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1 December 2011

HKUST Science and Technology Forum: Innovation for the Future of Hong Kong
President's Speech

Ladies and gentlemen:

Today, I have a big topic to tackle: the role of a university of science and technology in a knowledge society, in Hong Kong in particular.

Before I talk about this topic, I'd like to discuss two related questions first:

Question no. 1: "Does Hong Kong need science and technology?
Question no. 2: "Can HK do S&T successfully?"

Now on the first question: "Does Hong Kong need science and technology?" Sometimes the best way to answer a question like this is indirectly, by telling you a story. I just visited the Korea Advanced Institute of Science and Technology a few weeks ago and was deeply impressed by the rapid development of the country and its higher institutions. 40 years ago, Korea was a much poorer country than it is today, with an economy that can only be described as third-world. But today, it is one of Asia's fierce tiger economies, as famous for kim-chi as for exporting cars, electronic consumer products, nuclear reactors and ship building. I still recall that 20 years ago, when Korea first dipped its toes into exporting cars to the US market, Hyundai was treated as a lemon by the American car-buyer. Today, it is one of the most desirable and respectable brands, especially among young people. I also discovered that Korea leads the world in ship building! My visit to Korea reinforced my belief that the development of S&T is crucial for the development of any society in this knowledge era.

Let me elaborate further on why Hong Kong needs to further develop S&T. First, much has already been said that Hong Kong needs to diversity its economic base, which is overwhelmingly service oriented. We in Hong Kong got comfortable with our one-dimensional economic thinking. We have talked the talk, but we have seen few concrete actions in the diversification of our economy. Second, Hong Kong has no natural resources, other than human resources, and for it to maintain its high standard of living, it needs to move up the value-added ladder. S&T and innovation offer one such possibility. Third, it can and should leverage on the rise of the Chinese economy and its substantial investment in S&T. Fourth, it gives developmental opportunities and hope for the future for our younger generation with talents in S&T, which we have plenty. Finally, why shouldn't Hong Kong as a relatively rich and advanced society not try to contribute to such an important part of human civilization?

Some may say that we can survive, indeed thrive, on finance, services and real estate alone. Perhaps that may be true. But if you look at the world's leading financial centers, London, New York, Singapore, Zurich and even Shanghai, every one of them may pride itself on being a financial center, but none is willing to concede that it doesn't need science and technology, and yield S&T leadership to other cities. Shanghai, for example, is not yielding S&T to Beijing. It wants to excel in both financial services and S&T, and is investing heavily in higher education in S&T and attracting multi-national R&D to its science parks. GSK, GE and Intel, among many others, have all set up R & D labs in Shanghai. New York City (NYC), traditionally a finance-centric city, is making a big move into S&T innovation. It wants to compete with Silicon Valley. A recent Chronicle of Higher Education article actually starts with this title "Silicon Valley, NY Style". NYC Mayor Michael Bloomberg has set aside substantial land and has called for proposals from leading universities around the world to build branch campuses in NYC to strengthen its economy by creating world-class applied science and engineering schools there. Stanford has responded, so has Cornell in partnership with the Technion (Israel's UST), as well as consortiums led by Columbia and NYU. By the way, the Hong Kong University of Science and Technology (HKUST) received an invitation to submit a proposal but we decided not to throw our name into the hat. What about London? An article in BBC a year ago says "Cameron reveals Silicon Valley Vision for East London" says it all.

Switzerland, a banking and finance center, with a population similar to that of Hong Kong, also leads in pharmaceuticals, food industry, and precision machineries. And everybody in Hong Kong knows about Singapore's investment in S&T innovation, so I won't say much more about it. So apparently all the major financial centers around the world are also into S&T innovation. The objective conclusion is that either they are all foolish or they all see the same vision of the future.

Now I come to the second question: "Can Hong Kong do it? " If you had asked me this question 20 years ago when this university first started, I might have had my doubts. But now the situation is much more favorable. First, we have the human capital and talents. Hong Kong students have consistently ranked among the best in global science aptitude tests, such as PISA and PIMMS. Our universities are ranked amongst the best in Asia. HKUST, in particular, has been globally recognized for its excellence in S&T and Business Management, two key ingredients in any innovation ecosystem. We also benefit from our geo-political location being part of China under the One Country, Two Systems principle. We can leverage on China's national plan, as reflected in its latest 12th Five-Year plan (12-5 Plan), to make S&T a key component of national development. And I challenge anyone to find a region in China more favorable than Hong Kong + Pearl River Delta in having a combination of top universities, large markets, multitudes of technology and manufacturing enterprises, rule of law, mature intellectual property protection, world-class infrastructures and an international city that most foreign talents find easy to adapt to. In fact, everywhere I travel these days, most people in the higher education sector around the world are envious of us and it'd be a pity for us not to take advantage of these.

