Government promotion of 'pillar' industries must be laser sharp
Jeffrey Lam says HK needs to focus on its strengths in six 'pillar' trades
To seize the opportunities offered by globalisation, Hong Kong is aiming to turn itself into a knowledge economy by promoting the six pillar industries of education, innovation and technology, testing and certification, medical services, cultural and creative industries, and environmental industries.
The idea of these six "pillars" has been to diversify the economy in response to the 2008 financial crisis. However, the road to that vision has been bumpy due to the government's lack of forward thinking and action. Some have even mockingly referred to the six industries as the "six poor industries" (in Cantonese, the word for "pillar" sounds similar to the one for "poor").
Take the setbacks in the development of the city's education industry for example. Universities have been so aggressive in their admissions that local students now complain of limited campus accommodation and overcrowded canteens and study areas. The government has also been criticised for making a big land grant to the Hong Kong branch of Harrow International School, which caters to rich local and mainland families.
Similar problems afflict the government's strategy to develop medical services. The influx of pregnant mainlanders wanting to give birth in Hong Kong has taken a heavy toll on obstetrics staff, and our maternity care services have come close to breaking point.
The stress on our education and obstetrics services should serve as a wake-up call for the city to refocus on its strengths, instead of blindly pursuing new industries to drive growth.
Rather than overload our obstetrics services, for instance, the government should be helping to promote what our hospitals are good at. The city is famous for carrying out liver transplants, and angioplasty and coronary artery bypass surgery, among other skills. The government should capture the soaring regional demand for these services.
Meanwhile, Hong Kong should capitalise on the enormous market opportunities presented by the mainland, which is determined to upgrade its industries. One way to do that is by offering Hong Kong's distinctive, East-meets-West perspectives in the hi-tech and creative industries. This is where we have an edge over foreigners. Thus, developing the creative and technology industries as new pillars puts Hong Kong on the right track.
The government has made a good start by providing funding and land for the Hong Kong Science and Technology Parks. Then there's the pilot development zone in Guangzhou's Nansha district, to be jointly developed with Guangdong and Macau.
However, having the "hardware" alone doesn't mean we are ahead of our peers in the race to become the regional hi-tech hub. We need the "heartware" of enterprising innovation technology firms. Most companies in the information technology, research, and cultural and creative industries are small- and medium-sized enterprises, and they need financial help and support to market their products. As Hong Kong's financial institutions tend to require property as collateral for loans, SMEs have found it difficult to secure the financing necessary for them to develop their products and open up a market.
Therefore, the government should encourage the development of angel investors and venture capitalists in the private sector, who are the lifeblood of innovative companies in the United States.
Other government support, such as providing low-rent offices, organising business-matching events and encouraging the use of intellectual properties as financing tools, can help start-ups and SMEs receive critical nurturing.
Hong Kong has fundamental strengths for turning itself into a knowledge economy, but how can the city succeed? The government's forward-looking plans and all-round support are indispensable.
