Financial Secretary Paul Chan Mo-po delivered his 2023-24 Budget speech on Wednesday. As the first budget under the John Lee Ka-chiu administration, the new budget is considered comprehensive and abundant in measures for reinforcing the entire value chain of the local technology and innovation (T&I) ecosystem, consistent with the industry's expectations.
Against the backdrop of dwindling financial reserves and a volatile international political and economic climate, Chan took a visionary approach to integrating a “capable government” with an “efficient market”. Not only did he commit to allocating additional resources to accelerate the development of the digital economy and research and development (R&D) in certain frontier technology fields, but he also invested in the future and unleashed market forces, as evidenced by the proposed initiatives for Web 3.0, green tech and talent pooling. Echoing the pursuit of high-quality development in General Secretary Xi Jinping’s report to the 20th National Congress of the Communist Party of China, Chan’s approach aimed to enhance Hong Kong’s competitive edge as an international T&I hub, and ultimately to achieve sustainable long-term social development and economic prosperity.
The budget sets out three main directions to attain high-quality development; namely, promoting the digital economy, Web 3.0, and the International GreenTech and GreenFi Centre.
First, I welcome the feasibility study into the development of an artificial-intelligence supercomputing center, which has long been demanded by the industry and was reiterated in my proposal to the financial secretary. Such advanced digital infrastructure will directly upgrade the computing capabilities of R&D institutions and tech enterprises in Hong Kong and the Chinese mainland, and enable those with insufficient computing resources to accelerate their R&D progress at lower cost. As the Northern Metropolis will serve as a major T&I base for decades to come, the deployment of a computing center there will demonstrate appropriate land use.
I also expect to see breakthroughs in the iAM Smart platform, such as the adoption of blockchain technology and digital IDs for residents, following the financial secretary’s announcement of HK$200 million ($25.5 million) in funding to enhance its operations. As a platform with a participation rate of 25 percent of the population, iAM Smart has the potential to be developed as a core application that connects all e-public services and showcases a more-creative smart government.
Second, I welcome the initiatives to nurture the Web3 culture and ecosystem and the establishment of a task force on virtual-assets development. Since the declaration of the Policy Statement on the Development of Virtual Assets in Hong Kong and the Hong Kong Innovation and Technology Development Blueprint last year, the T&I industry has been confident about the government's commitment to fostering the next generation of the internet.
Echoing the pursuit of high-quality development in General Secretary Xi Jinping’s report to the 20th National Congress of the Communist Party of China, Chan’s approach aimed to enhance Hong Kong’s competitive edge as an international T&I hub, and ultimately to achieve sustainable long-term social development and economic prosperity
Furthermore, the recent licensing regime for virtual-asset service providers and the public consultation on crypto-assets and stablecoins have demonstrated the government’s commitment to developing a conducive yet appropriately regulated market environment. Such a stance is important and will be welcomed by those Web 3.0-related companies considering establishing a business presence in Hong Kong. I suggest that the government should formulate development road maps for other Web3 applications such as security-based token issuance (STO), and study their regulatory frameworks.
Third, I think the initiative to promote the green economy is an ambitious move. Hong Kong has long been regarded as the adopter of green tech and green finance. A recent example was the tokenized issuance of green bonds for institutional investors. However, the five directions as announced by the financial secretary — namely, building a green technology ecosystem, green finance application and innovation, green certification, talent training, and cooperation with the GBA and international markets — highlight the policy shift from adoption to innovation. If the government stays abreast of those “green” enterprises, Hong Kong is likely to develop a new pillar industry, while creating new employment and technology export opportunities.
Besides the three main directions outlined above, I am pleased that my proposal on the investment immigration scheme has been heard. It is renamed as the Capital Investment Entrant Scheme in the budget. Its details are yet to be announced, although the financial secretary emphasized that investment in the local property market will not be qualified.
In my original proposal, I reviewed and compared various investor immigration schemes in major developed countries. To channel overseas capital into specific sectors of the economy, an applicant can invest either in an accredited venture fund or in a local tech company operating in Cyberport or Hong Kong Science Park. An accredited fund can act as a gatekeeper, not only screening and investing in local tech firms, but driving overseas private capital into the local T&I ecosystem, and in effect strengthening its capital chain. On the other hand, if the applicant prefers direct investment, the companies in Cyberport or Hong Kong Science Park are subject to regular audits, so their operational and financial quality is somewhat assured. I hope that the program will be implemented with a similar mindset.
In stepping up the above efforts, the financial secretary earmarked HK$6 billion to set up thematic research centers by local universities and research institutions, HK$3 billion to promote the development of facilities for AI and quantum technology, and announced the establishment of a Microelectronics Research and Development Institute. These measures will undoubtedly strengthen support for the commercialization of R&D outcomes and reindustrialization. I also believe that these new facilities will absorb talent from the ongoing Top Talent Pass Scheme.
In addition to the above, the budget set out a raft of initiatives to ease the pressure on small and medium-sized enterprises and ordinary households, including a new round of the consumption voucher program with a total value of HK$5,000 per eligible resident as requested in my proposal. These measures fall outside the scope of T&I policy but they are equally important in paving the way for recovery.
On the whole, the budget is responsive to the voices from the T&I industry. It is a forward-looking yet practical one given that Hong Kong’s economy has contracted for three years (2019, 2020 and 2022). Although there are still many challenges and uncertainties ahead, I look forward to the government taking the lead in Hong Kong’s emergence from economic recession, and the revitalization of the post-pandemic economy. With the right policies and implementation, we could rebuild our society in no time.
The author is a Legislative Council member representing the Technology and Innovation Functional Constituency, the non-official member of the Digital Economy Development Committee, a tech entrepreneur, and a veteran tech investor.
The views do not necessarily reflect those of China Daily.
