HK-Mainland Boost Tech Ties

Chief Executive Carrie Lam

My Government believes in the promise of innovation and technology (I&T). Last year, at this forum, I outlined our major innovation and technology policies and programmes. This is an opportune time for me to update you on some of our initiatives.

Over the past year, we have introduced a super tax deduction of up to 300% for R&D (research and development) expenditure incurred by private enterprises starting from the 2018-19 fiscal year. We have also set up an Innovation & Technology Venture Fund to co-invest in local startups. We have committed $10 billion to establish two research clusters that focus respectively on healthcare technologies and artificial intelligence and robotics technologies. We have also injected $20 billion into the Research Endowment Fund of the Research Grants Council to provide sufficient funding for R&D at universities. Taken together, these initiatives would considerably strengthen our innovation and technology ecosystem and provide a big boost towards our goal to double Hong Kong's R&D expenditure as a ratio to GDP to 1.5% by the year 2022.

For the two research clusters on health technologies and AI (artificial intelligence) and robotics that I mentioned last year, we have been sounding out notable international companies, universities and research institutions. The response, I am pleased to say, has been cheering. To date, we have received some 50 proposals, many of which are supported by an MOU signed with Hong Kong universities for undertaking joint R&D projects. We expect that the first research institutions will be setting up their laboratories at the Hong Kong Science Park before the end of this year.

Dynamic startup scene

Our startup scene, I am pleased to say, is also flourishing. The number of startups in major public and private co-work spaces and incubators here in Hong Kong has grown 18% to more than 2,600 at the end of 2018. Of the founders, some 35% were from outside Hong Kong, showing that Hong Kong is an attractive place for talent and entrepreneurs from around the world.

With the number of startups increasing, we are also sighting more unicorns here, with several of those begun at our flagship innovation and technology institutions - Hong Kong Science Park and Cyberport. Speaking of which, Cyberport is now home to more than 1,200 companies and startups, but we want more. That is why we have announced in this year's Budget an allocation of $5.5 billion for the development of Cyberport 5. The expansion, expected to open in 2024, will add about 66,000 sq m of floor space to Cyberport.

Our ability to attract institutions, startups, talent and investment from other countries is in no small part due to Hong Kong's "one country, two systems" framework. That gives us a clear and compelling advantage in the region. This is underlined in the Guangdong-Hong Kong-Macao Greater Bay Area development. The far-reaching development emphasises co-operative development, focusing on the distinct strengths of each of the Greater Bay Area's 11 cities, that is Hong Kong, Macau and nine prosperous Guangdong municipalities. One of our distinct strengths will definitely be our international network, established over the years under "one country, two systems".

Beyond our international connectivity, Hong Kong offers top universities and scientists, a pro-business environment, the rule of law underpinned by an independent judiciary, and reassuring intellectual property protection. It helps, too, that our logistics and communications infrastructure is world-class. Add it up, and you know why the world looks to Hong Kong to connect and excel.

An Outline Development Plan for the Greater Bay Area development was promulgated by the Central Government in February this year. It identifies Hong Kong, Macau, Guangzhou and Shenzhen as the four core cities, as well as the key engines for driving the regional development. Among others, the plan expects Hong Kong to play a key role in the Greater Bay Area's emergence as an international innovation and technology centre. This is in line with the steer and support given by President Xi Jinping who, noting our solid science and technology foundation and a large pool of technological talent, considers Hong Kong an important force in implementing the nation's innovation-driven development strategy.

Considerable advances

Hong Kong is already at work in building an impressive foundation for our strategic role in the Greater Bay Area. The Hong Kong-Shenzhen Innovation & Technology Park, some four times the size of the current Science Park, is now under construction in Hong Kong, strategically close to Shenzhen. We are also enhancing R&D collaboration with other cities and research institutes in the Mainland, thanks to the relaxation of cross-boundary remittance for science and technology project funding.

Financial technology is another important area, a growth sector we are committed to running with, for the Greater Bay Area and the Asian region as a whole. I know the Financial Secretary will be speaking tomorrow at the summit's FinTech Forum, so I will leave it to him to detail the considerable advances we are making, from our Faster Payment System to virtual banking, insurtech and a good deal more. But let me just say that, with innovation and technology being the focus of the Greater Bay Area development, and given Hong Kong's status as a global financial centre, the Greater Bay Area has all the potential to be both the Silicon Valley and the Wall Street of the East.

Ladies and gentlemen, the theme of this year's Internet Economy Summit is Digital Economy - Redefines our Future. With the encouraging developments that I have outlined just now, I would say that Hong Kong's innovation and technology is developing in the best of times. In particular, with a population of over 70 million and a combined GDP of some US$1.6 trillion, the Greater Bay Area opens up a new development horizon for the region and provides Hong Kong with a huge opportunity to grow our economy and uplift the well-being of our people. It is up to us all to seize this opportunity.

This year marks the 70th anniversary of the founding of the People's Republic of China. Today's summit is the first of the many events Hong Kong is organising to honour this significant milestone. There will be more to come, and I look forward to having you in our celebration events.

Chief Executive Carrie Lam gave these remarks at the Internet Economy Summit 2019 on April 15.