Hong Kong budget 2024-25: innovation sector gets HK$24 billion investment boost to drive tech economy

Hong Kong has reinforced its commitment to innovation with a HK$24 billion (US$3.07 billion) investment to boost the tech-driven economy despite shrinking support for small businesses. In his budget speech on Wednesday, Financial Secretary Paul Chan Mo-po announced a raft of innovation and technology (I&T) initiatives with various funding schemes to foster a vibrant and diversified economy, pledging continued support for turning the city into a global tech hub. “I&T is a key engine driving our economy and society towards high-quality development … and its vision of becoming an international I&T centre,” he said. “The government has committed substantial resources to building a vibrant I&T ecosystem by focusing on enhancing I&T infrastructure, research capacity and talent.” The new measures come amid a tightening of export rules by the United States in recent years to curb China’s access to cutting-edge computer chips and manufacturing equipment. One key budget initiative is the launch of a HK$10 billion New Industrialisation Acceleration Scheme. Under the measure, enterprises engaging in life and health technology, artificial intelligence (AI) and data science, advanced manufacturing and new energy technology will each be provided with funding support of up to HK$200 million on a matching basis. Under the plan to push for new industrialisation, an eligible applicant will need to invest no less than HK$200 million in Hong Kong with each company allowed to hire five overseas technical staff. Chan said he anticipated that the scheme would attract 50 to 100 enterprises within five years to invest no less than HK$20 billion in Hong Kong. With the first phase of Cyberport’s AI Supercomputing Centre expected to start operating this year, a HK$3 billion three-year AI Subsidy Scheme will be rolled out to support local universities, research institutes and enterprises to leverage its computing power and achieve scientific breakthroughs. “The subsidy will also be used to strengthen the cybersecurity and data protection of the centre, and launch promotional and educational activities, et cetera, to encourage mainland and overseas AI experts, enterprises and R&D projects to come to Hong Kong,” Chan said. The government is also due to announce a white paper this year on the development of the Hong Kong-Shenzhen Innovation and Technology Park in the Lok Ma Chau Loop which will roll out its first batch of buildings by the end of this year. With an InnoLife Healthtech Hub being set up in the park to attract top-notch teams and talent to conduct research on life science, HK$2 billion will be dished out to support the InnoHK research clusters to establish a presence in the loop. Another HK$200 million will be provided to start-ups engaging in relevant incubation and acceleration programmes. Other measures include HK$6 billion in subsidies for local universities to collaborate with mainland and overseas organisations to set up life and health technology research institutes. A HK$3 billion Frontier Technology Research Infrastructure Support Scheme will also be launched for government-funded universities to conduct research related to AI, quantum information, integrated circuit, clinical medicine and health, and gene and biotechnology. Each government-funded university will also be provided with no more than HK$16 million for technological transfer. Besides enhanced investment on innovation, Chan also sought to press ahead with development of the city’s green finance with the US$100 billion Green and Sustainable Finance Grant Scheme. Bourse operator the Hong Kong Exchanges and Clearing will also keep trading going during adverse weather this year. Hong Kong sets aside HK$1.09 billion to boost tourism, transform city into cultural hub While Chan announced the extension of the 80 per cent and 90 per cent loan guarantee scheme to March 2026 in a bid to ease small and medium enterprises’ cash flow problems involving a further commitment of HK$10 billion, the 100 per cent guarantee scheme will close at the end of March. Daggie Chan Ka-ling, 60, owner of Ma Ma’s Dumpling in Yuen Long, who still owes the bank HK$1.2 million under the 100 per cent loan guarantee scheme, said it had helped her ride out difficulties during the Covid-19 pandemic. “But our business has now dropped by 30 per cent compared with Covid levels due to Hongkongers heading north for spending,” she said. “We are still in dire straits and need support. But we’d rather see the government roll out measures to stimulate spending.” Ho Lok-sang, director and research professor of the Pan Sutong Shanghai-Hong Kong Economic Policy Research Institute at Lingnan University, said he was optimistic over the government’s hefty investment in innovation and technology, and that he was glad to see the city’s awareness of the potential of the sector. Hong Kong delays Lantau reclamation project, orders departments to cut costs “I think it won’t take too long for [returns]. Of course there will be a development period, but that shouldn’t last too long,” he said. “Hong Kong’s investment in this area has been relatively weak with the mainland having strong output in this area. But I think we have potential in the Greater Bay Area.” William Chan, tax partner at Grant Thornton Hong Kong, said Hong Kong needed to build a robust ecosystem to attract talent, start-ups and investments. “In light of the intensifying global race for technology hubs, we urge the government to step up its game to build a robust ecosystem that will attract talent, start-ups and investments,” he said. “It is also important for Hong Kong to align with national development strategies and foster a risk-taking mindset that is essential for driving innovation in the community.” Additional reporting by Jess Ma