinical Trial Collaboration Platform in the Hetao area, enabling pharmaceutical companies to conduct trials simultaneously in Hong Kong and Shenzhen. Concurrently, we will prepare to set up the International Clinical Trial Academy for nurturing clinical trial professionals in the GBA and host international summits and forums.

63. The Government will set up the Hong Kong Centre for Medical Products Regulation and submit a legislative proposal on regulating medical devices in 2026, with a view to establishing the centre as an internationally recognised regulatory authority for medical products as soon as possible. We will expedite the "1+" mechanism for new drugs, piloting priority evaluation and approval of innovative drugs recommended by the Hospital Authority (HA) for treatment of severe or rare diseases. This will help pharmaceutical companies bring innovative drugs to the market sooner. In addition, we will promote the standardisation of clinical data within the GBA and establish a real-world data platform to help pharmaceutical companies bring innovative drugs to the Mainland and international markets more quickly.

64. The HA will establish the Office for Introducing Innovative Drugs and Medical Devices. It will identify the needs and benefits of innovative drug treatments for local patients through big data analytics, bringing in innovative drugs and medical devices that are cost-effective and beneficial to patients.

Promote the Development of the New Energy Industry

65. To meet the country's "dual carbon" targets, Hong Kong is working to achieve carbon neutrality before 2050, in which the new energy industry will play a crucial role. We will expedite the application of green technologies, create quality employment opportunities and build an influential industry chain of new quality productive forces. Relevant measures are as follows:

(i) We will develop a sustainable aviation fuel (SAF) industry chain. Major airports and airlines in Europe, America and Asia have gradually raised their SAF consumption targets. The Government will work with the Mainland authorities to enable a local enterprise, one of the world's major SAF suppliers, to develop its business in the GBA, covering upstream collection of raw materials, the setting up of production plants and large-scale production, to dovetail with the specified target SAF consumption ratio for flights departing from the Hong Kong International Airport (HKIA) by 2030. An SAF blending facility will also be constructed to boost the competitiveness of our SAF industry and bolster the bargaining power of airlines.

(ii) The Government has made top-level planning in the Strategy of Hydrogen Development in Hong Kong announced last year, and 28 hydrogen energy trial projects are underway or under preparation. These projects cover, among other things, hydrogen buses, hydrogen street washing vehicles and a public hydrogen filling station in the New Territories. We will formulate hydrogen standard certification, establish public hydrogen filling facilities on Hong Kong Island and in Kowloon, press ahead with more trial projects, and develop the GBA Hydrogen Corridor in collaboration with the Guangdong Province.

(iii) The Government is pushing forward the construction of Hong Kong's first large-scale electric vehicle (EV) battery recycling facility at the EcoPark, which is expected to commence operation in the first half of 2026. The recycled black mass converted from locally retired batteries will be supplied to the Mainland and neighbouring regions, promoting the development of the EV battery recycling industry.

Promote the Development of the AI and Data Science Industries

66. AI is the key driving force of a new round of scientific and technological revolution, as well as industrial transformation. With our advantages in scientific research, capital, data and talent, together with abundant use cases, Hong Kong is poised to become a global hub for AI development. The Government will step up the promotion of AI as a core industry for Hong Kong's development, guided by the strategy of "strengthening infrastructure and promoting the application-oriented approach". We will promote the development of AI+ and facilitate an extensive and deep integration of AI across sectors, with a view to achieving "industries for AI" and "AI for industries", while placing strong emphasis on safety risk prevention.

Promote AI Scientific Research and Leverage Our Wealth of Talents

67. The Government has bolstered its efforts to nurture local and attract overseas and Mainland AI professionals. Relevant measures include setting up the AIR@InnoHK research cluster that pooled over a thousand experts. Combined with nearly a thousand AI companies that have gathered in our I&T parks, this helps enhance our AI R&D capabilities and lay the foundations for wide-ranging AI applications.

68. The Government earlier announced the launch of the $3 billion Frontier Technology Research Support Scheme. It will help funded universities attract international top-notch scientific researchers in AI and other fields to Hong Kong to spearhead basic research in frontier technologies. The scheme will invite applications soon.

69. We have also earmarked $1 billion for the establishment of the Hong Kong AI Research and Development Institute in 2026, to facilitate upstream AI R&D, the midstream and downstream R&D outcome, and the expansion of use cases.

Mobilise Capital for AI Investment

70. Hong Kong has developed full-fledged financing channels covering angel investment, venture capital, private equity funds, patient capital and initial public offerings (IPOs), effectively linking capital and quality projects around the world. The Hong Kong Investment Corporation Limited (HKIC), as the "patient capital" institution wholly owned by the Government, has invested in a number of AI enterprises engaging businesses in fields such as AI Large Language Model, cloud computing and AI drug development. It will continue to support the development of the AI industry through investments.

Strengthen Advantages in Data for AI

71. Hong Kong will further capitalise on the advantages under "One Country, Two Systems", and promote the early establishment of a compliant and secure mechanism for cross-boundary flow of Mainland data to Hong Kong Park for scientific research purposes, supporting AI application testing and innovation.

72. With the establishment of Cyberport's AI Supercomputing Centre and the Government's launch of the AI Subsidy Scheme, we will put up for tender a site of about 10 hectares at Sandy Ridge in the North District this year for the development of a data facility cluster. It will provide advanced computing power facilities, promoting the development of data and AI-related industries.

Expand the Application of AI

73. The development of AI must be steered by safety and driven by application. The Government attaches great importance to the governance and risk management of AI applications. Information systems of the Government and public organisations must undergo repeated testing, audits and continuous monitoring to ensure security.

74. Meanwhile, the widespread application of AI can create greater value to our society. Under the leadership of the AI Efficacy Enhancement Team, the Government will promote AI applications in government services. The Digital Policy Office will roll out various AI applications in respect of data analysis, customer service and document processing, to promote extensive application in departments, while ensuring security and controllability.

75. Departments will also develop their own AI solutions. Examples include using AI to help the public make non-emergency reports to the police via voice messages and expedite the vetting and approval of transport licences; enhance traffic management by diverting traffic flow according to real-time data; bring convenience to members of the public by providing an AI Assistant for users of the "iAM Smart" and the "Digital Corporate Identity" platforms to answer enquiries and offer personalised services, as well as to recommend suitable funding schemes and public service support for enterprise, especially small and medium enterprises (SMEs); render carer support through an AI chatbot to give carers more convenient access to information; improve the accuracy of histopathological and cytological analysis by introducing digital pathology technology and the application of AI, and enhance patient care efficiency, hospital management and service quality by promoting the application of generative AI in clinical workflows.

76. The Government will also promote AI business applications. The Hong Kong Monetary Authority (HKMA), in collaboration with Cyberport, has launched the second cohort of the AI Sandbox initiative to promote AI applications to more financial institutions. In addition, the HKMA is developing an AI model evaluation approach to step up testing on the system security of financial institutions. The DEVB will provide subsidies to encourage the application of AI in private sector construction works. The Department of Justice (DoJ) will also establish an inter-departmental working group to review the legislation needed to support a wider application of AI.

(To be continued.)

Ends/Wednesday, September 17, 2025
Issued at HKT 11:50

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