Hong Kong's high property prices and the government's aversion to risk have made the city a difficult place for a technology start-up scene to flourish, Polytechnic University vice-president Professor Alexander Wai Ping-kong says. "Making money in Hong Kong is too easy," Wai said in an interview. "If you have HK$100 million to invest … I won't ask you to invest in technology but in the property market." He said "the whole economic structure of Hong Kong" provided little support for technology developers. In part, that's because corporations see real estate as a safer investment with more predictable returns than technology, Wai said. Tech start-ups also require plenty of space, which is particularly expensive in Hong Kong. That high overhead further dissuades investment, he said. The existing high failure rate of local tech start-ups also puts off potential investors, including the city itself, Wai said. He believes the government could foster a successful start-up scene by offering capital and a more robust support structure. But he said government officials were largely unwilling to take risks, as they see mistakes as societally unacceptable. However, Wai pointed out that even in the United States' apparently blossoming start-up scene of Silicon Valley near San Francisco, California, some estimates put the failure rate of new tech businesses at 90 per cent. Those failures, Wai said, were where young entrepreneurs learned the lessons they would eventually apply to become successful business leaders. "Hi-tech entrepreneurship has three characteristics: high risk, high investment and high returns," he said. "But Hong Kong's attitude is that risk is unacceptable. Whoever makes a mistake will lose his head. The whole government's activities have become more and more conservative in the past decade." While Hong Kong invests less than 0.8 per cent of its annual GDP in technology research and development, the mainland invests 2.2 per cent of its GDP. Singapore pours in 3.4 per cent, Taiwan spends 2.8 per cent and Japan spends more than 3 per cent, Wai said. Wai said that in Singapore, the government not only provides free space for start-ups but also pays employees' salaries in the first three years, while in Taiwan the government offers benefits to entice many US-trained Taiwanese professionals back home. "Hong Kong has been lagging behind in this," he says. Edward Yiu Chung-yim, an associate professor of geography and resource management at Chinese University, said the government's mishandling of the property market had created an imbalance between the supply and demand of available land. He also said the government, which technically owns all land in Hong Kong, had created the price bubble by limiting the supply of land available for development, making the government itself a monopoly and vested interest holder. The Hong Kong dollar's peg with the US dollar also means that the exchange rate cannot adjust itself when a large amount of foreign money pours in, Yiu said. For example, as tens of millions of mainland shoppers have brought in an influx of renminbi, the Hong Kong dollar has not appreciated in kind, but has rather become even cheaper as the US dollar has dropped compared to the yuan. As even more mainlanders come to take advantage of the comparably cheap retail prices, rents have gone up, forcing out many local businesses, including tech start-ups, Yiu said. Yiu said the government should be more transparent in its land-use policies, and relax its controls on new development, in order to create more affordable space for new businesses. "Right now, the property market is controlled by a small group of vested interests, creating the artificial suffocation," he said. Young Hongkongers need a tech boost to reach potential, says government adviser Developing innovation and technology is important in creating employment opportunities for young people and helping them move upward, said the newly appointed technology adviser to the chief executive. Speaking at a youth development forum yesterday, Nicholas Yang Wei-hsiung, former vice-president of Polytechnic University, said Hong Kong's ageing society had put young people in an increasingly important position. "Hong Kong is facing a very serious problem," said Yang, who was appointed as the chief executive's innovation and technology adviser and a non-official member of the Executive Council in March. "Hong Kong really lacks young people." Yang said the average age in the city was 43, which made Hong Kong one of the 10 oldest regions in the world, compared to an average age of 37 in the United States, 35 on the mainland, 21 in Nepal and 15 in Uganda. "This makes it more important to let young people fully reach their potential," said Yang. To develop technology, the city could make use of the mainland's advantages such as young talent and new ideas, he said. Hong Kong, with its international standards, also provided what the mainland needed, he said. He added that the government should also provide the private sector with incentives to invest in research and development. Born in Taiwan, Yang, 59, also heads a new advisory body that replaced the previous steering committee on innovation and technology, which was presided over by Financial Secretary John Tsang Chun-wah. Yang was tipped to be the chief of a proposed innovation and technology bureau, but the government has failed to secure HK$35 million funding for the bureau from the Legislative Council's Finance Committee because of a filibuster by pan-democrats.