LCQ8: Assisting manufacturing industry to relocate operations back to Hong Kong
Following is a question by the Hon Wong Ting-kwong and a written reply by the Secretary for Commerce and Economic Development, Mr Gregory So, in the Legislative Council today (November 16):
With funding support from SME Development Fund under the Trade and Industry Department, the Professional Validation Council of Hong Kong Industries and the Hong Kong Productivity Council have, earlier on, jointly launched the Benchmarking and Support Service Study on Relocation of Operations Back to Hong Kong for Five Pilot Sectors of Manufacturing Industry. The five pilot sectors are: food products manufacturing industry, pharmaceuticals or medical equipment manufacturing industry, watches and clocks manufacturing industry, jewellery manufacturing industry, and precision fabricated metal parts and tooling manufacturing industry. As pointed out in the report of the aforesaid study published in June this year, land disposition is one of the important considerations of manufacturers in relocating their operations back to Hong Kong. Some manufacturers have indicated that the lack of factories and suitable sites in Hong Kong is the greatest hindrance to their consideration of relocating their operations back to Hong Kong. In this connection, will the Government inform this Council:
(1) of its plans to follow up on the aforesaid study report;
(2) whether it has assessed the impacts of the relocation of part of the operations of the aforesaid five sectors back to Hong Kong on the economic development, employment rate, etc. of Hong Kong; if it has assessed, of the details; if not, the reasons for that;
(3) whether it has compiled statistics on the respective numbers of manufacturers who relocated part of their operations back to Hong Kong and those who set up new factories in Hong Kong in the past five years (broken down by sector of manufacturing industry); and
(4) of the measures in place to support manufacturers who wish to set up factories in Hong Kong in acquiring their required sites; whether it will consider taking measures (e.g. setting up support funds for industry development, providing tax concessions, etc.) to promote the diversified development of the local manufacturing industry; if it will, of the details; if not, the reasons for that?
My consolidated reply to the question raised by the Hon Wong, after consulting the Innovation and Technology Bureau (ITB), the Development Bureau (DEVB), the Trade and Industry Department, the Economic Analysis and Business Facilitation Unit and the Census and Statistics Department, is as follows:
It is the HKSAR Government's policy to provide a favourable business environment for and render appropriate support to various trades and industries so that they can build on their respective strengths and grow.
For parts (1) and (4) of the question, on policies and measures to support the industrial sector (including the manufacturing industry), the HKSAR Government endeavours to assist industries in responding to changes in their operations and provide them with appropriate support in aspects such as the relocation of industrial operations back to Hong Kong, land disposition and diversified development. We liaise closely with them as well as industrial and trade organisations, with a view to helping them address issues of concern. We also discuss with them issues affecting the development of industry and commerce as well as support for industries through various advisory boards, such as the Trade and Industry Advisory Board and the Small and Medium Enterprises Committee, etc. After the "Study Report on Relocation of Operations Back to Hong Kong for Manufacturing Industries" (the study report) is completed, the Government and the Professional Validation Council of Hong Kong Industries have made it available to the relevant policy bureaux and the trade respectively for reference.
The ITB is committed to promoting "re-industrialisation" and encouraging the development of high value-added industries or manufacturing processes which make use of smart production, data analysis or Internet of Things and do not require substantial land resources, thereby facilitating the development of Hong Kong into a technology-based economy.
To tie in with the "re-industrialisation" policy, the Hong Kong Science and Technology Parks Corporation (HKSTPC) will develop an Advanced Manufacturing Centre (AMC) and a Data Technology (DT) Hub in Tseung Kwan O Industrial Estate, providing over 135 000 square metres of floor area to promote and support smart production. The DT Hub is expected to be completed in 2020, while the AMC in 2021-22. In addition, the HKSTPC plans to expand the Hong Kong Science Park in phases to provide more technological infrastructure to the relevant sectors. Upon completion of stage one of the expansion programme, the total floor area of the Science Park will increase from the current 330 000 square metres to about 400 000 square metres overall. The project is expected to be completed in 2020.
The DEVB will continue to provide sites necessary for commercial and industrial developments to the market through land use planning and land supply. In recent years, the Government has sold two industrial sites in Kwai Chung, and will consider putting up more industrial sites for sale having regard to the market situation. The Government will also provide the necessary land or introduce other complementary measures in accordance with the policy of relevant bureaux on promoting the development of individual industries. To meet the demand for land for scientific research and new industrial uses, the Government has earmarked suitable land for such uses in Kwu Tung North New Development Area, Hung Shui Kiu New Development Area, Tuen Mun Area 38 and Wang Chau in Yuen Long (next to Yuen Long Industrial Estate). In addition, we have initially identified some suitable sites near Liantang/Heung Yuen Wai Boundary Control Point for exploring the development as Science Park and Industrial Estate. For the longer term, the Government is examining the development potential of Lantau Island and New Territories North as Strategic Growth Areas as well as various potential near-shore reclamation sites, with a view to providing more land and space for various economic activities.
For the promotion of the diversified development of our economy, including the industrial sector, the Economic Development Commission (EDC) led by the Chief Executive, since its establishment in 2013, has been studying how to make the best use of Hong Kong's prevailing advantages and opportunities, and conducting in-depth discussions on the overall strategy and policy to broaden our economic base and enhance our long-term development. The EDC and its four working groups have been actively discussing ways to promote the diversified development of the relevant industries. They have made specific recommendations progressively on policies and measures to support the development of different industries for consideration and implementation of the Government as appropriate.
In addition, the Government and public organisations provide enterprises (including manufacturers) with the latest market information and advisory services through different channels, and administer various funding schemes, including the special concessionary measures under the SME Financing Guarantee Scheme, the SME Loan Guarantee Scheme, the SME Export Marketing Fund, the SME Development Fund as well as the Dedicated Fund on Branding, Upgrading and Domestic Sales, to provide support for Hong Kong enterprises (including manufacturers who wish to relocate their operations back to Hong Kong) in areas such as financing and enhancing their overall competitiveness. By offering one-stop solutions for different sectors to elevate their technology level, the Hong Kong Productivity Council also facilitates industrial upgrading and restructuring and shifting towards high value-added production.
For part (2) of the question, we note that the study report is aimed at obtaining a preliminary understanding of the wishes of surveyed enterprises in the five selected sectors for relocating their operations back to Hong Kong, and their needs for various production factors and policy support if they wish to do so. How the relocation of operations back to Hong Kong will, in the end, affect our economy will depend on the number of related enterprises choosing to relocate their operations back to Hong Kong and the scale of such operations. As this concerns the commercial decisions of individual enterprises, it is difficult to make a quantitative assessment in general.
For part (3) of the question, the Government does not have statistics on the respective numbers of manufacturers who relocated part of their operations back to Hong Kong and those who set up new factories in Hong Kong.
Ends/Wednesday, November 16, 2016