Speeches and Presentations



LCQ 11: Hong Kong Jockey Club Institute of Chinese Medicine

Following is a question by Dr Hon Priscilla Leung and a written reply by the Secretary for Commerce and Economic Development, Mr Gregory So, at the Legislative Council meeting today (October 26):

Question:

The Innovation and Technology Commission recently announced that the Hong Kong Jockey Club Institute of Chinese Medicine (HKJCICM) set up in 2001 will be disbanded, and it is preparing to set up a committee, which will be chaired by the Commissioner for Innovation and Technology, to lead the research and development (R&D) as well as promotion of Chinese medicines in Hong Kong. In this connection, will the Government inform this Council:

(a) given that at a special meeting held on June 14 this year, the Panel on Commerce and Industry of this Council unanimously passed the motion that the Panel considers that the Administration should not disband HKJCICM, and the Kowloon Chamber of Commerce, the Chinese medicine industry as well as a number of business associations have also written to the authorities earlier to query the relevant decision, but the authorities still insist on disbanding HKJCICM, of the reasons for that; before arriving at the final decision of disbanding HKJCICM, whether the authorities had gone through the relevant procedures required by the Government, fully consulted various major stakeholders including the Chinese medicine industry, and reflected truthfully the relevant views to the two major shareholders (i.e. the Hong Kong Applied Science and Technology Research Institute Company Limited and the Hong Kong Jockey Club (Charities) Limited);

(b) how the aforesaid committee proposed to be set up will assist the local Chinese medicine industry in its research work; how the authorities assess whether the operation mode of replacing HKJCICM with the committee can more effectively support the local Chinese medicine industry in its research work;

(c) given that HKJCICM's research on certain medicines is still in progress, and it has accumulated 10 years' research experience and skills, how the Government will preserve HKJCICM's achievements in academic research and professional support, so as not to waste the results of its work over the years;

(d) whether the authorities will consider transferring HKJCICM's incumbent research staff to work in the organisations under the new committee, so as to ensure that this group of experienced researchers on Chinese medicines can continue to serve Hong Kong’s Chinese medicine industry; and

(e) given that the authorities indicated that they will continue to support the development of Chinese medicines through the Innovation and Technology Fund (ITF), which has a current balance of some $2.1 billion, of the amount of funding under ITF to be used for supporting R&D of Chinese medicines in the future; and the percentages of the funding to be used respectively to pay for administrative expenses as well as those actually used to conduct research and testing?

Reply:

President,

(a) The Hong Kong Jockey Club Institute of Chinese Medicine (HKJCICM) was established in May 2001, with the mission to spearhead the development of Chinese Medicines (CM) as a high value added industry for Hong Kong through promotion and coordination of related activities and strategic support for scientific and evidence-based development programmes. It was set up under the Companies Ordinance as a subsidiary of the Hong Kong Applied Science Technology Research Institute Company Limited (ASTRI), with Hong Kong Jockey Club (HKJC) (via its Hong Kong Jockey Club (Charities) Limited (HKJCCL)) and ASTRI each holding 50% of the shares.

In view of considerable new developments in the CM sector in Hong Kong in recent years, the Board of HKJCICM engaged consultants to conduct a comprehensive review of HKJCICM last year. The scope of the review included the current situation and needs of the CM sector, the most effective way to integrate the efforts of Government, industry, academic and research sectors to cope with future development needs, and the role and cost-effectiveness of HKJCICM after a decade of operation. The Review Report was submitted to the HKJCICM Board and the Innovation and Technology Commission (ITC) for consideration in March 2011. In brief, the Report shows that:

(i) The cost-effectiveness of the Institute has not been as good as envisaged when it was first set up. HKJCICM has committed around $108 million on projects (funded by HKJCCL) over the last decade. This means an average project spending of around $10 million per year (with variations from year to year). The recurrent cost of running the Institute is provided by ASTRI. Since 2008/09, the sum earmarked for HKJCICM was some $10 million a year [actual expenditure in 2009/10 was $8.65 million]. Thus roughly, the ratio between project expenditure and operating expenditure is close to 1:1 and this is undesirable. On the output side, the projects have not brought along great impact (one of the important projects is the production of chemical markers. But due to missing documents and doubts on the quality of chemical markers, sales has been suspended);

(ii) Due to its small establishment (with only some 20 employees), HKJCICM has not been able to create a critical mass. Although it has tried to make changes in its strategic direction and work priorities at different stages over the years, the outcome was still less than desired;

(iii) In the past decade there have been considerable new developments and changes in the CM sector, indicating that more and more parties have become interested in and are capable of contributing to the development of CM in Hong Kong in various ways, e.g. the establishment of the Hong Kong Council for Testing and Certification in 2009 with CM designated as one of its four selected trades with good potentials, the research capabilities and infrastructure of local universities in CM area have been enhanced after years of development, the Hong Kong Science and Technology Parks Corporation has been actively developing a biotechnology (including CM and western pharmaceuticals) cluster in recent years; and

(iv) The reason for putting HKJCICM under ASTRI at the outset was that HKJCICM could benefit from ASTRI's administrative and housekeeping support. However, over the years, ASTRI has increasingly focused its work on information and communications technologies (ICT) which are not related in any way to the promotion of CM development.

