Budget Speech

Innovation and Technology

64. The development of I&T will bring huge economic benefits to Hong Kong.  The intellectual property so generated can be commercialised to drive ancillary economic activities, thus creating quality employment opportunities and enabling people to live comfortably by adopting new technology.

65. The current-term Government spares no effort in promoting I&T development, focusing on four areas, namely biotechnology, artificial intelligence, smart city and Fintech.  I have allocated sufficient resources, with a commitment of over $100 billion so far.

66. To develop I&T, we need a robust ecosystem and the Government aims to establish through various I&T policy initiatives.  We have stepped up support for the scientific research and I&T sectors by developing I&T infrastructure, promoting research and development (R&D), pooling talent, supporting enterprises and promoting re-industrialisation.  All these efforts have brought significant enhancements to the local I&T ecosystem.

Developing Innovation and Technology Infrastructure

67. "One cannot make bricks without straw".  We need quality infrastructure to attract I&T talent, and facilitate the operation of I&T enterprises.  In last year's Budget, I allocated $3 billion to the Hong Kong Science and Technology Parks Corporation (HKSTPC) for constructing R&D infrastructure and facilities such as laboratories.  The construction of some facilities has commenced and they will gradually come into operation.  Meanwhile, Stage 1 of the Science Park Expansion Programme is also underway.  It will provide an additional floor area of around 74 000 square metres upon its scheduled completion this year.

68. The HKSTPC is also working in full swing to develop a Data Technology Hub and an Advanced Manufacturing Centre in Tseung Kwan O Industrial Estate to support and promote smart production activities and high-end manufacturing industries which have great demand for data services.  The two projects are expected to be completed in 2020 and 2022 respectively.

69. Meanwhile, Cyberport has built a digital technology ecosystem with over 1 200 companies and start-ups, and nurtured over 500 start-ups after years of growth.  I will earmark $5.5 billion for the development of Cyberport 5.  This will serve to attract more quality technology companies and start-ups to set up their offices in Cyberport and provide a pathway for young people to pursue a career in I&T.  The expansion project is expected to provide about 66 000 square metres of floor area, and include facilities such as offices, co-working space, conference venues and data service platforms.  We will proceed with the statutory town planning procedures with a view to commencing construction in 2021 for completion in 2024 at the earliest.

70. The Hong Kong-Shenzhen Innovation and Technology Park at the Lok Ma Chau Loop will become the basecamp for I&T development in Hong Kong.  In last year's Budget, I set aside $20 billion for the Park's first stage construction works, which is now in good progress.  Our target is to make the first batch of land available by 2021 for Phase 1 superstructure development.  The Park will provide essential infrastructure for the sustainable I&T development in Hong Kong.  I will allocate additional resources to ensure timely development of the Park as a world-class R&D hub.

Promoting Research and Development

71. R&D is the foundation of the development of I&T.  Hong Kong enjoys a unique edge in this area.  To promote local R&D activities, we injected $10 billion into the Innovation and Technology Fund (ITF) last year to support the continued operation of existing ITF funding schemes and introduce various new initiatives.  Furthermore, the Policy Address announced the injection of $20 billion into the Research Endowment Fund of the Research Grants Council under the University Grants Committee (UGC) to provide sufficient funding.

72. The Government has provided funding of $10 billion to establish two innovative clusters in the Science Park, namely "Health@InnoHK" focusing on healthcare technologies and "AIR@InnoHK" focusing on artificial intelligence and robotics technologies.  The two clusters give us an edge in pooling top-notch local, Mainland and overseas universities, scientific research institutions and enterprises to undertake R&D activities together.  They can also seek research funding from the ITF.  A number of leading universities like Harvard University, Stanford University, Imperial College London, University College London and Johns Hopkins University have expressed interest in joining the two clusters and collaborating with local universities.

73. In respect of applied R&D, funding for Technology Transfer Offices of designated universities, the Technology Start-up Support Scheme for Universities, State Key Laboratories and Hong Kong branches of the Chinese National Engineering Research Centre will be doubled to support more R&D work and the realisation of R&D results.  An additional sum of not less than $800 million will be provided over five year starting from 2019-20.

74. Technology enterprises are essential drivers of a technology-based economy.  To encourage more enterprises to engage in R&D in Hong Kong, the Government has provided a two-tiered enhanced tax deduction for eligible R&D expenditure of enterprises incurred after 1 April 2018.

75. Scientific exploration and academic research in universities lay the foundation for Hong Kong's I&T development.  I will set aside a dedicated provision of $16 billion for UGC-funded universities to enhance or refurbish campus facilities, in particular the provision of additional facilities essential for R&D activities (such as laboratories), with a view to creating an optimal teaching and research environment for university students and R&D staff.  I hope that universities will, in developing or enhancing hardware, give due and priority consideration to I&T needs to ensure that their teaching and research facilities can meet the objective of nurturing I&T talent.

Pooling Innovation and Technology Talent

76. In the face of keen global competition for technology talent, we introduced the Technology Talent Admission Scheme in June last year to expedite the admission of such talent to undertake R&D activities in Hong Kong.  Participating enterprises are required to employ local employees and interns concurrently.  So far, over 200 places have been approved under the scheme.  We will review the implementation details of the scheme in the first half of this year.

