2 March 2015

Maintaining innovativeness in Hong Kong with more financing

The Hong Kong government has announced that it will further boost innovation through financing new enterprises and microfinancing. 

To further encourage financing of new enterprises, the Hong Kong Science & Technology Parks Corporation (HKSTPC) will earmark HK$50 million to set up a corporate venture fund for co-investment, on a matching basis with private funds, in startups which are located in the Science Park or have participated in its incubation programmes.  The Hong Kong Mortgage Corporation Limited (HKMC) to expand and enhance the Microfinance Scheme.

A proposed injection of HK$5 billion to the Innovation and Technology Fund will help strengthen support for relevant enterprises, said John Tsang, Hong Kong's Financial Secretary, in his Budget speech for 2015.

In addition to providing startups with enhanced hardware and software support through the HKSTPC with the Leading Enterprises Acceleration Programme, Tsang said free online government informatio
n will be released in digital formats to encourage development of more applications by startups.  "Many startups have developed a wide range of mobile applications by exploiting such public sector information, including information on real-time traffic and weather conditions," he said.

Financial technology will be another focus for Hong Kong. "Financial technologies that help facilitate functions such as payment, clearing and settlement systems, big data analytics, cloud computing, information and risk management and network security can enhance operational efficiency and help open new modes of development for the financial sector. 

"Being an international financial centre with years of experience in technology, Hong Kong is an ideal place for developing financial technologies. I have asked the Secretary for Financial Services and the Treasury to set up a steering group to study how to develop Hong Kong into a financial technology hub together with industries, research and development institutions as well as regulatory authorities," he said.

The Secretary for Commerce and Economic Development, Gregory So, earlier shared what Hong Kong is doing to boost innovation and competitiveness in a written reply to questions from the Honourable Martin Liau in the Legislative Council this February.

"Innovation and technology (I&T) are important economic drivers. They also underpin the development of other economic sectors. To fully capture the opportunities provided by advancements in technology and the commercial potential they offer, the government is committed to promoting the development of I&T in Hong Kong, and has proposed to set up the Innovation and Technology Bureau to provide focused and high-level leadership and stronger policy co-ordination. In his latest Policy Address, the Chief Executive also proposed to inject HK$5 billion into the Innovation and Technology Fund (ITF) and include the Research and Development (R&D) Cash Rebate Scheme under the ITF.

"Furthermore, the government will continue to provide sustained and comprehensive support for Hong Kong's I&T development through different measures. There are five strategic directions, namely the provision of world-class technology infrastructure for enterprises, research institutions and universities; financial support for stakeholders in the industry, academia and research sectors to develop and commercialise their R&D results; nurturing talent; strengthening science and technology collaboration with the Mainland and other economies; and fostering a vibrant culture of innovation. Recent examples include:

(a) focusing on the promotion of private sector investment in R&D and realising/commercialising R&D results, such as -

(i) extending the funding scope of the ITF to render stronger support to downstream R&D and commercialisation activities;

(ii) waiving the industry sponsorship requirement for R&D projects under the ITF initiated by government bureaux/departments and statutory bodies, and increasing the funding ceiling of the Public Sector Trial Scheme under the ITF to a maximum of 100% of the actual cost of the original R&D project;

(iii) launching a new Technology Start-up Support Scheme for Universities (TSSSU) to provide an annual funding of up to HK$24 million to six local universities, initially for three years, to encourage their students and faculty members to start technology businesses and commercialise their R&D results; and

(iv) launching a new Enterprise Support Scheme (ESS) around March 2015. ESS will replace the Small Entrepreneur Research Assistance Scheme to provide funding support for companies of all sizes to conduct in-house R&D projects. The funding ceiling for each project will be HK$10 million, with no requirement for recoupment of (the) government's contribution;

(b) development of the HK$4.9 billion Hong Kong Science Park (Science Park) Phase 3 with a strong focus on green technology; and

(c) implementation of the recommendations of a review of the Science Park and industrial estates (IEs), including the strengthening of the Science Park's role in developing the I&T ecosystem; suitably raising the development density of the park to optimise land use therein for the development of new R&D facilities; and proceeding with the formulation of a new IE policy to enhance the value chain of the I&T industries in Hong Kong and further revitalise the IEs."

On the applied R&D front, So shared that the government set up five R&D Centres in 2006 to drive and co-ordinate R&D work in five selected technology areas. He said: "Over the years, the Centres have undertaken over 700 R&D projects, with a total funding amount of over HK$3.9 billion from the ITF. 

"Examples include the 'Finer Nu-Torque Cotton Yarn Production' technology jointly developed by the Hong Kong Research Institute of Textiles and Apparel (HKRITA) and The Hong Kong Polytechnic University; the 'E-Lock-Based Enabling Technology' developed by the Hong Kong R&D Centre for Logistics and Supply Chain Management Enabling Technologies (LSCM) in collaboration with the Customs and Excise Department for facilitating logistics flow between Hong Kong and the Mainland; and a tracking system jointly developed by the HKRITA, the LSCM and the Applied Science and Technology Research Institute for keeping track of the whereabouts of institutionalised elderly people."

Building a pipeline of skilled human resources is on-going. "On nurturing science and engineering talents, in the 2013-14 academic year, around 34,000 students were enrolled in University Grants Committee (UGC)-funded programmes in science discipline and engineering and technology discipline, representing about 35% of total enrolment. They are the new blood to serve industry needs," said So.

The government has also created incentives to encourage university graduates to pursue I&T careers, including: 

(a) Innovation and Technology Scholarship Award Scheme supported by the Innovation and Technology Commission (ITC)

(b) Hong Kong PhD Fellowship Scheme by the Research Grants Council (RGC), for which 4,785 applications from 106 countries/regions were received for the 2013-14 academic year. So shared that 185 candidates from 33 countries/regions have accepted offers for the fellowship.

(c) Internship Programme by the ITC. Over 1,700 internship positions have been provided since the inception of the programme;

(d) Early Career Scheme by the RGC to attract, support and nurture new junior faculty members.

(e) Incubation Programmes at Science Park and Cyberport which have benefitted over 510 and 260 companies respectively; and

(f) Instilling a vibrant vulture on innovation with activities such as the annual InnoTech Month.

"To encourage and induce enterprises to deploy resources for R&D, the R&D Cash Rebate Scheme launched by ITC in April 2010 provides cash rebates on the investment by enterprises in conducting R&D projects either funded by the ITF or in partnership with designated local public research institutions. To enhance the effectiveness of the Scheme, ITC increased the level of cash rebate from 10% to 30% with effect from February 1, 2012. Besides, under the current tax system, we already allow full deduction on expenditure incurred by a business enterprise for carrying out R&D related to its trade, profession or business, including capital expenditure (such as for the purchase of plant or machinery)," So added.

Thirdly, So said the government is working on diversifying industries so as to enhance the overall competitiveness of Hong Kong. "Since its establishment in 2013, the Economic Development Commission (EDC), led personally by the Chief Executive, has been studying how to make use of Hong Kong's prevailing advantages and opportunities. The EDC has also been exploring the overall strategy and policy to broaden our economic base and enhance our long-term development, and identifying industries which present opportunities for Hong Kong's further economic growth," he said.