The review has explored three options for the future of HKJCICM, namely (1) maintaining the status quo; (2) complete revision of HKJCICM's roles and functions; and (3) setting up of a new committee under Government to coordinate the development and promotion of CM and disbandment of HKJCICM.

ITC considers that Option (3) is the most desirable. Since the coordination work on promoting CM development in Hong Kong has become increasingly complex, a new Government-led committee will be needed to coordinate the collaboration of all parties in promoting the R&D and testing of CM to meet the future needs of Hong Kong. It will also resolve the issue of HKJCICM being a subsidiary of ASTRI which focuses on ICT and does not have expertise in CM.

Furthermore, since mid-2010, a number of incidents have revealed internal management problems of HKJCICM, e.g. various complaint cases (including anonymous and non-anonymous), missing of documents and about half of HKJCICM's staff resigning within a short period of time. There has also been involvement of law enforcement agencies. The image as well as the operation of HKJCICM have inevitably been affected. We have already submitted the relevant information to the Legislative Council Panel on Commerce and Industry.

The decision on the future of HKJCICM rests with HKJC and ASTRI. We have hence submitted all relevant information (including the Review Report, feedbacks from stakeholders, views of the Panel on Commerce and Industry as well as ITC, etc.) to the two shareholders for deliberation.

The ASTRI Board of Directors has conducted an in-depth review of the role of HKJCICM in Hong Kong against the rapidly changing environment in CM and taking into consideration the new strategy put forward by the Government on promoting CM through a Government-led committee. The Board has concluded that since the current focus of ASTRI is on ICT, it should concentrate its energy and resources on its core business instead of CM. As such, the Board has decided to disband the HKJCICM.

The other shareholder, HKJC, has also decided to endorse Government's proposal to disband HKJCICM. It however stresses that despite the disbandment, it is committed to supporting the development of CM in Hong Kong. Recognising the value and importance of CM to the community, it will continue funding worthwhile CM projects in Hong Kong after the disbandment of HKJCICM. Currently, about $400 million out of the $500 million earmarked by HKJC for supporting CM R&D projects remains unused. To facilitate the continued development of CM, HKJC would use the remaining balance of the funds to support non-profit organisations to conduct CM R&D in Hong Kong.

Following the endorsement of the two shareholders, ITC and the two shareholders issued press releases on September 28, 2011 to announce the decision to disband HKJCICM and the setting up of a Government-led committee.

(b) ITC is setting up the new Committee which will be chaired by the Commissioner for Innovation and Technology. Members of the Committee will include representatives from the Government, industry, academic and R&D institutions involved in CM R&D. The Committee will collect views from various stakeholders, formulate strategies for promoting CM R&D in Hong Kong, and promote the relevant work in collaboration with various parties. Since the representation and scope of work of the new Committee will be broader than HKJCICM, we believe that it will be more effective in coordinating collaboration among various parties.

(c) With the decisions made by the two shareholders, ITC is now working with the management of the shareholders on the disbandment of HKJCICM. It will cover issues such as appointment of the liquidator, staff arrangements, disposal of assets, unspent funds, intellectual properties (IP), etc.

Regarding the preservation of HKJCICM's R&D deliverables and professional support, as most of HKJCICM's R&D projects are implemented by local universities, we will explore the feasibility of transferring the R&D projects or deliverables to the corresponding universities in handling the ownership of IP and technologies. Such arrangement will facilitate the universities to conduct follow-up research and technology transfer to the industry.

(d) On the staffing side, HKJCICM now only has 9 employees, one of whom is a researcher. Contracts of staff of HKJCICM will be dissolved in accordance with existing contractual provisions and the Employment Ordinance. Before the announcement of the decision on the disbandment of HKJCICM, a briefing was given to staff to explain to them the decision of the shareholders and to seek their assistance in the preparation for the dissolution of the company. They were assured that termination of employment would be made in accordance with their contracts and the relevant laws of Hong Kong.

(e) The Innovation and Technology Fund (ITF) under Government has been supporting applied R&D projects conducted by universities, R&D institutions and companies. R&D of CM is also one of the technology areas which ITF is supporting. The ITF does not have pre-set funding ceiling for specific technology areas. Hence, it will fund quality R&D projects from any technology areas.

The ITF has a current balance of about $2.1 billion. If the industry has suitable CM applied R&D projects, they can apply to ITC for funding support. Since all administrative work relating to the vetting and monitoring of ITF funded projects is handled by staff of ITC, no additional expenses will be incurred.

Separately, HKJC has indicated that it will continue to support the development of CM in Hong Kong after the disbandment of HKJCICM.

We would like to stress once again that the disbandment of HKJCICM definitely by no means suggests that the Government will provide less support to the development of CM. Instead, the new committee to be set up will provide stronger support for R&D and testing of CM in Hong Kong to the benefit of our community.

Wednesday, October 26, 2011