Hong Kong needs new economic thinking to match San Tin Technopole’s promise
- Just creating the huge innovation and technology hub won’t be enough on its own to diversify the economy
- Innovative ideas on public-private partnerships, business incentives, land allocation and more are necessary for the plan to achieve its lofty goals
Hong Kong’s economy has undergone significant structural changes since the early 1980s, becoming one of the world’s most service-oriented economies. While the service sector accounted for more than 93 per cent of gross domestic product in 2020, the share of manufacturing stood at a mere 1 per cent, a far cry from the 23 per cent recorded in 1980.
Public-private partnerships for infrastructure projects are not new. Take the case of Sha Tin: while the government took up the major land assembly, the private sector was brought in to carry out reclamation and site formation works. On completion, 70 per cent of the reclaimed land reverted to the government for public housing and infrastructure development while the remaining 30 per cent was used for private housing development.
While some may see this approach as akin to government-business collusion, we should recognise the public-private partnership model for what it is and acknowledge its benefits in bringing in private funds, efficiency and innovation.
With more than half of the land earmarked for the hub in private hands, there is much potential for private participation. For example, rather than having the government resume all private land, owners could be offered incentives such as concessionary land premiums to develop theses areas for I&T use.
Public tenders are the usual method for government land sales. Besides being relatively simple, they are objective and competitive, as tenders are awarded to the highest bidder.
Hong Kong’s I&T strategy must keep quality of life at its heart
Considering the need to attract leading I&T enterprises during the early stage of development of the hub, the government should use direct land allocation to facilitate negotiation and devise custom terms. However, a general policy framework should first be created to ensure transparency. Subsequently, restricted tender could be used to recruit complementary enterprises in the industrial chain.
To create new impetus for growth, the government has resolved to diversify the economy. This is a welcome change in policy, but more needs to be done in practical terms. While the old ways have served Hong Kong well over the years, we should also have a forward-looking approach to match the futuristically named San Tin Technopole. After all, change begins in the mind.
Ryan Ip is vice-president and co-head of research at Our Hong Kong Foundation
Jason Leung is a researcher at Our Hong Kong Foundation