Speeches and Presentations




LCQ5: Promotion of research and development in science and technology

Following is a question by the Hon Raymond Ho and a reply by the Secretary for Commerce and Economic Development, Mr Gregory So, in the Legislative Council today (April 25):

Question:

Will the Government inform this Council:

(a) whether the authorities have studied the research and development (R&D) situation in science and technology in Hong Kong and Singapore; if they have, how the two places compare with each other in respect of their strengths and weaknesses in this regard;

(b) apart from the Research and Development Cash Rebate Scheme, whether the authorities have formulated other specific measures to encourage local universities to participate in R&D projects in science and technology undertaken by the innovation and technology sector and the industrial sector, so as to enhance Hong Kong's overall capability in R&D in science and technology; and

(c) whether it knows if local universities at present collaborate with the innovation and technology sector and the industrial sector in the development of R&D projects in science and technology; if they do, of the number and scopes of research of such projects, as well as the amounts of investment involved?

Reply:

President,

The Government attaches great importance to promoting innovation and technology. With innovation and technology being identified in 2009 as one of the six industries where Hong Kong enjoys clear advantages, the Commerce and Economic Development Bureau and the Innovation and Technology Commission (ITC) have adopted a multi-pronged approach to promote R&D activities and technology transfer through enhancing collaboration among the government, industry, academic and research sectors.

My reply to the three parts of the question is as follows:

(a) Given the unique history and situation of development in different economies, the Administration has not conducted any study to directly compare the R&D development in Hong Kong and Singapore. Nevertheless, we have kept track of the international indicators on innovation and technology as well as R&D development and measures in other regions as a reference to further enhance our efforts.

On R&D development, both Singapore and Hong Kong are well endowed. Both places possess a sound legal system, enjoy a free flow of information, and have access to a pool of talent with good language skills, etc.

Singapore has its own advantages, such as a larger manufacturing base. Hong Kong is a service-driven economy, and its manufacturing sector dominated by original equipment manufacturing (OEM) contributed to less than 2% of the gross domestic product (GDP) in 2010, which is in stark contrast to 22% in Singapore and 30% in Korea. In addition, many other countries have greater demands for R&D because of the need for national defence. For Korea and the United States (US), government budget for defence R&D accounted for 17% and 51% of total government R&D budget respectively in 2009. Hong Kong does not have these pre-requisites to stimulate a large amount of R&D activities. Hong Kong's gross domestic expenditure on R&D for 2010 stood at US$1.7 billion, which is 0.76% of our GDP. Singapore's gross domestic expenditure on R&D for 2010 was US$4.7 billion, which is 2.14% of its GDP.

It should be stressed that enhancing R&D and innovation capability requires long-term investment. With the efforts made by various sectors over the years, Hong Kong has made considerable achievements in the development of innovation and technology:

- In the past decade, Hong Kong's R&D expenditure has been increasing at an average annual growth rate of 7%, from 0.55% to 0.76% when expressed as a percentage of GDP;

- The R&D expenditure by the public sector (including Government and higher education sectors) has continued to increase at an average annual growth rate of 4.8%, from $5 billion in 2001 to $7.5 billion in 2010, accounting for 57% of the gross R&D expenditure; and

- The number of companies operating in the Science Park has also been on the rise over the years from about 160 in 2007 to over 380 at the moment, employing over 6 300 R&D personnel.

With access to the huge domestic market in the Mainland, especially with the Pearl River Delta as our hinterland, Hong Kong is also well-positioned to develop science and technology. Innovation and technology is one of the focused areas for development under the National 12th Five-Year Plan. The 12th Five-Year Plan also has a dedicated chapter setting out support for Hong Kong's innovation and technology development. This has brought tremendous development opportunities for the local R&D sector.

(b) and (c) Promoting collaboration between universities and the industry is of paramount importance. To this end, we have adopted various measures:

1) The Innovation and Technology Fund (ITF)

As at end February 2012, the ITF has supported over 1 700 R&D projects, of which over 910, i.e. more than half, were undertaken by universities, involving a total approved funding of about $2.4 billion. Some examples include:

- the joint development of the application solution for the fourth generation broadband mobile communication technology by the Partner State Key Laboratory on Millimeter Waves in Hong Kong and a well-known company in Guangzhou; and

- the development of authentication method for high-value food stuff such as abalone and bird's nest through DNA sequencing analysis and the establishment of a reference database.

These examples involve R&D work by universities and the participation and support from the industry. We also introduced various enhancement measures under the ITF, including amongst others expanding the funding scope to cover prototype and sample production and encouraging trial use of products in the public sector through the R&D Centres. For example, the Hong Kong Polytechnic University (PolyU) and Hong Kong Applied Science and Technology Research Institute (ASTRI) have recently conducted R&D on various intelligent home systems and equipment. Together with the Hong Kong Housing Society, a demonstration centre has been set up in Yau Ma Tei to provide information with a view to enhancing the quality of living of the elderly.

In addition, our R&D Cash Rebate Scheme also encourages the industry to establish stronger partnership with local universities and research institutes by providing enterprises with a cash rebate equivalent to 30% of their R&D expenditure.

2) Funding from the University Grants Committee (UGC) and Research Grants Council (RGC)

Our R&D funding currently comes from two main sources, with the ITC supporting applied R&D and UGC together with its RGC supporting academic research.

The Government set up an $18 billion Research Endowment Fund in 2009 and injected another $5 billion into the Fund this year, which demonstrates Government's staunch support for the research activities of tertiary institutions. Furthermore, since 2009/10, UGC has introduced an additional stream of recurrent funding earmarked for the institutions to strengthen and broaden their endeavours in knowledge transfer. All institutions are also setting aside some of their own resources to enhance work in this area.

3) The Five R&D Centres

Since 2006, the five R&D Centres set up by the Government have been committed to partnering with the university and industry sectors to conduct R&D projects and promote commercialisation of R&D results in selected technology areas. We have just completed a review on the Centres' performance and effectiveness during their first five years of operation. The results and our recommendations were reported to the Legislative Council (LegCo) Panel on Commerce and Industry last week. I would like to thank the Panel for supporting the extension of the operation of the Centres beyond the original expiry of end March 2014. We will submit the proposal to the LegCo Finance Committee for approval in due course.

4) Hong Kong Science Park

Many Members have visited the Science Park in Shatin. The Science Park not only encourages technology companies but also the academic and research sectors to set up R&D facilities in the Park. For example, PolyU and Hong Kong Baptist University will conduct R&D projects on areas relating to food safety, Chinese medicines and environment. I would like to thank Members for supporting the development of the $4.9 billion Science Park Phase 3 in 2010.

5) Collaboration with the Mainland

We have set up collaboration platforms at the Central, provincial and municipal levels, such as the Shenzhen-Hong Kong Innovation Circle and the Guangdong-Hong Kong Technology Cooperation Funding Scheme, to promote university participation in exchanges and R&D. In particular, it is encouraging that four local universities have established their Industry, Academic and Research Bases in the High-Tech Zone of Nanshan District in Shenzhen over the past two years to conduct R&D and collaborate with the Mainland.

As a knowledge-based economy, we firmly believe that innovation and technology is a key driver for economic development. We shall capitalise on our advantages and opportunities together with the joint efforts of the Government, industry, academic and research sectors with a view to achieving remarkable progress in the areas of science and research. My special thanks go to Members for their support for and valuable views on innovation and technology development.

Wednesday, April 25, 2012


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