Following is a question by the Hon Jimmy Ng and a written reply by the Secretary for Innovation and Technology, Mr Nicholas W Yang, in the Legislative Council today (March 22):

Question:

     The Chief Executive indicated in the 2016 Policy Address that re-industrialisation would be a potential new area of economic growth for Hong Kong. The Government would introduce sustainable measures for the promotion of re-industrialisation and development of suitable high-end technology industries. Besides, the Financial Secretary indicated in his Budget delivered last month that a new committee on innovation and technology (I&T) development and re-industrialisation would be set up to co-ordinate I&T development and re-industrialisation of Hong Kong, and that a tax policy unit would be set up to explore proposals for enhancing tax deductions for I&T expenditure. In this connection, will the Government inform this Council:

(1) since the implementation of the measure allowing the operation of calibration laboratories in industrial buildings in February last year, of (i) the respective numbers of applications for waivers received and approved by the authorities in respect of the operation of testing laboratories in industrial buildings, and (ii) the total amount of waiver fees exempted by the authorities;
 
(2) since last year's revision of the policy on industrial estates (IEs) to accommodate I&T industries, of the total area of unused factory sites within IEs which have been repossessed by the authorities; the total land area in the three IEs currently available for redevelopment, and the expected time when such lands will be made available for use;
 
(3) of the authorities' expected completion date of the study on enhancing tax deductions for I&T expenditure, as well as the manpower and expenditure involved; whether they will consider offering tax concessions to manufacturers outside Hong Kong (including Mainland China as well as the countries and places along the Belt and Road) in respect of expenditures on acquiring machinery and using copyright; whether they will consult the industrial sector on the relevant taxation measures; if so, of the details; if not, the reasons for that; and
 
(4) whether the authorities will consider establishing a dedicated department for the co-ordination of work among various government departments, and the formulation of policies and measures to mitigate the problems currently faced by the industrial sector, such as supply of raw materials, manpower resources, logistics, taxation, in order to promote re-industrialisation and development of high-end technology industries; if so, of the details (including the organisation and functions of that department); if not, the reasons for that?
 
Reply:
 
President,
 
     Having consulted the relevant policy bureaux, our reply to the four parts of the question is as follows:
 
(1) Effective from February 1, 2016, the Government introduced a new measure to facilitate the operation of testing and calibration laboratories (testing laboratories) in industrial buildings. Upon approval of application, the Government will exempt the waiver fees that would otherwise be chargeable for issuing waivers to allow testing laboratories use under a general industrial land lease.
 
     As at end February 2017, the Government had received seven applications, which involved three testing laboratories in three industrial buildings. Five of the applications (involving the same testing laboratory) have been approved.
 
     Under general circumstances, the amount of waiver fee payable would depend on the floor area, location, and the proposed use of the premises in question. However, the Government had not assessed the waiver fees for the above applications because the waiver fees were already exempted under the new measure.
 
(2) The Government has been working closely with the Hong Kong Science and Technology Parks Corporation (HKSTPC) in promoting re-industrialisation. We have revised the Industrial Estate (IE) policy to encourage smart production, attract high value-added technology industries and manufacturing processes. In future, the HKSTPC will build and manage specialised multi-storey industrial buildings for rent to different users. In 2016, the Government also secured the Legislative Council's funding for the HKSTPC to build a Data Technology Hub and an Advanced Manufacturing Centre in the Tseung Kwan O IE with a view to promoting smart production. It is expected that the two projects can be completed in 2020 and 2021/22 respectively. In addition to the aforementioned project sites, there are about 5.55 hectares (ha) of vacant industrial sites in the three IEs.
 
     In order to make better use of the existing IE sites, the HKSTPC is actively negotiating with relevant grantees of the IE sites, encouraging them to surrender the unused plot ratio or premises which have not been fully utilised. So far, the HKSTPC has successfully repossessed seven sites with an area of about eight ha. In addition, the HKSTPC has also clawed back about 116 000 square metres of undeveloped gross floor area (GFA) and released a GFA of about 118 000 square metres from the seawall at Tseung Kwan O IE, which can be transferred to other sites within the IE.
 
     The HKSTPC will identify suitable premises from the surrendered factories and refurbish them for leasing to the technology industry. In this regard, the first project is a five-storey building on a 0.35 ha site in Tai Po IE. The HKSTPC is carrying out refurbishment works for the building. After completion of the works, a GFA of 8 500 square metres can be provided. The HKSTPC has started receiving applications for admission since this month. It is anticipated that tenants can move in in September this year at the earliest.
 
(3) The Financial Secretary announced in the 2017-18 Budget that the Financial Services and the Treasury Bureau (FSTB) would set up a tax policy unit. On the one hand, we will seek to align our tax practices with international standards and actively study ways to foster the development of industries through tax measures including enhanced deduction for scientific research expenditure, so as to ensure that Hong Kong remains competitive and can create wealth. On the other hand, we will enhance our tax regime and explore broadening the tax base and increasing revenue, so as to ensure that adequate resources are available to support the sustainable development of our society.
 
     FSTB is actively making preparatory work for setting up the tax policy unit and aims to formulate the direction and study areas, including the deduction for scientific research expenditure, shortly. FSTB has included about $3.5 million in its Estimates of Expenditure for 2017-18 to meet the expenditure for the additional manpower required.
 
(4) The 2017-18 Budget announced that that the Government would set up a committee on innovation and technology (I&T) development and re-industrialisation. The committee will co-ordinate the I&T development of Hong Kong and re-industrialisation through a higher-level and inter-bureaux approach.
 
     We are now working on the terms of reference and membership of the committee with a view to commencing the appointment exercise as soon as practicable. We plan to invite the major stakeholders in the I&T and industrial sectors in Hong Kong to serve as members of the committee and provide their views to the Government on matters relating to the promotion of I&T development and re-industrialisation in Hong Kong. We will work out the development strategies and work focus based on the committee's recommendations.

Ends/Wednesday, March 22, 2017
Issued at HKT 12:20

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