77. The Researcher Programme has so far sponsored over 3 700 local graduates to join the I&T industry.  The Postdoctoral Hub Programme launched last year has also sponsored over 350 postdoctoral talents to pursue a career in R&D.  To attract more local graduates to the industry, we will increase, with immediate effect, the monthly allowance from $16,000 to $18,000 for researchers with a Bachelor's degree, and from $19,000 to $21,000 for researchers with a Master's degree.  We will also extend the funding period of both the Researcher Programme and the Postdoctoral Hub Programme from two years to three years with immediate effect.  This means R&D institutes or enterprises can hire relevant R&D talents for three years which give them ample time for demonstrating their professional strengths in R&D projects.

78. Accommodation is an issue pertaining to the recruitment of researchers.  The HKSTPC is constructing an InnoCell, which will offer about 500 residential units with flexible design to tenants, incubatees or visiting researchers in the Science Park.  This project is expected to be completed by 2021.

79. To pave the way for nurturing local technology talents, we will also encourage the promotion of popular science education in schools.  I will deploy $500 million to implement the IT Innovation Lab in Secondary Schools Programme in the coming three school years.  Each secondary school benefiting will be granted $1 million to procure the necessary information technology (IT) equipment and professional services, and organise more relevant extra-curricular activities to deepen students' knowledge of cutting-edge IT, such as artificial intelligence, blockchain, cloud computing and big data, with a view to helping young people build a good IT foundation early during their secondary school years.  In addition to financial support, the Office of the Government Chief Information Officer (OGCIO) will set up a one-stop professional support centre to provide assistance.

Supporting Technology Enterprises

80. Technology enterprises and start-ups in particular, are an integral component of the I&T ecosystem, with an important role in facilitating commercialisation and application of R&D results as well as developing innovative ideas.  In 2014, we launched the Technology Start-up Support Scheme for Universities, which has so far supported 188 start-ups established by university teams to venture beyond their campus.  Some of the funded start-ups have secured investment exceeding $300 million.  I will raise the maximum annual funding for each university from the existing $4 million to $8 million starting from 2019-20 to better nurture university start-ups.

81. Last year, I reserved $7 billion for the HKSTPC to enhance support for its tenants and incubatees, with part of the funding dedicated to expand Incubation Programme.  The programme has been well-received, with over 120 applications so far.  Besides, the Corporate Venture Fund (CVF), launched by the HKSTPC in 2015, co-invests on a matching basis with angel investors or venture capital funds in tenants and incubatees of the Science Park.  The CVF has already committed the entire fund of $50 million to invest in nine projects and acted as a catalyst in attracting more than $670 million from co-investors.  Building on the success, the HKSTPC will expand the CVF to $200 million to support the growth of its tenants and incubatees.

82. In last year's Budget, I injected $200 million into Cyberport to enhance the support for its tenants and start-ups.  In this connection, Cyberport has increased the financial subsidy under its incubation programme to $500,000 and introduced the Overseas/Mainland Market Development Support Scheme to offer an additional subsidy of $200,000.  Moreover, Cyberport launched the Easy Landing Scheme to attract multinational corporations to set up offices and R&D units in Cyberport through rental concessions.

83. To encourage private investments in local I&T start-ups, the Government set up the $2 billion Innovation and Technology Venture Fund to co-invest in local I&T start-ups together with venture capital funds.  We selected a total of six Co-investment Partners in mid-2018, and have been receiving co-investment proposals.

Promoting Re-industrialisation

84. The Policy Address proposed allocating an additional $2 billion for the HKSTPC to build dedicated facilities required by the advanced manufacturing sector in industrial estates to facilitate more manufacturers to set up operations in Hong Kong.  We plan to inject $2 billion into the ITF for launching a Re‑industrialisation Funding Scheme to subsidise manufacturers on a matching basis to help them set up smart production lines in Hong Kong.  These initiatives for developing real high-end production will help reduce our economy's over-reliance on service industries.  The Innovation and Technology Bureau (ITB) will seek funding approval from the Legislative Council (LegCo) as soon as possible, with a view to implementing these initiatives in the second half of this year.

85. I visited five local R&D centres last year to see for myself their work on applied R&D.  I am impressed with the immense potential Hong Kong has in pursuing the commercialisation of R&D results and technology transfer in areas such as advanced materials, nanotechnology, microelectronics, etc. which can boost the development of industries and re-industrialisation.  The Committee on Innovation, Technology and Re-industrialisation, which I chair, will explore appropriate measures for promoting the development in this regard.

Other Supporting Measures

86. The Government is striving to remove unnecessary constraints for I&T development and create more opportunities for the procurement of I&T products and services.  We will introduce a pro-innovation government procurement policy this April so that innovative proposals stand a better chance of winning government contracts.  The Policy Innovation and Co-ordination Office has started reviewing existing laws which are outdated and impede I&T development. 

The Way Forward

87. We are now in an excellent position to promote I&T development, and are presented with unprecedented opportunities arising from the Greater Bay Area development.  From the perspective of regional development, with our strong R&D capabilities, world-class universities, advantages as an international and market-oriented economy and robust intellectual property protection regime, Hong Kong serves as an I&T pioneer in the region.  On the other hand, with an sizeable market, the Greater Bay Area offers more cooperation opportunities for local I&T enterprises as well as capabilities in commercialising R&D results and advanced manufacturing.  We can promote technological collaboration, interaction among industries and productisation of scientific and technological achievements, thereby facilitating the development of the Greater Bay Area into an international I&T hub.

88. Financial services and I&T aside, the Government will also roll out measures in other economic sectors to promote the development of industries.  I will talk about these measures later.



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