Land re-use: The former Shek Kip Mei Factory Estate building has been converted into the Jockey Club Creative Arts Centre. The Policy Address suggests 1,000 old industrial buildings can be converted or redeveloped to facilitate the growth of six key industries.

Chief Executive Donald Tsang today announced initiatives to spur Hong Kong's economic recovery, including the development of six economic areas where the city enjoys clear advantages. They are education services, medical services, testing and certification services, environmental industries, innovation and technology, and cultural and creative industries.

The private-sector part of these industries directly contributes up to 8% of GDP, and employs 350,000 workers - 10% of Hong Kong's total workforce.

"The Government's strategy for promoting the six industries is to seize the opportunities arising from our co-operation with Guangdong and align our efforts with measures already introduced to get immediate results," Mr Tsang said.

"With appropriate policies to remove obstacles to their development, the six industries will enter a new phase of development, propelling Hong Kong towards a knowledge-based economy."

Optimising land use

More than 1,000 old industrial buildings could be converted or redeveloped to facilitate the development of these industries, he said.

He proposed lowering the compulsory sale threshold for redevelopment, considering tailor-made lease conditions, and allowing payment of additional premiums exceeding $20 million by instalments over five years at a fixed interest rate to encourage the buildings' redevelopment.

He also proposed to exempt owners who opt for the wholesale conversion of a building instead of redevelopment from paying the waiver fee for change of land use, provided the requirement on age of property is met and planning permission obtained.

"These measures have been proposed after careful consideration by the Government. They can address the needs of economic development by enabling owners to revitalise and add value to their industrial buildings, thus providing new momentum for economic growth and creating jobs. They are also in line with the principle of 'big market, small government', and allow the market to respond to such needs," he said.

"To be more business friendly, the Lands Department will set up a dedicated team to process applications for redevelopment or wholesale conversion of industrial buildings."

Promoting Chinese medicine

Creating more training places and promoting Hong Kong as a Chinese medicine centre will be a high priority, the Chief Executive said.

"To facilitate the development of Chinese medicine the Government will expedite the setting of standards for Chinese herbal medicines commonly used in Hong Kong. We will further consider allowing more renowned Chinese medicine practitioners from the Mainland to join clinical teaching and research programmes in Hong Kong to make Hong Kong a stage for promoting Chinese medicine to the world."

The Government will by year's-end invite expressions of interest from the market to develop private hospitals, which may provide traditional Chinese medicine services, on four sites at Wong Chuk Hang, Tseung Kwan O, Tai Po and Lantau.

It will also consider making use of the vacant space in public hospitals for additional medical facilities, and facilitate the change of land use of private sites for medical use subject to planning permission.

"We will closely monitor the demand of the market and medical sector for land, and ensure suitable sites are available for the development of medical services," he said.

Testing, certification

Mr Tsang said the testing and certification industry will have an important role to play in establishing Hong Kong as a centre for Chinese medicine, and the Council for Testing & Certification, formed in September, will promote the sector and draw up a three-year plan for it.

"The council will examine a number of important issues, including how to align the work of the Accreditation Service under the Innovation & Technology Commission with the development needs of the industry," he said.

Promoting innovation

The share of enterprises in Hong Kong's total expenditure on research and development  steadily increased from less than 30% in 2001 to nearly 50% in 2007.

To encourage more enterprises to invest in high technology and scientific research the Government will allocate $200 million to launch a research and development cash rebate scheme where eligible enterprises will enjoy a cash rebate equivalent to 10% of their R&D investments.

Regional education

The Government will introduce new measures to internationalise the education sector. It will consider relaxing requirements, allowing Mainland students to pursue studies in non-local programmes at degree level or above in Hong Kong.

The number of non-local students in Hong Kong grew 16% to 9,200 last year after introducing measures to encourage more overseas students to come to Hong Kong. The Government will encourage higher education institutions to step up exchange and promotion in Asia, as an increase of non-local students will provide a more international environment for local students to broaden their horizons, he said.

To diversify the sector through the promotion of more self-financing degree-awarding programmes, the Chief Executive proposed increasing the total commitment of the start-up loan scheme by $2 billion.

To help develop self-financing higher education, the Government has reserved sites in Ho Man Tin and Wong Chuk Hang for interested operators to provide programmes which are expected to provide 4,000 places.

Towards a greener HK

For environmental industries, Mr Tsang proposed extending the scope of the cleaner production partnership programme to help factories in the region adopt cleaner production techniques. From the programme's launch in April last year, up to the end of September, more than 330 projects had been approved.

Mr Tsang said the Government secured approval for eligible Hong Kong enterprises to participate in clean development mechanism projects on the Mainland which will help expand the transfer of green technology.

The Government has been expanding its green procurement list and developed green specifications for 60 products commonly used by government departments. It will provide guidelines for departments to promote its green procurement policy.

Creative industries

To develop cultural and creative industries Mr Tsang said the Government will promote regional co-operation in the field under the Closer Economic Partnership Arrangement.

He highlighted the success of the film industry using this model, noting six of the top 10 box-office hits on the Mainland last year were Hong Kong-Mainland co-productions.

The latest supplement to CEPA introduces liberalisation measures for the creative industries, covering films, publishing and printing, and online games.

The Government will seize the opportunities of the West Kowloon Cultural District's development to promote arts and culture in schools and throughout the community.

He described the past year as a milestone in Hong Kong's co-operation with Guangdong following the Central Government's unveiling in January of the Outline of the Plan for the Reform & Development of the Pearl River Delta region, and said the six industries will benefit greatly from this enhanced co-operation.