Finally, let me also cite a few successful examples of countries where earlier investment in S&T has led to substantial return in economic gains, a kind of "existence proof" in my math jargon.

Singapore's GDP grew by 16 times over the last 30 years. Today, it is a hi-tech economy whose per capita GDP is the highest among the four Asian tigers. Over the same period, Korea's GDP has grown over 14 times, while Hong Kong's grew by a little over 7 times. Korea leads in many technology fields and possesses many reputable global technology brands. Israel, with a population similar to Hong Kong's, is 2nd to only the US in technology IPOs on NASDAQ. Significantly, Korea is spending over 3% of its GDP on R & D, and Singapore's spending will rise from current 2.3% to 3.5% in 2015. Hong Kong's R & D investment is the lowest among the four Asian Tigers at just 0.79%, as you have heard earlier. Mainland China aims to increase from its current 1.8% to 2.2% within its 12-5 Plan which incidentally has given Hong Kong a specific role in its S&T development. Shouldn't Hong Kong's R & D investment be at least as much as China's?

If other places can do it, I don't see why we in Hong Kong cannot. All we need is the determination. As I always tell my students: my motto has always been: "If you try, you may fail; but if you don't try, you will never succeed."

Now I come to the topic in the title of my talk, the role of a university of S&T. As the head of the one and only university of science and technology in Hong Kong, it shouldn't surprise you that I believe we do have a special role to play.

First, we have a role in educating the next generation of innovators. We believe that innovation is best taught by doing, by hands-on research and problem-solving. We expose our students to a broad spectrum of disciplines in the arts, sciences and humanities by avoiding early specialization and giving them an early experience in original research. We have a very successful Undergraduate Research Opportunities Program. This year 30 of our graduates are directly absorbed into PhD programs in world-leading universities such as Stanford and MIT with full scholarships. Through the research experience, they experience discovery learning, tackling problems with unknown formulations, never mind known solutions, working in teams, polishing presentation skills etc. They learn to challenge the fundamental assumptions of established scientists.

We have a role in knowledge creation and transfer. The primary function of a university is not only the passive transmission of knowledge, but the active creation of new knowledge, in S&T and also in business. We encourage our faculty members to do research consulting with the industry. We even set up bases in Shenzhen and Nansha to facilitate industrial, educational and research collaborations. We are already in research partnerships with Huawei, GSK, MSRA, BGI and other big firms.

The university is also the epicenter for ideas, for expertise that together form a global innovation network. We provide incubation, consultancies, tech transfer and entrepreneurship enhancement. In our Entrepreneurship Center we bring people, ideas and funds together to create start-ups or spin-offs.

Coming to the last part of my speech, I would like to make some suggestions on how Hong Kong can move forward in S&T. First and foremost, we need a clear signal from the HK SAR Government. We need the Government to tell the universities, industries, citizens and students that the development of S&T is of utmost importance to the future of Hong Kong. Increasing the percentage of R & D spending, say to at least match the Country's 2.2%, would be a strong signal.

The role of the government was the defining factor in the success of Singapore, Taiwan and Korea in their transformation into a knowledge economy. In Singapore's case it offers very generous tax deductions for investments in R & D, up to 250% for initial expenditures and 150% for subsequent ones. Once the tech culture has taken root, the government's role is reduced and industry takes over. We can no longer hide behind the so-called time-tested "Active Non-Intervention" philosophy as an economic policy when it comes to the development of S&T.

Secondly, to make things happen and create a supportive climate of opinion, the government needs a high-profile presence, with a high-level bureau to lead the charge, to do long-term and sustainable strategic planning, with a budget go with it, and with the authority to coordinate among the many different parts of the S&T innovation system. It must also offer powerful incentives, in the form of tax rebates or deductions, patent laws, friendly incorporation regulations, land grants for new S&T corporations so as to attract multinationals to set up their R & D labs in our city. In a highly competitive regional environment, the absence of government initiatives and incentives is tantamount to handicapping our people.

Thirdly, we need a government-led effort to further win-win collaborations with Mainland China in order to leverage on China's substantial S&T investment and talents, as well as its many S&T enterprises.

Finally, a change of culture is also needed. Hong Kong is a society hooked on the thrills and spills of the property and equity markets, whose returns are immediate and short-term. Getting people excited about science and technology requires a culture change-from parents to potential employers, from investors to government leaders. We need to realize that technology is not just something "created elsewhere", that we queue up to buy, that we can invent and adapt new technology and leverage it for economic gains. We need an environment in which innovation is valued above examination performance. We also need a society that is ready to try and has no fear of failure.

Failing the above, we may be left by the wayside in the global, even regional, S&T race. Do we want to be 40 years behind Korea and Singapore? Or become the technological backwater of China? That would be a pity, considering that we enjoy conditions that are the envy of our neighbors and competitors.

Thank you.


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