Chief Executive Donald Tsang Yam-kuen has started his consultation on this year's policy address and has made it clear that the government aims to develop the six industries recommended by the Task Force on Economic Challenges that would sustain Hong Kong's long-term growth as a knowledge-based economy.
The search for new engines of growth outside the traditional pillar industries of financial services, trade and logistics, tourism and professional services is not new. In his 1998 policy address, former chief executive Tung Chee-hwa referred to the report of the former Commission on Innovation and Technology, chaired by Professor Tien Chang-lin, and laid out his vision for Hong Kong to become a place of many centres: for example, a world centre for design and fashion, health food and Chinese medicine, or a regional centre for multimedia-based information and entertainment, or for professional and technological talent and services.
The government has since set up a permanent Innovation and Technology Commission, invested in Cyberport and set aside billions of dollars in applied research and technology. While we have seen progress in a number of areas, it is fair to say that we have yet to realise the vision set by the former chief executive; and Hong Kong lags behind places like South Korea in turning innovation and technology into new drivers for economic growth.
Ten years later, the government continues to identify innovation and technology as one of the six industries with high potential. The chief executive said he would 'actively explore the possibility of new financial or tax incentives to encourage the private sector to increase investment in research and development'. Many governments, such as Taiwan's, use fiscal incentives and outright subsidies to support the development of new industries. But the Hong Kong government has always held on to the principle of 'small government, big market'. Whether this year's policy address will unveil a major shift in the economic policy and mark the beginning of substantial and active government intervention in our economy is something we should all watch and debate.
But that is not denying the importance of government support in nourishing new industries, such as education and medical services. It is true that we have achieved progress in these two areas: we have the largest number of international schools of any city and our top universities are among the best in the region. We have a world-class medical profession and our hygiene and regulatory regime has withstood the most rigorous tests brought about by severe acute respiratory syndrome and, more recently, swine flu.
But both areas have their share of problems. Despite the rapid development of tertiary education, only 18 per cent of our secondary-school leavers can enter university, the lowest percentage among developed economies. Apart from several thousand mainland students, we have only about 200 foreigners studying in our undergraduate programmes, making our universities look more provincial than international. Whether the two earmarked sites will be developed to meet the demand of local students or to attract foreign ones will raise the fundamental issue of balancing the social needs of providing more tertiary places for our students with the economic benefit of exporting our educational services - something Australia has been doing for many years.