Hong Kong urged to ramp up research spending to 4 per cent of GDP to keep pace with rivals
Current level of 0.73 per cent compares with 3 per cent in Taiwan and over 4 per cent in South Korea
Hong Kong needs to step up investment in research and development (R&D) to the equivalent of 4 per cent of its gross domestic product to stay ahead of punishing competition in the region, a pro-government think tank says.
Our Hong Kong Foundation, which was launched by former chief executive Tung Chee-hwa, said the level of such investment in the city last year was 0.73 per cent of GDP – “significantly lagging behind” its regional peers and mainland neighbours.
Professor Lawrence Lau Juen-yee of the Chinese University of Hong Kong, the leading writer of a report on the city’s positioning in future development, said at a forum on Thursday that the recommendation would put the city on a par with Shenzhen, which invested an annual 4 per cent.
“Hong Kong should set a goal, over the years, to achieve 4 per cent of GDP in R&D [expenditure],” Lau said. “This will be comparable to Israel, Taiwan and South Korea.”
Singapore spends 2 per cent of GDP on research, Taiwan 3 per cent and South Korea more than 4 per cent. Beijing invested 6 per cent on R&D last year.
Shenzhen topped Hong Kong for a second time this year as the most competitive city in China, according to the Chinese Academy of Social Sciences, a state-backed think tank.
Lau said the private sector should play a bigger role in future innovation investments, whereas the public sector – including government and universities – should ideally contribute 40 per cent of the total investment, instead of 55 per cent now.
At the same forum, Dr David Wong Yau-kar, chairman of the Mandatory Provident Fund Schemes Authority, said Hong Kong did not do enough in the field of applied technology despite its world-class academic researchers.
“There is a mismatch right now: we have top-notch universities doing very top-notch research, but at the same time our industries that need immediate applied research really have to go elsewhere.”
He said changes were needed in the way the government granted money for research and promoted academic staff.
The report also pointed to failings in the education system that dampened the outlook for the technology sector. Adults in Hong Kong, according to UN data, had an average of 10 years’ schooling compared with 12.9 years in the United States and 12.3 years in the United Kingdom. Yet the average was higher in Hong Kong than in the UK in the 1990s.
But it was not all gloom for Hong Kong – the report highlighted the city’s considerable strength in innovation and venture capital.
To develop the city into the “Silicon Valley cum Nasdaq” of Asia, the foundation suggested the government offer tax concessions to encourage R&D investment and facilitate initial public offerings for start-up companies or mergers and acquisitions.