Tax cuts, talent job subsidies, higher R&D spending planned up to 2022

Hong Kong's innovation and technology industry is in for a "golden" development period.

Chief Executive Carrie Lam Cheng Yuet-ngor said on Wednesday the government will launch multiple cross-departmental measures to lift the sector, including tax cuts, talent employment subsidies, infrastructure building and the setting up of a special steering committee to implement them.

Delivering her maiden Policy Address in the Legislative Council, Lam said her administration has already set the goal to double the annual spending on research and development (R&D) - from 0.73 percent of GDP to 1.5 percent - which would translate into HK$45 billion by the end of the current government's term in 2022.

Chief Executive Carrie Lam Cheng Yuet-ngor strides confidently to the podium to deliver her maiden Policy Address in the Legislative Council on Wednesday. Roy Liu / China Daily

To attain the objective, the government will intensify the private sector's participation in the industry through tax incentives. A government source said, ultimately, the private sector is expected to shoulder 55 percent of the HK$45-billion R&D expenditure to make R&D funding more sustainable.

The proposed tax deduction scheme would allow private companies, which invest in technological R&D, to enjoy a 300-percent tax deduction for the first HK$2-million eligible R&D expenditure and 200 percent for the remainder.

Lam said that local enterprises had shown interest in investing in innovation and technology as some have already invested in R&D projects in Israel. She's confident that Hong Kong companies would be more willing to invest in local R&D with her proposed measures.

According to the government source, the process to legislate the suggested tax scheme is expected to be completed during the current legislative session which ends in July next year, and would commence soon after.

Lam noted that the expenditure would be allocated to cultivate and sustain innovation and technology talents in Hong Kong. No less than HK$10 billion would be assigned to fund university research and another HK$3 billion would be allocated to fund students engaged in research work under the University Grants Committee-funded universities.

In addition, the Innovation and Technology Bureau (ITB) will launch a HK$500-million Technology Talent Scheme next year.

Under the scheme, part of the money would be used to help local enterprises recruit post-doctoral talents for scientific research and products development. A government source noted that the ITB would subsidize no more than two post-doctoral talents hired by one company for two years, and the company would receive a monthly subsidy of HK$30,000 for each of the eligible employees.

All companies at Science Park, Cyberport and those registered under ITB projects are eligible to join the scheme.

The rest of the HK$500 million would be used to subsidize local enterprises on a matching basis for training their staff on advanced manufacturing technologies.

In providing more technological infrastructure, the ITB would cooperate with the Home Affairs Department and Cyberport to launch the Space Sharing Scheme for Youth. The scheme's first phrase will see a floor area of some 60,000 square feet being lent to startups with rents no more than one-third of the market value in the first half of next year.

Meanwhile, the government would invest HK$700 million to push ahead infrastructure projects for smart city development, including providing "eID" to all Hong Kong residents and building a big data analytics platform. The "eID" will enable everyone to use a single digital identity and authentication to conduct government and commercial transactions online, and provide a key digital infrastructure for smart city development.

As the whole package of innovation and technology development measures involve different government departments, a high-level, inter-departmental steering committee on innovation and technology will be set up to examine and steer measures proposed in the Policy Address. Lam would personally head the committee.

Legislators welcomed Lam's measures on innovation and technology.

Chan Kin-por, newly elected chairman of the LegCo Finance Committee, said investing in innovation and technology is an investment for the future. He suggested that the insurance industry, one of Hong Kong's leading business sectors, could adopt more new technologies.

The business community also backed Lam's proposals.

Yue Yi, vice-chairman and chief executive of Bank of China (Hong Kong), spoke highly of Lam's plans for raising R&D investment and tax deduction, saying they would not only enhance Hong Kong's competitiveness, but also help the city catch up with the global trend.

willa@chinadailyhk.com

(HK Edition 10/12/2017 page5)