New | Government must nurture the Lion Rock spirit of innovation
Andrew Sheng and Edward Tse say Hong Kong should invest in R&D to secure a competitive edge
The Legislative Council is considering a government proposal to establish a science and technology bureau. Taking immediate steps to develop an economy where innovation, education, science and technology play direct and definitive roles in boosting creativity, jobs and long-term sustainable growth is the right way to go.
But, before we get a bureau, we need a clear science and technology policy.
Although Hong Kong ranked seventh in the 2013 World Economic Forum Global Competitiveness Report, it identified that we have insufficient capacity to innovate, an inadequately educated workforce and a government structure not geared to support innovation upgrading.
Hong Kong must move to the next stage of a knowledge economy. We are either a leader in knowledge services or a follower. We cannot stand still.
As a free market, Hong Kong has a lot of talent. We just have to make sure we fully explore and exploit our capabilities. To do so, we need to co-ordinate our priorities, breaking down the silo mentalities in education, business, the civil service and society.
We need to improve on the five pillars of our innovation economy. First, in the governance pillar, we need a political consensus that science and technology innovation is critical for our competitiveness and social inclusiveness.
The government must … raise our investment in R&D to match at least the mainland
Science and technology is not something that the market alone will provide. Every competing neighbour, not least Korea, Japan, Taiwan and Singapore, enjoys positive government intervention in developing its research and development sector.
The Hong Kong government must play a dual role: it must provide thought leadership, and facilitate collaboration between the public and private sectors in R&D. It should lead in practice, too, such as through e-government projects.
The second pillar is entrepreneurship, for which Hong Kong is famed. Our small and medium-sized enterprises cannot seize opportunities made possible by science and technology and R&D unless they appreciate and have access to specialist knowledge support. Through the use of incentives, we can encourage our universities to provide SMEs with R&D support.
The mainland has already started the New Third Board as a nursery for good SMEs to prepare for eventual listing on the main stock exchanges. The Hong Kong Exchanges and Clearing should look at the feasibility of developing similar mechanisms to prepare companies throughout Asia for listing at the next level.
The third pillar is finding innovative ways to fund R&D. Hong Kong cannot claim to be a knowledge economy if it spends only 0.73 per cent of GDP on R&D, compared with 2 per cent for mainland China, 3.7 per cent for Korea, 2.3 per cent for Taiwan and 2.2 per cent for Singapore.
The government must have a game plan to raise our investment in R&D to match at least the mainland. Currently, most R&D is done at universities, funded largely by government and Hong Kong Jockey Club grants. Even though we boast a simple and low tax regime, we do not have a simple and workable system for private donations to fund knowledge creation.
We need to set aside funds for science and technology development. There are several funding options, such as allocating part of the current stock market turnover levy, allocating a small proportion of Exchange Fund investments to fund start-ups, or running a special Jockey Club lottery to fund R&D.
The fourth pillar is education and training. Science and technology and R&D are the work of generations, because it takes at least 20 years of critical mass before we can produce the best scientists and technical support staff.
Our excellent universities must lead in fostering a culture of cross-fertilisation with the private sector where R&D can be transferred and commercialised. This requires university staff to be part of the new start-ups, either in R&D, consulting or being partners in operating new businesses.
Last, but not least, there must be public awareness of the importance of R&D.
Hong Kong has a choice of continuing to invest its excess savings in foreign exchange reserves, earning low interest rates - or in its own people.
In every economy, investing in people through R&D and skill training yields the highest social returns. R&D and knowledge are socially inclusive, giving the poor and the young an opportunity to create knowledge and wealth. Investing in R&D and start-ups is exactly in the spirit of the Lion Rock.
Enough of the continuous debate on the achievements of Hong Kong or the lack thereof. What is needed is practical action. Let's start working to realise a vision for Hong Kong as Asia's knowledge leader on the cutting edge.
