The government could begin by examining Singapore's success
By Brian Yeung
China Daily/Asia News Network
When thinking of a global hub of entrepreneurship and innovation, most people consider Silicon Valley in the US. However, Singapore is rising fast and ranks top in Asia in the 2015 Global Innovation Index, a report co-published by Cornell University, INSEAD and the World Intellectual Property Organisation.
According to the index, Hong Kong's ranking has been dropping steadily, from 8th in 2012 to 11th in 2015. Even though Hong Kong ranks second in Asia after Singapore, the special administrative region lags behind its regional rival in five out of seven areas, the exceptions being market sophistication and creative output.
Are there any benefits for Hong Kong in making reference to the Lion City?
Contrary to the ecosystem in Silicon Valley, in which the industry takes the lead, the success of Singapore is built on a well-defined framework created by the government. Apart from an active set of government funding arrangements, there are various government agencies dedicated to different aspects of the innovation ecosystem.
The Agency for Science, Technology and Research (ASTAR) is a prime example. The agency provides scholarships to groom local researchers, bridges the gap between scientists and industry players and creates licensing and spin-off opportunities for the city-state's innovations.
Hong Kong never had such a one-stop agency until the new Innovation and Technology Bureau (ITB) was established after years of delays. But having the bureau itself is not the answer.
The question that remains is how to harness the bureau and take Hong Kong's innovation system to its next level. On closer examination of the index, Hong Kong's innovation appears particularly behind in knowledge and technology outputs, which are illustrated by domestic resident patent applications (72 out of 141), royalty and license fees receipts (56 out of 141) and other indicators.
The figures imply Hong Kong's insufficient local innovations and subsequently demand on these innovations. What holds back Hong Kong's innovations?
While Hong Kong takes pride in being an international financial center with dozens of privately funded venture capital funds, the overall high-tech venture capital investment in Singapore (US$324 million) was almost 10 times more than Hong Kong's (US$37 million) in 2014, according to Asian Venture Capital Journal.
One major difference is that private venture capital's investment is matched with government funding in Singapore while government funding and private investment remain separated in Hong Kong. The advantage of joint investment is to provide incentives to private investors and thus to make the pie bigger.
Both Hong Kong and Singapore have research and development complexes such as Hong Kong Science Park and Block 71 Ayer Rajah Crescent or One-North in Singapore.
But infrastructure means more than just space and equipment. Singapore's government agency ASTAR has several councils to support public-private joint research projects, which are often based in those research and development complexes.
Nevertheless, Hong Kong has a more sophisticated market and more creative outputs than the Lion City, according to the index. For instance, Hong Kong has a more active initial public offerings market, which may attract the world's most innovative companies and top tech startups to choose Hong Kong for their regional presence, other than Singapore.
But the key is how to leverage this foreign expertise to benefit local entrepreneurs and innovations. The new ITB might provide the linkage.
Hong Kong is neither Silicon Valley nor Singapore. But the Singaporean experience shows that there is more than one way to create an enabling ecosystem for innovations.
While the Hong Kong government tends to follow a non-intervention approach and expects the private sector to take the lead, Singapore's success proves there are proactive roles the government can play to nurture Hong Kong's innovations.
Singapore's success shows that a vibrant ecosystem facilitated by the right policy will reap dividends before long.
* The author is a consultant on entrepreneurship and innovation.