Message. The Trade and Industry Bureau is committed to providing maximum support for Hong Kong s manufacturing and services industries.

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1 Message The Trade and Industry Bureau is committed to providing maximum support for Hong Kong s manufacturing and services industries. With the weight of our economy shifting towards knowedge-based and higher vaue-added production, it is imperative to upgrade our infrastructure and strengthen our support for promoting innovation and technoogica improvement in our manufacturing and service industries. To this end, we wi aunch a range of new initiatives incuding the estabishment of an Innovation and Technoogy Fund and a pubicyfunded appied science and technoogy research institute. These new initiatives wi hep fufi our vision of making Hong Kong a centre of innovation and technoogy in the 21st century. Sma and medium enterprises (SMEs) are the backbone of Hong Kong s economy, making a significant contribution towards our economic growth as we as offering empoyment opportunities. The Government is fuy committed to providing a conducive business environment and the necessary support for the deveopment of this important sector of business in Hong Kong. We therefore propose the setting up of a Sma and Medium Enterprise Office in the Industry Department to hep SMEs gain better access to the various support services provided to them. (Chau Tak Hay) Secretary for Trade and Industry

2 High Vaue-added and Competitive Industries Our Poicy Objective is to enabe Hong Kong to be one of the most competitive economies in the word by increasing the added vaue and productivity of Hong Kong s manufacturing and service industries. 1

3 Key Resut Areas (KRAs) To ensure that this Poicy Objective can be achieved, we must deiver resuts in a number of key areas, that is, we must I II III IV Promote innovation and improved technoogy in manufacturing and service industries Maximise Hong Kong s access to high-tech products Deveop a word cass support infrastructure for manufacturing and service industries Provide support for sma and medium enterprises Page 3 Page 8 Page 10 Page 13 The foowing sections of this booket expain the importance of these KRAs, describe the broad thrust of our efforts, and outine the indicators which we use to assess progress. Each section ists the new key initiatives being taken to achieve our objectives and pinpoints the agency accountabe for each initiative and the specific targets which we intend to meet. 2

4 I Promote innovation and improved technoogy in manufacturing and service industries Innovation and technoogy are powerfu drivers of the ong-term growth of an economy. They are essentia for increasing the added vaue, productivity and competitiveness of our manufacturing and service industries in the knowedge-based goba economy of the 21st century. Innovation incudes both improved technoogy and better methods of doing things. It may be manifested in new products or services; improved quaity; new ways of production, packaging, marketing or distribution; new markets; new suppy sources; new organisations or systems; and other areas. Improved technoogy is a powerfu force for innovation, and is needed not just in the high-tech segments of the economy, but in a economic sectors. Improvements to technoogy may be appied to a aspects of the vaue-adding chain, incuding the way in which a product or service is designed, produced, marketed and deivered. We aim to increase the capacity of our businesses to innovate, as we as to stimuate improvements in technoogy throughout the economy. We wi focus on sustaining and expanding our existing industries and spawning new industries that match our current and future competitive strengths. Our vision is to make Hong Kong a centre of innovation and technoogy in the 21st century. In March 1998, the Chief Executive appointed a Chief Executive s Commission on Innovation and Technoogy to study and advise on the measures and institutiona arrangements necessary to reaise our vision. The Commission submitted a First Report to the Chief Executive in September 1998 and wi compete its tasks by the midde of

5 Indicators Progress in this area is manifested by the extent to which businesses undertake innovative activities and enhance their products, services, processes or systems through technoogy. Initiatives To estabish an Innovation and Technoogy Fund to finance innovation and technoogy reated programmes reevant to commerce and industry (Trade and Industry Bureau (TIB))* To estabish programmes which wi promote university-business coaboration, e.g., matching grants for coaborative research projects recent higher-degree research graduates or students undertaking research and deveopment in private companies private companies funding research initiatives in universities (Industry Department (ID)) Targets To estabish the fund in the sum of $5 biion in 1999 To aunch the new programmes in 1999 * the brackets denote the agency with ead responsibiity for the initiative 4

6 Initiatives To estabish an appied science and technoogy research institute to support mid-stream research and deveopment (TIB) To aunch new programmes which wi promote and faciitate coaboration between the business sector and technoogica institutions on the Mainand, e.g., an eectronic database of Mainand technoogica resources; iaison meetings between reevant bodies in Hong Kong and Mainand counterparts (Industry Department (ID)) To examine the case for the deveopment of an Institute for Chinese Medicine, which woud undertake research, industry support work and promote commerciaisation of medicina products (TIB) Targets To begin the consutancy study for panning of the institute in 1999 To start discussing with technoogy-reated authorities in the Mainand on the database and the iaison mechanism in 1999 To set up a panning committee in

7 Initiatives Targets To encourage reevant bodies to foster coser co-operation with Mainand bodies in the area of technoogica support infrastructure, incuding encouraging joint-research between Hong Kong and Mainand institutions encouraging technoogy exchanges between the two paces to foster crossfertiisation of ideas co-operation between the future Hong Kong Science Park and proposed appied science and technoogy research institute and their counterparts as we as research institutions on the Mainand (ID) To strengthen our support for joint-research projects between Hong Kong and Mainand institutions under Government funding schemes To encourage such exchanges between oca and Mainand institutions and companies using Government funding schemes and specificay, to support cross-visits, seminars, conferences and training programmes etc. To initiate discussion at the Provisiona Hong Kong Science Park Co Ltd the issue of co-operation with Mainand institutes/ science parks in

