Hong Kong leader doubles R&D expenditure to HK$45 billion for next five years to boost ‘smart city’ innovation

Goodies include enhanced tax deductions and additional university funding

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Published: 7:04pm, 11 Oct 2017Updated: 4:25pm, 12 Oct 2017

Hong Kong will double its expenditure on research and development to 1.5 per cent in the next five years to boost innovation, a bold target set by Chief Executive Carrie Lam Cheng Yuet-ngor in her maiden policy address.

In her 88-page blueprint delivered on Wednesday, Lam detailed her ambition to nurture new businesses and retain talents, rolling out initiatives including an enhanced tax deduction on R&D expenditure, additional university research funds and a plan to build a “smart city”.

Lam also acknowledged the thorny role that financial regulation has played in innovation. She pledged to remove “outdated provisions”and “red tape” by leading a high-level steering committee herself covering different government departments.

Hong Kong Science Park in Sha Tin stands to benefit from the additional R&D expenditure. Photo: Shutterstock

The initiatives came amid long-standing criticism that the city lacked resources dedicated to technology and innovation. Hong Kong spent only 0.73 per cent of its gross domestic product on R&D, falling behind South Korea (4.23 per cent), Japan (3.28 per cent) and China (2.07 per cent), according to the latest World Bank data.

To reach Lam’s target, a total of HK$45 billion is to be invested annually to develop new technologies and products, with government contributing 45 per cent of the figure, according to a government source familiar with the matter.