USAGE INTERNE - N5 - INTERN GEBRUIK Innovation and technology Overview Opportunities brought by the National 13th Five-Year Plan and the Guangdong-Hong Kong-Macao Bay Area development will allow Hong Kong to capitalise on its advantages in R&D capabilities, technological infrastructure, legal system and intellectual property protection to act as a strategic bridge for innovative companies looking to access the Mainland market. New Initiatives New I&T-related initiatives announced in the October 2017 Policy Address include: Doubling the Gross Domestic Expenditure on R&D as a percentage of the GDP to about $45 billion a year (i.e. from 0.73% to 1.5%) in the next five years. 300% tax deduction for private enterprises on the first $2 million of qualified R&D expenditure, with additional expenditure attracting a 200% deduction. Earmark at least $10 billion for university research funding, to be disbursed subject to recommendations of the Task Force on Review of Research Policy and Funding. Launch a $500 million Technology Talent Scheme to support enterprises to recruit postdoctoral talent for R&D work and to subsidise local enterprises on a matching basis to train staff in advanced manufacturing technologies, especially those related to Industry 4.0. Enhance the Internship Programme by increasing monthly internship allowances and expanding its coverage to all I&T tenants of Hong Kong Science and Technology Parks Corporation and Cyberport. Inject $3 billion into the Research Endowment Fund with investment income used to help more local students carry out research work. Open up government data to bring more convenience to the public and to facilitate technological research and development. Explore the inclusion of innovation and technology as a tender requirement for procurement arrangements. Cyberport to operate 20,000 square feet of co-working space under the Space Sharing Scheme for Youth for I&T start-ups at concessionary rents. High-level Steering Committee on Innovation and Technology, chaired by the Chief Executive, will take forward I&T development and steer collaboration across bureaux and departments. 1 USAGE INTERNE - N5 - INTERN GEBRUIK On-going efforts Develop the Lok Ma Chau Loop into the Hong Kong-Shenzhen Innovation and Technology Park, and establish an international I&T hub in the Guangdong-Hong Kong-Macao Bay Area. Set aside $500 million to encourage government departments to make good use of technology to enhance service quality. Innovation and technology stakeholders The Academy of Sciences of Hong Kong, established in 2015, provides advice to the Government on science research and technology policy. Cyberport is a creative digital community of about 950 companies, engaged in communications technology, digital content creation and mobile app development. Hong Kong Science Park is home to more than 600 technology companies, focusing on five technology clusters: biomedical technology, electronics, green technology, information and communications technology, and material and precision engineering. It has three cross-disciplinary application platforms: robotics, healthy ageing and smart city. The renowned Karolinska Institutet of Sweden opened its first overseas research facility in Science Park in 2016. The Guangzhou Institutes of Biomedicine and Health under the Chinese Academy of Sciences set up a stem cell and regenerative medicine research centre at Science Park in 2017. Hong Kong Science and Technology Parks Corporation has set up a subsidiary company – the Hong Kong-Shenzhen Innovation and Technology Park Limited – which is vested with responsibility to construct, operate, maintain and manage the Hong Kong-Shenzhen Innovation and Technology Park in the 87-hectare Lok Ma Chau Loop. The Park will provide a key base for scientific research, supported by related higher education, cultural and creative industries and other facilities. The Hong Kong Applied Science and Technology Research Institute (ASTRI), established in 2000, focuses on applied research in five areas: fintech, intelligent manufacturing, next generation network, health technologies, and smart city. The Hong Kong-Israel Research and Development Co-operation Programme, launched in 2015, helps Hong Kong and Israeli companies apply for government funding for joint industrial R&D projects. The United States’ Massachusetts Institute of Technology set up its first overseas Innovation Node in Hong Kong in 2016. Hong Kong actively collaborates with research institutions in the Mainland. There are currently 16 Partner State Key Laboratories in Hong Kong and six Hong Kong branches of the Chinese National Engineering Research Centres. Supporting start-ups 2 USAGE INTERNE - N5 - INTERN GEBRUIK Hong Kong had 1,926 start-ups