The government has already invested more than HK$100 billion in fostering technology development since establishing the Innovation and Technology Bureau five years ago. What are the investment results? How can we strive for greater development in the long-run?
Photo: Dr Winnie Tang (left) pictured at a startup event.
Over the years, Science Park and Cyberport have nurtured many unicorns (i.e. privately held startups valued at no less than US$1 billion, and established for less than 10 years), such as SenseTime, WeLab, TNG, GoGoVan and Klook. Some have raised the point that if the three major R&D organisations – Science and Technology Park Corporation (including Science Park and several industrial villages), Cyberport and Hong Kong Applied Science and Technology Research Institute (ASTRI) – were consolidated as one organisation, it would boost Hong Kong’s scientific research power on advanced technologies, e.g. artificial intelligence, internet of things, and big data. They can also complement each other, as Science Park is good at biomedical technology while Cyberport is strong in financial technology (FinTech).
At the same time, the synergy of merging theoretically delivers resource and administrative efficiency.If the organisation was listed on the stock exchange, it would face pressure to earn a return from years of investment and reduce the government’s financial burden. Similar to the Toll Revenue Bond of five tunnels and one bridge (i.e. the Aberdeen Tunnel, Cross Harbour Tunnel, Lion Rock Tunnel, Shing Mun Tunnels, Tseung Kwan O Tunnel and Lantau Link) in 2004, it could turn these government assets into financial products that can be bought and sold to the public. The three-in-one plan of creating a mega R&D institution not only provides international institutional investors and retail investors with an option to invest in Hong Kong innovation, but also expands the local capital markets. At the same time, the merger could motivate more growth of commercialised innovation as inventors are subsequently rewarded. All in all, this would make the ecosystem of innovation and technology more effective.
However, to be taken seriously, we must consider the pros and cons of such a merger. FinMonster quotes commentator Lu Feng and scholar Lin Benli on the merger of Mass Transit Railway and Kowloon-Canton Railway, claiming that the harm was greater than the merits because of the lack of competition after the merger, reducing choice for passengers. Besides, it is difficult to significantly improve operation efficiency due to the difference in operating systems. In fact, looking at service delays alone, cases of more than eight-minute delays became more frequent after the merger in 2007.
However, in the history of Hong Kong, there are many more successful examples of mergers. For example, the Hong Kong Exchanges (HKEX) has been at the forefront of global IPO totals in recent years. It arose as the result of merging four exchanges 20 years ago. The Link REIT, whose stock price has grown to nine times its 2005 IPO listing price, is the result of an acquisition of 180 rental and car park facilities from the Housing Authority.
In the Global Competitiveness Report 2019 from the World Economic Forum, Hong Kong’s overall performance ranked 3rd among 141 economies, but its innovation ranking was only 26th. At the same time, according to the Global City Competitiveness Report 2019-2020 produced by the Chinese Academy of Social Sciences and UN-HABITAT, Hong Kong was overtaken by Shenzhen and Shanghai for the first time. The study suggested that for Hong Kong to break through, it needs to upgrade its economy via “technological innovation”. The study of Our Hong Kong Foundation also pointed out that collaboration in the innovation and technology community could help unlock potential. Therefore, I believe the integration of the three scientific research institutions can be considered.
The outbreak of COVID-19 has turned Hong Kong’s economy upside down. However, this also gives us an incentive to review whether the conventional thinking is still up-to-date. As Dane Stangler of Ewing Marion Kauffman Foundation pointed out in 2009, half of the US Fortune 500 companies were born after bear market. Looking back, this epidemic may be a turning point for Hong Kong’s economy, but only if we are bold enough to make bold changes in response to the new world before us.
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