How the govt can encourage R&D in Greater Bay Area

March 25, 2019 17:49
A section of the Hong Kong-Macao-Zhuhai Bridge in Hong Kong. China’s Greater Bay Area plan offers Hong Kong a huge platform for innovation and technology development. Photo: AFP

I recently bumped into Nicholas Yang Wei-hsiung, the Secretary for Innovation and Technology, at an event, and took the opportunity to discuss the prospects for innovation and technology development in Hong Kong.

During our conversation, I jokingly told Yang that the Innovation and Technology Bureau (ITB) will definitely have its work cut out for it in the days ahead, as under the Outline Development Plan for the Guangdong-Hong Kong-Macao Greater Bay Area (GBA), Hong Kong has been assigned a leading role in establishing an international tech hub in the region.

While Yang asserted that the government is highly determined and supremely confident in fulfilling that role, he also conveyed his hope that the local business chambers can provide more support for the city’s innovation and technology development as well as assume a more pro-active role in it.

After all, he told me, Hong Kong cannot rely solely on the government when it comes to facilitating innovation and technology development, given that the business sector is an indispensable part of the entire tech ecosystem.

As such, he said, a new idea or invention would exist on paper only, no matter how good it might be, without the participation of businesses.

The Outline Development Plan of the Greater Bay Area will no doubt provide a huge platform and more resources for innovation and technology development in Hong Kong.

In the meantime, it will also enable the elevation of the local industrial structure.

One can easily tell from the Outline Development Plan that the central authorities are working aggressively to break down regional barriers within the Pearl River Delta and promote deeper cooperation among Guangdong, Hong Kong and Macau, as well as being supportive of the sharing of resources among the three places.

For example, under the Bay Area plan, institutions in Hong Kong and Macau are allowed to take part in state technology development programs, and have access to key scientific research facilities and equipment in the Guangdong province.

I am eagerly looking forward to seeing governments of the three places formulate and implement solid measures to make that happen as soon as possible.

One key component of the innovation and technology development in the Greater Bay Area is to facilitate cooperation in the field of research and development (R&D) between the business and academic sectors.

But Hong Kong private enterprises, especially those that are running manufacturing plants in the mainland, have been investing very little in R&D over the years.

Given this, there is definitely an urgent necessity for the governments on both sides to introduce innovative measures to encourage more private investment in R&D.

At the end of last year, in written submission of recommendations to the government on the 2019-20 Budget, the Chinese Manufacturers’ Association of Hong Kong suggested that the government think outside the box when it comes to helping local industrialists with factories in the mainland to overcome their “shortcomings” in technological innovations.

One of the suggestions was that the administration should extend to industries operating outside the city the supportive measures that are currently available to local businesses operating on Hong Kong soil.

Meanwhile, authorities should also consider further relaxing the approval mechanism of the existing subsidization programs relating to innovation and technology development.

Take the Innovation and Technology Fund (ITF) as an example. At present, in order for a project to be eligible for it, the maximum proportion of its R&D activities that take place outside Hong Kong must not exceed 50 percent.

We believe the proportion should be raised to 80 percent or above so as to further optimize the use of the fund.

At the same time, the administration should also expand the scope of the Research and Development Cash Rebate Scheme to make it applicable to joint R&D projects between Hong Kong businesses and scientific research institutions in the mainland as well.

I believe such policy adjustments will not only encourage Hong Kong business owners to invest more resources in R&D, it will also facilitate further technology transfers and help achieve greater synergy within the GBA.

This article appeared in the Hong Kong Economic Journal on March 16

Translation by Alan Lee

[Chinese version 中文版]

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Dr Dennis Ng Wang-pun is the president of the Chinese Manufacturers' Association of Hong Kong