RTHK's Letter to Hong Kong by Financial Secretary Paul Chan

18-03-2018

Good morning, Hong Kong.

I’m happy to talk to you, this lovely, spring morning, about a subject the people of Hong Kong hold dear to their hearts: how to invest our resources wisely for tomorrow, for our people, and for Hong Kong.

That, and more, was certainly on my mind in putting together the 2018/19 Budget.

In it, I focused on three main objectives: diversifying our economy, investing for the future, and building a caring and sharing community.

This morning, allow me to focus, for the most part, on that first objective, so critical to our economic future: expanding our economy and providing more quality jobs for our people.

Innovation and technology lies at the heart of that objective – for Hong Kong, certainly. And for much of the increasingly globalised, technology-transforming world we live in.

And, as our Chief Executive, Mrs Carrie Lam emphasised in her Policy Address last October, “innovation and technology is not just a single industry but a new model of development” – one that sets new industries in motion, creates wealth and well-being, and ensures a flourishing future for our youth. And theirs.

We all share the vision that Hong Kong needs to embrace innovation and technology as the engine for future economic growth. More importantly, we must ensure that its applications can bring real benefits to Hong Kong.

To that good end, I have set aside over HK$50 billion in this budget in addition to the $10 billion funding reserved last year. We will focus on developing four areas that Hong Kong has competitive strength, namely biotechnology, artificial intelligence, smart city and financial technologies.

Some HK$20 billion will drive the first phase of the Hong Kong-Shenzhen Innovation and Technology Park, which will, soon enough, serve as an I&T hub of Hong Kong.

It will help us better leverage the synergies of the world-class financial and professional services of Hong Kong, the vibrant tech business sector in Shenzhen, as well as the advanced manufacturing in other cities in Guangdong Province. In short, the Hong Kong-Shenzhen Innovation and Technology Park will be a critical project in realising the enormous potential of the emerging Guangdong-Hong Kong-Macao Bay Area development.

I have also allocated HK$10 billion to Science Park. Of that, our flagship technology centre will employ about HK$3 billion for research-focused infrastructure. The remainder will be used to support Science Park’s dynamic mix of global and local tech tenants and to set up a Smart Campus.

However, the key for us to succeed, I believe, does not lie in the infrastructure we built, but in the pool of talent that we are able to attract and nurture. This is the reason why I have allocated HK$10 billion for establishing two research clusters – one for healthcare technology, the other for artificial intelligence and robotics technologies. The objective is to attract more renowned international research institutions and technology companies to Hong Kong and to bring in more experts from around the world, thereby helping us nurture our home-grown talent.

I’m confident, let me add, because of our encouraging track record in this regard. For example, in late 2016, the celebrated Karolinska Institutet of Sweden opened its first overseas research facility for Reparative Medicine at Science Park.

Then, last September, the Massachusetts Institute of Technology opened its first overseas Innovation Node here, providing entrepreneurial education and training for students and researchers from MIT and from Hong Kong as well.

MIT has also established a consortium here for R&D collaboration, with the support from the Hong Kong University of Science and Technology. To date, our Innovation and Technology Fund has supported 13 of the MIT-led consortium’s R&D projects, ranging from Internet-of-things for intelligent buildings and transport to e-learning research.

MIT and Karolinska are collaborating with Hong Kong R&D talent and institutions. Building on these, the two planned research clusters will expand our innovation and technology talent pool and provide more opportunities for local graduates.

In fact, this Government is accelerating that promise in numerous ways. The Innovation and Technology Fund will receive HK$10 billion injection to continue its critical support to applied research and development.

And the Technology Talent Scheme will be launched later this year, thanks to a HK$500 million Budget allocation. New initiatives include the creation of a Postdoctoral Hub scheme, designed to help recruit post-doctoral talent for our research institutions. The scheme will also fund local companies on a matching basis to train their employees in high-end technology.

And to encourage companies to boost their R&D, we will offer a 300 per cent tax deduction to companies for the first HK$2 million spending in R&D, with a 200 per cent deduction for the remainder. The legislation for that tax deduction is now being drafted.

Our I&T future must be broadly based. Which is why I set up, in last April, a Committee on Innovation, Technology and Re-industrialisation. And I’m pleased to note that our Data Technology Hub and Advanced Manufacturing Centre will be up and running in 2020 and 2022, respectively.

To further support start-ups and promote the development of digital technology ecosystem, I will also allocate $200 million to Cyberport for a host of initiatives. Cyberport, I should mention, will be provided with another $100 million for promoting e-sports, a fast-growing sector with tremendous potential.

And the HK$1 billion I’ve earmarked for a Construction Innovation and Technology Fund will help that critically important industry embrace innovative technology.

Ladies and Gentlemen, innovation and technology must do more than power our economy. More than boost our GDP and our corporate and personal wealth. It must also serve the community, involve each and every one of us, and help build Hong Kong into a more inclusive society.

To this end, I have earmarked $1 billion for the Innovation and Technology Fund for Application in Elderly and Rehabilitation Care, to subsidise elderly and rehabilitation service units to try out and procure technology products, so as to improve the quality of life of service users as well as reduce the burden and pressure on care staff and carers.

Some of you may be aware that the 2nd edition of Sonar Hong Kong, a global celebration of electronic music, virtual-reality and interactive art, was staged at the Science Park yesterday. Among the show’s stars, so I’m told, was Sophia, a robotic sensation created right here in Hong Kong.

Indeed, Sophia was recently named the first “Innovation Champion” of the United Nations Development Programme, with a mission to boost sustainable development and innovation in the Asia-Pacific.

Hong Kong needs more of those – the human as well as the humanoid.

I wish you all a happy and leisurely Sunday and a year brimming with promise and possibilities.

Thank you.

Your Financial Secretary,
Paul MP Chan

18 March 2018