Funding Available from the Innovation and Technology Commission

Hong Kong has long been lauded as an international financial powerhouse. However, while the prosperity of Hong Kong is indisputable, it is not infallible. The economy has a narrow base; in 2018 The Government’s Census and Statistics Department reported that services (including finance, property and trading) comprised 93.1% of Hong Kong’s GDP. Reliance on the service sector to guarantee economic growth has led to Hong Kong falling behind competitors in areas such as technological innovation and research and development (R&D), areas which are absolute drivers of economic growth. Thus, it is unsurprising that of late, the Government is pushing to promote growth in areas of innovation and technology.

The Hong Kong Government’s Innovation and Technology Commission administers the Innovation and Technology Fund (ITF), which offers multiple funding schemes to help push Hong Kong towards becoming a more knowledge-based economy. Below are some further details about some funding options that are available; there are four funds designed specifically to support research and development (R&D) projects, and two funds for non-R&D projects that will utilise advanced technology in order to enhance efficiency and productivity.

Funding to Support Research and Development

The following funding schemes were designed specifically to encourage and support the private sector to invest more in research and development (R&D). Each fund offers funding to specific types of R&D projects, and in different ways, so some further details about each fund are given below.

The Enterprise Support Scheme (ESS)

The Enterprise Support Scheme (ESS) was designed to help support private companies fund applied R&D projects, in order to promote investment in R&D. The Scheme offers relevant companies a grant of up to HK $10 million for an approved project. Funding is granted on a dollar-for-dollar basis; no repayment of the Scheme’s contribution is required. Companies seeking funding will have potential projects assessed and vetted by a panel of ‘independent experts’ who are looking to allocate funding to projects that they believe will lead to a commercially viable outcome (i.e. product), and that may have some relevance to advancing current government policies. Understandably the Scheme is only willing to support projects with a prominent innovative and technological component.

To be eligible to apply for the ESS, a company must be registered and incorporated in Hong Kong, and must not be a government-subsidised organisation. Despite requiring registration in Hong Kong, the ITF states that it hopes the ESS will encourage Mainland and foreign, as well as local, companies to establish an R&D presence in Hong Kong, perhaps in the hope that this will help stimulate Hong Kong’s lagging technology sector. The ITF also stipulates that it will ensure equal consideration for small and medium enterprises (SMEs) seeking funding.

Further information about the ESS can be found at the following link: https://www.itf.gov.hk/l-eng/ESS.asp

The Partnership Research Programme (PRP)

The Partnership Research Programme (PRP) offers grants to private companies that are planning to undertake R&D projects in collaboration with local public research institutions (these include universities). The Programme is looking primarily to support R&D projects that it believes will lead to innovative outcomes, advanced technologies and commercially viable products. Examples of such are: projects that intend to create new pieces of technology, enhance the quality of existing technology (products or services), or discover the means to make production more efficient. Hong Kong has some of the world’s leading universities, and so it makes sense for private companies to utilise this resource for their benefit.

Any company seeking funding must be registered with the ITF. An application for funding must be submitted by the research institution spearheading the project, with the participating private company as co-applicant. The collaborating company must contribute at least 50% of the total project cost.

Further information about the PRP can be found at the following link: https://www.itf.gov.hk/l-eng/PRP.asp

The Research and Development Cash Rebate Scheme (CRS)

The Research and Development Cash Rebate Scheme offers funding to private companies that have financed one of two types of research and development projects within the science, engineering and technology fields. The relevant R&D projects are projects under the ITF (named ‘ITF projects’), or projects fully funded by a private company and conducted by a ‘designated local public research institution’ (named ‘partnership projects’).

Companies can apply to receive a cash rebate of up to 40% of their expenditure on an applied R&D project within two years of completion of the project.

Further information about the CRS can be found at the following link: https://www.itf.gov.hk/l-eng/crs.asp

The Patent Application Grant

Patents provide patent holders with exclusive rights to exploit and capitalise on the market potential of an invention. Possession of a patent facilitates higher returns on the investment made in creating the product, as it allows for the commercialisation of the product free from the threat of competitors selling the exact same item. Patent protection benefits individual inventors, any company they may work for, and the aggregate economy. Fortunately, Hong Kong has a highly competent legal system that protects intellectual property. A comprehensive and well-enforced patent system has numerous economic benefits, including promoting innovation, knowledge sharing and the efficient use of resources.

However, applying for a patent is not without expense. In order to encourage those who may not otherwise be able to afford a patent, such as individual inventors and small and medium enterprises (SMEs), the ITF administers the Patent Application Grant (PAG). This scheme offers a grant of up to the lesser of HK $250,000, or 90% of the total direct cost of the patent application (including the cost of a patent search and assessment, and the administration fee charged by the HK Productivity Council).

The grant is administered by the Innovation and Technology Commission with the Hong Kong Productivity Council (HKPC) as the implementation agent. Grants will be provided on the basis that the invention is functional, utilises technology, and has relevant industrial applications (cosmetic designs will not be supported). The HKPC will run a patent search and technical assessment prior to approving the grant, in order to ensure that there is a reasonable chance of the invention obtaining a patent.

Hong Kong residents and locally incorporated companies who have never owned a patent (including overseas) are eligible to apply.

Other Funding Options (non-R&D specific)

The ITF administers two funding programmes that are available for non-R&D based projects that still make use of technology. Below are some further details about each programme and the types of projects they intend to support.

The Technology Voucher Programme (TVP)

The Technology Voucher Programme (TVP) provides grants to local enterprises that are looking to conduct projects in which technology will be used to improve the business’s competitiveness. Technology can be an effective way for businesses to improve their productivity, reduce costs, increase efficiency, and expand and develop, all of which can improve the competitiveness of a business. Some examples of projects previously supported by the TVP include: implementation of a new automatic data collection and analysis system, the set up and use of an advanced point-of-sales system, and the introduction of an electronic inventory management system. The TVP looks to support other projects of a similar nature.

The TVP offers eligible companies a cumulative total of HK $400,000 in funding, which can be used to fund up to four different approved projects. Companies receiving funding must contribute to at least one third of the project’s cost. To be eligible a company must be registered in Hong Kong, carry out at least some business operations in Hong Kong and not regularly receive any government subsidies.

Further information about the TVP can be found at the following link: https://www.itf.gov.hk/l-eng/TVP.asp

The General Support Programme (GSP)

The General Support Programme (GSP) offers funding for projects that have the potential to advance the use of technology in industry in Hong Kong, as well as positively impact the general Hong Kong community. This programme specifically funds non-R&D based projects; projects may include (but are not limited to) conferences, exhibitions, seminars, workshops, studies, and surveys.

Applications are assessed by the ITF, and projects that will receive funding are the ones that the ITF believe have the potential to positively impact the general Hong Kong community. For example, projects to improve environmental protection. Eligible applicants include both for and not for profit organisations, private companies and charities. Public bodies, local universities and district councils may also apply.

More information about the programme can be found at the following link: https://www.itf.gov.hk/l-eng/GSP.asp