September 28, 2020

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Hong Kong Budget doubles down on IT and R&D

Hong Kong’s Financial Secretary announced the 2019-2020 Budget on 27 February 2019 at the legislature.

As the economic landscape grows increasingly volatile and uncertain, the HKSAR Government is determined to ensure that the standards of living increase and that the region’s population is safeguarded from the looming prospect of economic hardship.

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

Sufficient resources have been allocated, with a commitment of over $100 billion so far.

To develop I&T, Hong Kong will need a robust ecosystem and the Government aims to establish through various I&T policy initiatives.

It will support 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

The region’s leaders have acknowledged the need for quality infrastructure to attract I&T talent and facilitate the operation of I&T enterprises. Last year’s Budget saw $3 billion allocated 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.

HKSTP 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.

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.

The Financial Secretary will earmark $5.5 billion for the development of Cyberport 5 which aims to attract more quality tech 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 will include facilities such as offices, co-working space, conference venues and data service platforms, with a view to commencing construction in 2021 for completion in 2024 at the earliest.

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.

Last year’s Budget set aside $20 billion for the Park’s first stage construction works, now making significant headway. The target is to make the first batch of land available by 2021 for Phase 1 superstructure development.

The Park will provide essential infrastructure for sustainable I&T development in Hong Kong. Additional resources to ensure the timely development of the Park as a world-class R&D hub will be allocated.

Promoting R&D

The Financial Secretary noted that R&D is the foundation of the development of I&T. To promote local R&D activities, the Government put $10 billion into the Innovation and Technology Fund (ITF) in 2018 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.

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 the region an edge in pooling top-notch local, Mainland and overseas universities, scientific research institutions and enterprises to undertake R&D activities together.

Applied R&D

With regards to 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 years starting from 2019-20.

Encouraging enterprise to conduct R&D

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.

Academia and R&D

Scientific exploration and academic research in universities lay the foundation for Hong Kong’s I&T development. The Financial Secretary will allocate $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.

It is expected that the 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.