For tech to flourish in Hong Kong, the government must invest where the private sector fears to tread
Sunny Cheng says to support innovation in the city, the government should be prepared to fill the funding gaps for sometimes risky projects
A question we seldom ask is what roles should governments play? Should they be regulators, facilitators, or do nothing? The government and the private sector often collaborate in unique ways. When people thank Steve Jobs for creating the iPhone, they forget it was the government that educated the software and hardware engineers, supported the birth and growth of the chip industry and invested in military communication which turned into civilian use.
The government will always remain the biggest supporter of technology creation and growth. When Hong Kong’s economic growth hits a wall, the government must lead to invest in our future. It has always been the patient farmer, and while the private sector picks the sweet cherries, the government prepares the farmland for growth. Economist Mariana Mazzucato argues that society uses the government to “socialise the risks”, while the private sector “privatises the rewards”.
We must change with the times. Our economy can only grow by creating new businesses. To facilitate this, governments must take a bigger role by focusing on the “new”, like encouraging graduates and students to innovate. By providing more money to universities, it will facilitate groundbreaking research and embolden students to start new ventures.
Funding new projects is never easy, especially when the risks are high. Businesses invest with expectations of returns in a year or two. Funding innovation can be risky as investments can go sour. The payback for biomedical investments, for example, can take more than 10 years.
Access to investors, venture capitalists and angel funds are part of the ecosystem of today’s innovative economy. However, they have their own priorities, preferences and exit expectations. They often find growth rates in semiconductors, robotics and green tech industries too slow. The government’s role is not to share the same risks as venture capitalists’, but to provide funds to fill such gaps. For example, it has set up a HK$2 billion fund to attract venture capitalists to the city, and will chip in one dollar for every two of their money invested. A portion of this fund should be used on risky projects and projects with long commitments.
When it comes to measuring the success of government programmes, society is seldom tolerant. When public support is weak, the government often becomes hesitant to help. But that is exactly its role – to provide help when there is a gap to fill. Like investing in education, hoping for jobs 20 years later, we must look beyond short-term profits.
Dr Sunny Cheng was a senior manager at the Innovation and Technology Commission