Following is a question by the Hon Chan Chun-ying and a reply by the Acting Secretary for Commerce and Economic Development, Dr Bernard Chan, in the Legislative Council today (June 3):

Question:

     The Chief Executive stated in the 2025 Policy Address the promotion of intellectual property (IP) trading and the bolstering of IP financing. In this connection, will the Government inform this Council:

(1) as the Hong Kong Monetary Authority collaborated with the Government to launch an IP financing sandbox at the end of last year to assist pilot sectors in leveraging IPs for financing, of the status of the sandbox experiments to date; whether it has considered further expanding the participating banks and pilot sectors;

(2) as it is learnt that many Mainland enterprises hold substantial IP assets in the biotechnology, electronics and innovation and technology sectors, whether the Government will consider gradually including some Mainland enterprises in the sandbox to lay the foundation for future cross-boundary IP financing; and

(3) as the Government has earmarked $28 million to provide qualitative patent evaluation for innovation and technology enterprises and implement a two-year Pilot Patent Valuation Support Scheme, there are views that banks' frontline approving officers are most concerned about the liquidity and valuation stability of intangible assets, whether, while assisting innovation and technology enterprises with patent valuation, the Government will formulate a clear recognition framework or guidelines for the above Scheme, so that banks can directly incorporate the relevant evaluation results into the valuation basis for loan collateral?

Reply:

President,

     As the global economy rapidly shifts towards a development model centred on creativity, technology and innovation, intellectual property (IP), as an intangible asset protecting creative and innovative ideas, has become a key driver of business competitiveness and economic growth. The National 14th Five Year Plan expressed support for Hong Kong's development into a regional IP trading centre. This positioning of Hong Kong has been reaffirmed by the National 15th Five Year Plan.

     The Government has been taking forward a series of targeted new policies and measures in a multi-pronged manner to further improve the local IP trading ecosystem, enhance Hong Kong's capabilities in IP trading and financing, and consolidate Hong Kong's position and competitive advantages as a regional IP trading centre.

     Having consulted the Hong Kong Monetary Authority (HKMA), the consolidated reply to the question raised by the Hon Chan Chun-ying is as follows:

     To help innovation driven enterprises leverage their IP assets to obtain financing so that they can devote more resources to research and development (R&D) and commercialisation, the Commerce and Economic Development Bureau (CEDB) and the Intellectual Property Department (IPD), in collaboration with the HKMA, launched the IP Financing Sandbox (Sandbox) in end-December 2025 to assist pilot sectors, particularly the technology sector, in leveraging IPs for financing. Three major banks in Hong Kong and their clients from different sectors, as well as professional services organisations, are participating in the Sandbox. The aim of the Sandbox is to, through small scale pilot projects, provide a collaborative and risk controlled environment for key stakeholders, including banks, enterprises, valuation and legal professionals and other professional bodies, to participate in suitable IP financing projects on a "pioneer and pilot" approach as reference cases for the future. The Sandbox will help unlock a new financing channel, thereby supporting the commercialisation of outcomes of R&D as well as creativity, and promoting innovation and technology (I&T) as a key driver of economic growth. These pilot projects will provide valuable practical experience, enabling the aforesaid key stakeholders to collectively test out the full lifecycle of financing arrangements based on IP assets, build cross sector trust, capacity building and long term partnerships, and provide guidance and basis for follow up arrangements.

     We are pleased to note that there has recently been successful completion of financing approval under the Sandbox, and other pilot cases are also undergoing the approval process. The CEDB and the IPD will, together with the HKMA, collect stakeholders' views, consolidate market feedback and experience on the Sandbox, and make follow up arrangements (such as increasing the number of participating banks and pilot projects). Banks will conduct approval in accordance with their established procedures after taking into account risk and other relevant factors. It is therefore necessary for banks to have a good understanding of enterprises participating in pilot projects, so that they can conduct due diligence in accordance with regulatory requirements.

     At this stage, we will focus on leveraging the Sandbox to accumulate practical financing experience for local enterprises, and will closely monitor the latest developments in IP financing in both Hong Kong and the Mainland, so as to make the most appropriate arrangement for the next stage of work.

     In addition, to help small and medium enterprises (SMEs) address the challenges of IP valuation, the Government will launch a two-year Pilot Patent Valuation Support Scheme (Pilot Scheme) through the Hong Kong Technology and Innovation Support Centre (HKTISC) to support eligible local SMEs to conduct valuation of their patents and other IP assets, which will provide concrete information on the enterprises' assets to serve as a reference for credit financing.

     The Pilot Scheme, which is expected to be launched in the third quarter of this year, will adopt a matching grant model of one-to-one between the Government and eligible local SMEs and provide each enterprise of an approved application (approved enterprise) with a one off funding capped at $80,000 to support them in commissioning qualified valuation service providers to conduct quantitative valuation of their patents and other IP assets. If the IP assets of the approved enterprise include at least one Hong Kong patent granted under the Patents Ordinance (Cap. 514) that has also undergone substantive examination, the IPD's patent examiners will, through the HKTISC, provide free qualitative patent evaluation service based on the national standard for one Hong Kong patent designated by the approved enterprise concerned. Valuation service providers may, where appropriate, refer to the results of such qualitative patent evaluation in conducting quantitative valuation. The Government has earmarked $28 million to support the HKTISC in providing patent evaluation for I&T enterprises and implementing the two-year Pilot Scheme.

     The Pilot Scheme will provide high quality qualitative patent evaluation and reliable quantitative valuation for IP assets held by approved enterprises. This not only assists relevant SMEs in demonstrating the economic value of their IP assets, but also enhances understanding of the value of intangible assets by financial institutions and investors, enabling them to consider the market potential of SMEs' IP assets in a more comprehensive manner and increasing their confidence in investing in SMEs or establishing strategic partnerships with them. Relevant evaluation and valuation reports could also serve as references to banks and other financial institutions when they assess enterprises' applications for financing, loans, etc. The IPD had briefed a number of local banks, through the HKMA, on the active supporting functions of the Pilot Scheme in their assessment of enterprises' applications for financing, and the Pilot Scheme was positively received by the banks. The IPD is working with the HKTISC to actively prepare the concrete implementation arrangements and detailed execution plan for the Pilot Scheme. The IPD is also preparing a guidance document setting out the minimum information requirements for valuation reports provided by valuation service providers under the Pilot Scheme, so as to ensure consistency in the contents of such reports and assist banks in using them for credit assessment in compliance with prudent risk management principles. The Government will regularly review the overall progress of the operation of the Pilot Scheme, with a view to enhancing banks' acceptance of valuation reports.

     The Government will continue to capitalise on Hong Kong's advantages in legal and professional services, seize the opportunity brought by our country's support for deepening Hong Kong's development as a regional IP trading centre, and actively promote more IP trading and financing activities, with a view to further consolidating Hong Kong's position as a regional IP trading centre.

Ends/Wednesday, June 3, 2026
Issued at HKT 12:45

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