Speech at Panel on Commerce and Industry

Progress report on the Innovation and Technology Fund

Positioning of the Innovation and Technology Fund

Mr CHAN Chun-ying pointed out that none of the funding schemes was dedicated to financial technology or e-commerce although financial services were one of the key industries in Hong Kong. He suggested that the Administration should consider establishing trade-specific programmes to facilitate the development of particular trades.

Vetting and approval procedures of funding applications

Noting that the funding schemes were now categorized into five major groups, Mr CHAN Chun-ying enquired whether the Administration would consider consolidating funding schemes with similar nature so as to make the funding schemes more user-friendly and streamline the operation of ITF. He also asked if there was any restriction for an applicant enterprise to apply for funds from more than one funding scheme with the same R&D project. If not, in the course of vetting the ITF applications, whether the Administration would remind the applicants to consider applying for additional funds from other applicable funding schemes.

CIT explained that since the establishment of ITF in 1999, various funding schemes had been introduced in response to the changing needs of the I&T industry and the society over the years. In respect of combining funding schemes of similar nature, CIT said that the Administration would launch the Partnership Research Programme (“PRP”) in January 2019 by merging the University-Industry Collaboration Programme (“UICP”) and the collaborative stream of the Innovation and Technology Support Programme (“ITSP”) as well as rationalizing the requirements such that PRP would adopt more flexible arrangements to encourage more collaborative R&D projects. CIT welcomed Mr CHAN’s suggestion and would identify further opportunities to consolidate different funding schemes as appropriate.

CIT added that applicant enterprises might apply for support from more than one funding scheme and the Administration would consider all such applications independently. For example, after conducting R&D projects in partnership with designated local public research institutions under ITSP, UICP, or PRP upon its launch in late January 2019, private companies might apply for cash rebate on its expenditure under the Cash Rebate Scheme. Private companies could further enjoy enhanced tax deduction for qualifying R&D activities at the same time.

State Key Laboratories, Hong Kong Branches of Chinese National Engineering Research Centres and Technology Transfer Offices of designated local universities

Mr CHAN Chun-ying noted that although TTOs of the designated local universities were funded by ITF, the universities were not required to return the profit generated from the commercialization of R&D results to the Government and there was no requirement on the use of such profit. As the ITF funding to TTOs was public money, Mr CHAN considered that the Administration should request the universities to use such profit only on its future R&D activities and technology transfer so that the annual funding to TTOs could gradually be reduced and the amount saved could be used to fund the other funding schemes.

CIT responded that while the use of such profit varied among universities, they were mainly used (a) for incentivizing the relevant R&D team and researchers; (b) on faculties/departments which supported the R&D projects; and (c) on the universities itself for R&D and technology transfer work. As the universities had established their own mechanisms for proper use of such profit, CIT considered it unnecessary for the universities to return the profit to the Government. The existing arrangement was considered effective in striking a balance between administrative efficiency and prudent use of public money.


Discussion at multilateral and regional fora on trade facilitation initiatives

Investment agreements

Mr CHAN Chun-ying noted that out of the 20 investment agreements (“IAs”) which Hong Kong had signed with different foreign economies, only one of the IAs was signed with a Member State of the Association of Southeast Asian Nations (“ASEAN”), i.e. Thailand. Mr CHAN enquired why other ASEAN Member States (“AMS”) which had close bilateral trade and investment ties with Hong Kong, including Singapore, Malaysia and Indonesia, had not signed IAs with Hong Kong.

DGTI advised that upon the signing of a Free Trade Agreement (“FTA”) with ASEAN, Hong Kong also signed an IA with ASEAN as a whole. The IA between Hong Kong and Thailand as an individual AMS was signed prior to the signing of FTA and IA with ASEAN. The Administration would not rule out the possibility of signing IAs with individual AMS. Generally speaking, IAs would provide Hong Kong investors with fair and equitable treatment, as well as full protection and security in respect of their investments in foreign markets.

International trade policies

Noting the United States (“US”)’s withdrawal from the Trans-Pacific Partnership in 2017 in pursuit of other bilateral or regional trade agreements, such as the United States-Mexico-Canada Agreement signed in November 2018, Mr CHAN Chun-ying enquired about the relevant impact on Hong Kong’s international trade policies.

DGTI advised that despite the recent changes in the US trade policies which had created uncertainties in the global trade environment, the US was still a signatory to the WTO Agreement on Trade Facilitation, which reflected that all WTO Members, including the US, had attached great importance to trade facilitation. The Administration would continue to uphold the principle of free trade at the multilateral fora.