Hong Kong must invest more in digital economy to catch Singapore, mainland China, Chamber of Commerce boss warns
- ‘A key challenge for Hong Kong is that we have insufficient investment in our research and development in technology and the digital economy,’ says George Leung Siu-kay
- Failure to spend more on tech research could harm the city’s standing as an international centre for trade, he warns
Leung cited World Bank data showing Singapore’s research and development (R&D) expenditure as a percentage of GDP was 1.9 per cent in 2019, compared with just 1 per cent for Hong Kong in 2020. China invested 2.4 per cent, while the average among developed markets in the Organisation for Economic Co-operation and Development (OECD) was 3 per cent in 2020.
“Even though the Hong Kong government set a goal to increase the ratio to 1.5 per cent in 2022, Hong Kong is still some way behind Singapore,” he said.
Digital trade refers to cross border e-commerce and other electronic means of supporting international trade such as cross-border payment systems.
The government has done a lot in recent years to catch up. A month ago, it said it would introduce a wide range of measures, including a new licensing regime for digital assets services providers, to help turn the city into a virtual-asset hub.
The Hong Kong Monetary Authority, the de facto central bank, launched the Commercial Data Interchange (CDI) platform in October to allow banks to make quick and easy decisions about lending to small and medium-sized enterprises (SMEs).
The authority granted eight virtual bank licences two years ago, and initiated a project aimed at introducing a digital currency called the e-HKD.
Leung said the city faces other big challenges, such as a loss of professional talent, an ageing population and the fact fewer international firms are choosing it as a regional headquarters. These trends could all erode its competitiveness.
“While Hong Kong can still play the role of a connector between China and the world, the decline of international companies using the city as a hub is something we need to be concerned about. We will need to find a way to attract the international companies.”