in a vibrant ecosystem of 38 co-working spaces, incubators and accelerators, according to the 2016 start-up survey by InvestHK, which hosts the annual flagship programme StartmeupHK Festival. In September 2017, the Government launched a $2 billion Innovation and Technology Venture Fund to co-invest with selected private venture capital funds in local start-ups on a matching basis with an investment ratio of about 1:2. In the private sector, the Alibaba Group launched a $1 billion Hong Kong Entrepreneurs Fund, while Sequoia Capital initiated the Hong Kong X-Tech Startup Platform to provide funding support for early-stage and angel projects. Cyberport has launched a $200 million Cyberport Macro Fund to provide seed to Series A stage funding to its digital entrepreneurs. Hong Kong Science and Technology Parks Corporation runs a $50 million Corporate Venture Fund and incubation programmes. An InnoCell will be built adjacent to Hong Kong Science Park to provide residential units and office facilities for principals of tenants/incubatees, overseas/Mainland employees and visitors of partner companies of Science Park. Being close to the manufacturing hub in Shenzhen, Hong Kong-based startups have strong support with product prototyping. Smart city The Government published the Smart City Blueprint in December 2017, mapping out development plan in the next five years, with a vision to build Hong Kong into a world-class smart city. The Blueprint lists out various strategies and initiatives in six major areas -- "Smart Mobility", "Smart Living", "Smart Environment", "Smart People", "Smart Government" and "Smart Economy". The Government will invest $700 million to take forward key infrastructure projects for Smart City development. Initiatives include: “eID” for all Hong Kong residents; a pilot “Multi-functional Smart Lampposts” scheme; reforming the development technology of e-Government systems; and, building a big data analytics platform. The Government will provide financial incentives to telecommunications companies to extend the fibre-based networks to remote villages. The plan will cover about 380 villages and benefit nearly 170 000 villagers. The Government will continue to develop intelligent transport systems, including new generation on-street parking meters which accept payment through multiple means, including remote payment via mobile apps, and providing real-time information on vacant parking spaces. The Government is implementing the Wi-Fi Connected City programme to further expand the coverage of the common brand Wi-Fi.HK in Hong Kong. Increase the number of free Wi-Fi hotspots to 34,000 by 2019. Fintech 3 USAGE INTERNE - N5 - INTERN GEBRUIK As an international financial centre with highly-developed ICT sector, Hong Kong is ideally placed for the development of Fintech. Hong Kong has 138 Fintech start-ups, up 60% from 2015 according to InvestHK’s 2016 start-up survey. Following in the steps of the Hong Kong Monetary Authority (HKMA), the Securities and Futures Commission (SFC) and the Insurance Authority (IA) also introduced Supervisory Sandboxes in September 2017 to facilitate the launch of new Fintech products and services in the market. The HKMA has announced plans to add new features to its Sandbox, and allow technology firms to have direct contact with HKMA through its chatbox without going through a bank. The HKMA will launch the Faster Payment System in September 2018 to allow banks and SVF operators to conduct real-time settlement and transfer on a single payment platform. HKMA is also working with the industry on a common QR code standard for retail payments, to encourage merchants to adopt more varied innovative retail payment products. The Government will continue to encourage the Fintech industry to develop and apply Fintech such as distributed ledger technology (DLT). The HKMA published its second whitepaper on DLT in October 2017, confirming the promising nature of DLT. The HKMA will use the findings of second whitepaper to develop a set of practical guidelines for the use of DLT in the banking sector. The HKMA has also commenced research and proof-of-concept work on central bank digital currency to study its feasibility, costs and benefits. In addition, the Cybersecurity Fortification Initiative introduced by the HKMA can help strengthen Hong Kong’s expertise and capability in cyber security. Re-industrialisation Re-industrialisation refers to the use of smart production in developing high value-added industries. Key industries with advantages for development in Hong Kong include: biotechnology, big data, Internet of Things, artificial intelligence and smart city. Hong Kong Science Park is being expanded. On completion of stage 1 of the expansion programme, the gross floor