Hong Kong’s Science Park just got the lion’s share of the budget goodies, but on what basis?
A government’s fiscal budget isn’t really a useful statement unless it is underpinned and driven by long term vision and strategy.
So each year, Hong Kong’ budget is a series of ad hoc expenditures based on the current surplus rather than total reserves. It’s as primitive as a household budget.
We’ve gotten so used to local terms like “goodies” and “sweeteners”, which are unheard of in real world public policy. They are poor intellectual substitutes for developing and funding long term policies to solve important social problems and steer the economy.
Some people heap praises on treating important and nuanced challenges like technology as if it’s a trendy subject that can be solved by one-time spending. The emphasis on government spending as Hong Kong’s way to technology prestige is much riskier than letting the private sector decide what technology suits Hong Kong’s domestic competitive advantages and disadvantages.
Historically, governments have rarely succeeded against the private sector in funding and developing successful technology from concept to application. The US government’s Manhattan Project, which built the atomic bomb - a real game changer - and the moon landing are the only two historically significant technology projects that a government can claim credit to.
You might include the internet, but today’s internet is a result of substantial private, rather than public investment.
As much as HK$40 billion (US$5.1 billion) was allocated to the Hong Kong Science Park, of which HK$10 billion was designated for funding reputable research institutes or tech enterprises to conduct research and development project in the areas of biotechnology, artificial intelligence and robotics technologies.
No one yet knows who will decide how the money will be spent and allocated, but serious problems are already looming.
Every time the subject of technology arises, government bureaucrats and researchers regurgitate some elite-driven concept that has little benefit to the average person. Sponsoring advanced research in these areas help Hong Kong’s core advantages like trade and logistics. Hong Kong has neither a biotech industry to speak of, nor investment funds or analysts. It is a totally unnatural sector for Hong Kong to enter, that only benefits a small group.
No one has discussed who will own the intellectual property of these ventures (probably the tenants, not the Hong Kong government) and how much the government will pay to license them.
Biotechnology experts tell me that the Hong Kong government is setting itself up for exploitation by feeling the need to bid aggressively for biotech projects.
Prestigious research groups will demand free facilities, large grants, subsidies for their salaries, generous housing allowances for expatriates.
Hong Kong is not a natural biotech entry point to the Chinese or international markets. Instead, biotech firms generate greater advantage by teaming up with a mainland Chinese entity. Biotech start-ups require at least 10 years to gestate initial results and high rents will easily kill them.
And any talk of adding additional committees to monitor progress and account for spending will only add to the suffocating layers of red tape and bureaucracy that already floats around at these local science parks.
Bureaucrats are scared to make mistakes and cannot decisively commit to funding because unlike investors or venture capitalists, they possess no specialised experience or track record.
Rather than watch a group of bureaucrats stumble around making the same mistakes they did with technology in Hong Kong 20 years ago, it would be easier if Hong Kong’s government just gave free rent to local start-ups or throw HK$1 billion into a thousand start-ups, stood back and see what happens instead of choosing its favourite sector.
Peter Guy is a financial writer and former international banker.