Driven by cross-border flows, Hong Kong has enjoyed good times as finance, property and tourism became key pillars of the economy. However, this success formula has started to lose its magic in recent years.
Meanwhile, the city’s global rankings have seen slippage in terms of competitiveness, economic freedom and ease of doing business.
In particular, Hong Kong’s spending on R&D as a proportion of GDP has stayed far below the world average since the territory’s return to Chinese rule in 1997.
R&D spending usually accounts for 3 to 5 percent of GDP in developed economies. But in the case of Hong Kong, it’s less than 0.8 percent.
DJI, the world’s biggest maker of recreational drones, was founded by Frank Wang, a graduate of the Hong Kong University of Science and Technology.
But the then startup chose Shenzhen as its base. Why? Because Hong Kong was not able to offer the right environment for such tech ventures to grow.
Data hub is another example. We could have become a top regional data hub in Asia, but we missed the chance.
Also, we have never tried hard enough to woo global tech giants to set up office in Hong Kong, unlike what we did when it came to bringing a Disney theme park to the city.
Our long-time rival Singapore is a lot more forward in this aspect, offering numerous incentives.
Without the edge of being a regional data hub, it becomes a lot harder for Hong Kong to establish an edge in fields like big data and artificial intelligence.
Hong Kong intends to launch Faster Payment System in the third quarter this year, which the government claims would mark a key step toward the dawn of smart banking era.
The embarrassing truth, however, is that Singapore, South Korea, Japan, China, UK, Sweden and even India all have achieved this sort of real-time retail payment system five years ago.
That said, we can take comfort from the fact that we are at least moving in the right direction now with regard to policy initiatives on promoting innovation and technology, offering a chance to Hong Kong to once again glow in the digital era.
This article appeared in the Hong Kong Economic Journal on March 1
Translation by Julie Zhu
[Chinese version 中文版]
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