OPINION: Hong Kong Tech Funding Puts Shenzhen in the Loop

OPINION: Hong Kong Tech Funding Puts Shenzhen in the Loop
Credit: REUTERS/Bobby Yip
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Hong Kong is stepping up funding for its tech sector, but major spending on a remote new facility is questionable.

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In a major boost to its technology industry, Hong Kong said it would spend HK$50 billion (US$6.38 billion) on technology and innovation during its 2018 budget announcement in late February.

The figure is a whopping five times the amount spent on tech last year, and is a clear response to calls for greater technology spending to bring Hong Kong in line with other Asian states.

Hong Kong has long been seen as lagging in its efforts and spending on the tech industry, which received less than half the amounts spent by Taiwan, Singapore and South Korea in terms of proportion of GDP as of 2016.

On paper, this is fantastic news for Hong Kong’s tech entrepreneurs. The 2018 funding allocates HK$10 billion for the Innovation and Technology Fund, as well as another HK$10 billion for establishing two “technology research clusters” on biotechnology, and AI and robotics. The science park will get HK$10 billion to construct facilities and improve support for businesses and employees working in the park.

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Credit: REUTERS/Bobby Yip
Exterior of the first office building at Hong Kong's Cyberport in November 2001. The project, once intended to be Hong Kong's answer to Silicon Valley, is widely regarded as a failure and has struggled to attract tenants.

However, almost half of the amount – HK$20 billion – will be spent on developing the first phase of a planned technology park on the Lok Ma Chau Loop, an unoccupied piece of land on a riverbank adjacent to Shenzhen, which until 1997 was part of the southern Chinese city before a river straightening project handed jurisdiction to Hong Kong.

The idea is controversial, not least because its location on the northern fringes of Hong Kong is as remote as one can get for Hong Kong residents – at least one hour away from Central on public transport.

Of course, for the Shenzhen side, things are more convenient since the site is literally next door, but this brings up the question of whether Shenzhen would benefit more from the park than Hong Kong. If yes, then the many billions of dollars that Hong Kong will spend to build it, with none coming from Shenzhen, could be seen as wasteful.

Besides the cost, there are significant ecological and decontamination challenges involved with clearing the site of toxic mud before construction can begin.

Hong Kong’s mainland neighbor has surged ahead as a national and regional tech hothouse and cooperation should be fostered, but building a costly technological park that mainly benefits one side is not the most effective way. It will be interesting to follow the progress of this park, especially as Hong Kong has had a mediocre record in the last decade with big-budget infrastructural projects.

After all, Hong Kong already has dedicated tech parks in Hong Kong Science Park and Cyberport. The former, to which HK$10 billion from the innovation budget has been allocated directly, is home to over 600 tech start-ups and has an occupancy rate of about 80 percent, though the latter is widely perceived as underperforming and has been labeled a white elephant – more luxury property development than a proper tech center. The extra funding for the Science Park is laudable but it needs to be followed up and monitored to ensure it is not wasted.

The Loop aside, Hong Kong also needs to face up to the need of fostering more IT talent and making conditions easier for start-ups to operate. Hong Kong has a need for more engineers and developers, as many graduates in these fields often move to finance or property jobs. The planned setting up of two new research centers for biotechnology and AI means there will be even greater need for talent in these fields. Funding technological programs and teachers at secondary and tertiary levels should be one area the government pursues to encourage more Hong Kongers to embrace tech as a career. In addition, the government needs to be more proactive in recruiting overseas talent and investment.

While the massive increase in technology spending is a good start for Hong Kong, the fact that 40 percent of the funds will be spent on building a brand-new tech park takes away some of the shine.

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Editor: TNL Staff

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