The government of the Hong Kong Special Administrative Region has recommended rolling out new funding programs and proposed institutional frameworks to develop new quality productive forces by positioning Hong Kong as an international innovation and technology center.

For the first time, the government has suggested adopting a fund-of-funds approach by setting up a HK$10 billion ($1.28 billion) I&T Industry-Oriented Fund to channel more market capital to invest in strategic industries such as life and health technology, artificial intelligence and robotics, semiconductors and smart devices, advanced materials, and new energy.

A source from the Innovation, Technology and Industry Bureau said the relevant funding application will be submitted to the Legislative Council in the 2025 financial year, and the fund is expected to start operating in the 2026 financial year.

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The administration proposed redeploying the HK$1.5 billion Innovation and Technology Venture Fund, which could lure HK$4.5 billion in market capital based on the new matching ratio of 1-to-3. This fund has invested HK$300 million and attracted HK$2.7 billion in market capital, benefiting 37 startups.

To hasten the startup acceleration process in Hong Kong, the government will launch the I&T Accelerator Pilot Scheme with a funding allocation of HK$180 million that could attract HK$360 million market capital based on the 1-to-2 matching ratio between the government and accelerators. Based on the subsidy ceiling of HK$30 million, the administration expects the scheme to subsidize at least six accelerators.

Kenny Shui Chi-wai, vice-president of Our Hong Kong Foundation and co-head of the Public Policy Institute, argued the fund of funds model can diversify risks while maintaining a high level of independence. “For luring more venture capital investment, we recommend the parent fund provide call options to private venture capital funds, allowing venture capital funds to purchase the shares of the parent fund in the sub-fund within a certain period of time (such as 5 years) at the original price plus interest.”

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Regarding institutional revamps, the administration said it will press ahead with the establishment of the Hong Kong New Industrialization Development Alliance consisting of the government and the industry, academia, research and investment sectors to provide more funding opportunities and foster cooperation between the SAR’s newly-listed companies and universities. The administration has started preparatory work to establish the third InnoHK research cluster for advanced manufacturing, materials, energy and sustainable development.

Federation of Hong Kong Industries Chairman Steve Chuang said he believes the alliance will help to build a platform which is conducive to the implementation of scientific research results and to providing financing opportunities. “We agree with the reform proposals to strengthen the cross-policy coordination mechanism, and to adopt industrial guidance to make forward-looking policy directions, which are conducive to the diversified development of Hong Kong's industries.”

For the Hetao Shenzhen-Hong Kong Science and Technology Innovation Cooperation Zone, the SAR government said the development outline for the Hong Kong Park will be published later this year that will set out policies to facilitate the flow of personnel, materials, capital and data between Hong Kong Park and Shenzhen Park. The SAR government and mainland authorities are also exploring trial implementation of facilitation measures, such as for cross-boundary travel for designated personnel of the two parks, cross-boundary movement of materials, and cross-boundary fund transfers by mainland enterprises settling in the Hong Kong Park.

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“We will continue to cooperate with the government in implementing measures related to I&T development, promote the research and development of key core technologies and the transformation of achievements, promote the trade and protection of intellectual property rights, and finally, comply with the country’s direction of developing high-end intelligent manufacturing,” Hong Kong Productivity Council Chairman Sunny Tan said.

The administration said it will establish the Working Group on Developing the Low-altitude Economy, led by the deputy financial secretary. The working group will focus four main areas, including exploring drone-flying application scenarios, amending relevant regulations, promoting an interface with the mainland, as well as studying and planning for low-altitude infrastructure systems.

Lawmaker Elizabeth Quat Pui-fan, who is also the founding president of the Greater Bay Area Low-Altitude Economy Alliance, said she hopes the working group can foster the construction of an interconnected, efficient and collaborative low-altitude economic ecosystem in the Guangdong-Hong Kong-Macao Greater Bay Area to achieve all-round development in transportation, logistics, tourism and industry.