Chief Executive Leung Chun-ying announced a HK$2 billion (US$256.7 million) Innovation and Technology Venture Fund in his policy address on Wednesday after the establishment of the Innovation and Technology Bureau last year.
The fund will support technology startups by putting in a dollar for every two from venture capital investors.
Another HK$2 billion will fund technology research in Hong Kong universities and HK$500 million will support innovative projects that improve daily life.
However, no tax breaks were announced despite a clamor for such incentives from the technology sector.
Nevertheless, Prof. Au Yuk-fei, director of the Center for Entrepreneurship of the Chinese University of Hong Kong, said the government should be given credit for committing to support tech startups despite a deteriorating global investment environment.
By any measure, HK$2 billion is a large sum of money, he said.
Au said he is happy that despite the gloomy investment prospects worldwide, the government is willing to take a risk.
If successful, the program could attract billions of dollars in foreign investment over the next few years.
However, Democratic Party lawmaker Sin Chung-kai is worried that the potential for abuse could be enormous and might give rise to collusion between the government and big business, favoritism and secret deals.
He said it is important that the Legislative Council provide oversight and demand transparency from the government in running the fund.
Allen Ma, chief executive of Hong Kong Science and Technology Parks (HKSTP), said funds should be capped at US$1 million to US$2 million for each project.
Also, he said the government should simplify the approval process.
HKSTP is planning to increase its total gross floor area by 70,000 square meters to provide more space for tech startups.
The government will soon carry out a feasibility study for a planned hi-tech industrial park near the border with mainland China.
This article appeared in the Hong Kong Economic Journal on Jan. 14.
Translation by Alan Lee
[Chinese version 中文版]
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