8 Initiatives To promote a cuture conducive to technoogy ventures through a professionay managed Appied Research Fund (ID) Targets To engage at east two venture capita firms for the management of the Appied Research Fund in To achieve a significant proportion of private investment in funded projects of the Appied Research Fund To continue to hep sustain and expand our existing support for the services industry through the Services Support Fund (ID) To secure additiona resources for the Services Support Fund for

9 II Maximise Hong Kong s access to high-tech products High-tech products, such as high performance computers, eectronic equipment and tee-communication devices, are essentia to our banking, finance, and high vaue-added manufacturing sectors. Free and fu access to these products heps to maintain Hong Kong as an internationa business and financia centre, and stimuates the process of technoogica upgrading in Hong Kong. Some high-tech products are aso capabe of miitary use, therefore our trading partners, in ine with internationa practices, contro exports of these products. To ensure that our trading partners can have confidence in exporting these goods to Hong Kong without fear that they wi contribute towards proiferation activities, we must maintain an effective contro system as regards the transfer and use of these goods. The Trade Department maintains an effective computerised icensing contro system with regard to the import, export and use of strategic commodities which cover high-tech goods capabe of miitary use. The system is supported by vigorous enforcement action by the Customs and Excise Department. The effectiveness of our system is we recognised by our trading partners, and we accordingy have good access to hightech products. We aim to maintain and enhance our system and enforcement capabiity so as to ensure the uninterrupted suppy of the highest eves of technoogy to our industries. Indicator Our main indicator in this area is the extent to which oca business can continue to import the maximum range of high-technoogy products for egitimate use from our major trading partners. 8

10 Initiatives To impement fuy the Chemica Weapons Convention in Hong Kong Specia Administrative Region so as to achieve the highest recognised standard of contro of chemica products (Trade Department, Customs and Excise Department (C&ED) and Government Laboratory) To maintain and improve the effectiveness of enforcement action in combating the unicensed import and export of strategic commodities (C&ED) Targets To enact egisation and put in pace reated administrative arrangements in To maintain a high eve of surveiance with additiona resources being made avaiabe in the year

11 III Deveop a word cass support infrastructure for manufacturing and service industries The Government is committed to providing a business environment conducive to the deveopment of our manufacturing and service industries. Accordingy, we invest heaviy in infrastructura faciities to support and faciitate the deveopment of our industries. We have aso set up industria support organisations to provide services which meet our industries needs. Companies investing in new or improved processes and products which cannot operate efficienty in muti-storey buidings can obtain deveoped and in the industria estates at deveopment costs through the Hong Kong Industria Estates Corporation. The Hong Kong Industria Technoogy Centre Corporation provides accommodation and support services to promote technoogy transfer and to nurture technoogy companies. The Hong Kong Productivity Counci provides professiona and consutancy services in order to promote productivity and to enhance the vaue-added content of products and services. In addition, the Industry Department s Standards & Caibration Laboratory and the Hong Kong Laboratory Accreditation Service provide professiona support and services for quaity assurance. Our industria base is moving from ow-wage and abour-intensive production to high vaue-added and knowedge-based activities. We therefore aim to provide a support infrastructure which wi promote the further deveopment of high vaue-added and technoogy-based industries. 10

12 Indicators The indicators we wi use to measure progress in this area are the extent to which financia and human resources are provided by the Government for major infrastructure projects in support of our manufacturing and service industries the amount of fuy serviced industria and suppied to cater for the changing needs of the industria sector user satisfaction with existing major purpose-buit infrastructure (e.g., the industria estates and industria technoogy centre) Initiatives Targets To pan for and provide new industria infrastructure, viz To compete the construction of new industria infrastructure on schedue, i.e., to the Science Park bring Phase One of the Science Park on stream in 2001 the second industria technoogy centre compete construction of the second industria technoogy centre in 2001 the fourth industria estate make avaiabe the first (Industry Department) batch of fuy serviced and in the fourth industria estate by 2001, with a view to competing the whoe project in

13 Initiatives To conduct a consutancy on the need for a business park (Trade and Industry Bureau) Targets To work cosey with the consutant in competing Stage One of the Study by mid-1999 to estabish the need or otherwise for a business park in Hong Kong 12

14 IV Provide support for sma and medium enterprises There are some sma and medium enterprises (SMEs) in Hong Kong. They comprise over 98% of businesses in Hong Kong and empoy about 60% of the working popuation. The Government is committed to providing a business environment conducive to the deveopment of this sector. Currenty, a variety of services are provided by the Government and industria and trade organisations to support SMEs. For exampe, the Industry Department s Business Licence Information Centre provides one-stop information services on icensing requirements. The Hong Kong Productivity Counci and the Hong Kong Trade Deveopment Counci provide support and consutancy services specificay targetted at SMEs. An SME Committee advises the Government on issues affecting the deveopment of SMEs. We aunched a $2.5 biion Specia Finance Scheme in August 1998 to hep SMEs gain better access to bank financing in view of the iquidity crunch probem. Given their imited resources and size, SMEs have constraints in meeting the chaenge of an increasingy competitive market. We therefore aim to strengthen the Government's support for them. Indicator Our indicator of progress in this area is the extent to which SMEs show satisfaction with the eves of support we provide. Initiative The Industry Department to estabish a Sma and Medium Enterprise Office within the Department to hep SMEs gain access to services (Industry Department) Target To achieve 75% of user satisfaction 13

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