The industrial sector does not contribute much to Hong Kong’s current economy. For instance, the added value of the manufacturing industry ($35.5 billion) accounts for around 1.2% of the total GDP in 2018. Since Hong Kong’s economy heavily relies on the financial industry, the local economy is less stable and less capable in building resilience. We support the Government’s proposal for promoting the development of innovation & technology and re-industrialisation, as we believe it helps improving Hong Kong’s economic development, building foundation for the advanced manufacturing industry, as well as assisting innovations.

 

Restrictions and Difficulties

• Insufficient communication between scientific research institutes and the business sector hinders commercialization of research outputs.
• Human resources, especially innovative, skilled workers are inadequate. The education system in Hong Kong provides insufficient training for industrial talents. Manufacturers carry out little R&D activities and they are weak in assimilating new technologies.
• High cost for industrial land use due to lack of land resources.
• Supporting equipments and services for re-industrialization are seriously inadequate and scarce. For instance, enterprises have a hard time seeking for supply chain to carry out manufacturing procedures.
• Government’s complex bidding process may discourage enterprises.
• Laws do not keep up with developments. Enterprises gave up moving their production machines back to Hong Kong as they fail to gain approval from the Town Planning Board under the current building regulations.

 

Suggestions

1. To explore an appropriate and effective management system

At present, outputs and results of the University Grants Committee (UGC) funded research are held by Universities. Since selling of patents is not easy, research teams and Universities have little concern for the possibility in industrialising research findings. Instead, they focus on the academic nature of research projects and publishing papers. The present mechanism suffocates the development of industrialisation of research output and splits scientific research and industrial development.

In order to combine research, education and industrialisation, the Government should set up a system to mobilize the efforts of Universities and research teams. Under this system, research output would be collectively owned by the government, Universities and research teams, but managed by a specifically set up statutory institution. This institution would be responsible for the development of research outputs and results that shall include, but not limited to promoting industrialization of it. At the same time, profits gained by selling a patent would be shared by the Government, Universities and research teams at a prescribed ratio. As a result, different parties will gain more incentives while the government can reinvest the profit for future research to achieve sustainable development.

For government-sponsored research institutions like the ASTR, as the degree to which research output gets industrialised should be included as an important criterion in evaluating their performance. The government should draw a linkage between the progress and research funding. Hence, those institutions can be motivated to conduct research in response to the needs of the public and the industries. It would be important to maximize technological development.

2. To promote one or two selected industries for a breakthrough

Development of supporting equipments and chains cannot be done overnight. If industries fight alone as they work on innovation & technology and promote industrialisation, they inevitably face restrictions. The government shall endeavour to promote emerging industries, in order to help these industries take shape and reach a certain scale in a short period of time.

It is recommended that the Government shall seek for breakthrough by identifying and selecting one or two industries with high technological content and low supporting requirements, and provide support through policy tilts. As an industry starts to come in shape, the Government can move on to catalyze the development of another industry, and make progress in achieving re-industrialization as well as developing high-end industries. Among many potential industries, we think the biomedical industry is worth considering.

3. To actively attract experts and nurture local talents

Hong Kong has always been a good choice for international experts to come and stay. Being affected by vandalism as well as the struggle between China and the US, the Government has to work harder in attracting talents to promote technological developments and achieve sustainable economic growth.

As the US has recently banned some mainland students and scientific researchers from entering, we should seize this opportunity and attract them to come and develop in Hong Kong.

 

4. To attract leading enterprise and drive local industries

Measures shall be taken to attract enterprises at home and abroad to set up R&D and production facilities in Hong Kong, especially enterprises from industries that Hong Kong intends to nurture. The Hong Kong Government should also implement preferential policies if the leading enterprises are willing to settle in Hong Kong, so as to facilitate the formation of the industrial chain and help scaling up relevant industries.

 

The Hong Kong Chinese Importers’ & Exporters’ Association
5 June, 2020