I would like to talk about what we are doing here in Hong Kong to promote innovation and research and development activities. Our aim is to grasp the opportunity to make technology a key pillar for our future as an advanced knowledge-based society.

Hong Kong is often described as a melting pot of cultures, but even more importantly, it is also a melting pot of ideas brought from all corners of the globe and tested in a community that demands quality, efficiency and the very latest technology.

We are also a community that is increasingly integrated with the Mainland of China and its 1.3 billion people. New ideas born or nurtured in Hong Kong have the potential to reach the vast Mainland market quickly and efficiently. We are also well positioned to play an important role in advancing scientific research in Asia.

For new concepts to take root in Hong Kong, we encourage a free flow of ideas and information, we have strong protection for intellectual property rights and we have the rule of law. We believe in open markets, and we have been recognised as the world's freest economy by two separate international think-tanks for more than a decade. These attributes provide a fertile environment for creativity and innovation, which are key elements to sustaining economic growth.

The importance of solutions from biotechnology is highlighted in our Central Government's economic blueprint, the "11th Five-Year Plan". Biotechnology is a key area identified for development in the plan to achieve clean energy and food security, improved health care and a better living environment. These are concerns that our nation shares with economies around the world.

In Hong Kong, we can add to the mix of issues that we face in the 21st century an ageing population and declining birth rate. Hong Kong has one of the world's lowest fertility rates and one of the longest life expectancies. People expect to live longer and they expect to be more comfortable, secure and active in later life.

There is growing demand here and elsewhere for preventive, therapeutic and regenerative medicines, medical diagnostics, wellness and, of course, anti-ageing products.

Meeting these demands will require academic research as well as business acumen. Hong Kong, as the gateway to the Mainland, provides an ideal platform for the development of suitable technology and offers endless business opportunities.

4,000 overseas firms based in HK

Our business-friendly systems, support for advanced R&D and well-educated and hardworking people have helped to attract about 4,000 overseas companies to set up their regional headquarters in Hong Kong.

Part and parcel of being a global business and financial centre is a commitment to a strong foundation for fostering scientific and technological developments, and support for efforts to develop products and to commercialise the results.

Each year, about a third of our university graduates obtain a science or engineering degree. The Government invests heavily in education. In recent years, we have been spending $50 billion annually on education, which is about a quarter of our total recurrent public expenditure. 

In my Budget delivered in February, I set aside $18 billion to set up a Research Endowment Fund, to provide enhanced and stable research funding for our universities. We will use a portion of this funding to support specific themes that are critical to Hong Kong's long-term development and strategic direction.

In addition to investing through academic channels, the Hong Kong Government also promotes applied R&D through funding schemes and a network of infrastructure support. The $5 billion Innovation & Technology Fund was established in 1999 to support applied R&D projects that will enhance Hong Kong's international competitiveness. So far the fund has supported some 1,200 projects with funding that is worth about $3.6 billion. In the biotech area, projects that have been supported, include those in bio-informatics, molecular diagnostics, drug and therapeutic discovery and the development of traditional Chinese medicine.

In terms of infrastructure support, the 22-hectare state-of-the-art Hong Kong Science Park in Sha Tin provides an environment that is attractive to technology-based firms and activities. Phase 1 of Science Park was completed in 2004, while Phase 2 is being implemented in stages up to 2009.

Science Park offers a comprehensive range of services catering to the needs of technology enterprises at various stages of their development. For example, the park nurtures technology start-ups through an incubation programme, and provides affordable engineering and technical support services to companies involved in applied R&D activities. Biotechnology, electronics, precision engineering and information and communications technology, are the current focus areas of Science Park.

There is also a dedicated Bio-informatics Centre and two biotechnology laboratory buildings to provide shared facilities for biotechnology companies for R&D in bio-informatics, therapeutics, medical diagnostics and devices. There are about 20 biotechnology-related tenants in Science Park and spread over the industrial estates in Tai Po, Yuen Long and Tseung Kwan O.

Science Park also hosts two important publicly-funded research institutes, the Applied Science and Technology Research Institute, or ASTRI for short, and the Hong Kong Jockey Club Institute of Chinese Medicine. ASTRI conducts high quality R&D on four closely interrelated technological domains relating to information and communication technologies. The Institute of Chinese Medicine has a scientific and evidence-based Chinese medicine research programme working to facilitate the modernisation and standardisation of Chinese medicine.

Hong Kong's biotechnology industry is relatively new compared to some other economies, but it is an exciting growth area given our access to capital, R&D capabilities and demand from the business community.

Hong Kong is home to some 250 biotechnology-related firms, comprising mainly healthcare-related companies with businesses in pharmaceuticals, medicinal or healthcare products of traditional Chinese medicine. Activities include product R&D, manufacturing, marketing and sales. About 70 of these companies are listed on the Hong Kong Stock Exchange and Growth Enterprise Market.

Six of our eight universities are engaged in biotechnology-related research and offer undergraduate and higher degree training in relevant disciplines. According to a study conducted by Science Park in 2004, Hong Kong's combined basic biomedical research output and related human resources are quite competitive internationally. The total number of basic medical publications per year doubled to about 700 between 1997 and 2002. It is also estimated that Hong Kong universities produce about 250 high impact biomedical publications annually.

We welcome more overseas students to come and study in Hong Kong. We recently increased the quota for overseas students at our tertiary institutions and relaxed visa restrictions, so they can remain in Hong Kong for up to a year after finishing their studies to give them ample time to find the right job.

In recent years, Hong Kong has made a mark in its scientific contributions in international, large-scale genomic projects, such as the International HapMap Project in which Hong Kong shared the responsibility with a Mainland team for mapping part of the human genome.

Our two medical schools, the University of Hong Kong and the Chinese University of Hong Kong, are rated among the top in the world in the field of clinical medicine by the ISI Essential Science Indicators. Both schools manage extensive collaborations with multinational pharmaceutical companies, and have experience in conducting clinical trials for the approval of new drug registration in the US.

The Hong Kong Eye Hospital, the University of Hong Kong and the Chinese University of Hong Kong are the first three institutions outside the Mainland to gain approval from the China State Food and Drug Administration, to carry out clinical trials in a number of disciplines for drug registration purposes in China.

Applications of biotechnology are diverse and far-reaching, with synthetic biology being a new paradigm in the biotechnology revolution. Biotechnology is changing the way we generate bio-energy, manufacture pharmaceuticals, make medical diagnosis and deliver treatment in years to come.

Hong Kong has laid a firm foundation for developing biotechnology, and we will continue our investments in this area, in both academic research and in nurturing a thriving industry.

We look forward to more joint research projects between Hong Kong, the Mainland of China, and other parts of the world to take forward applications in the field of biotechnology and its younger cousin, synthetic biology.

We expect that such research opportunities will attract a large share of venture capital to Hong Kong and translate that into exciting business opportunities for entrepreneurs to unleash the economic benefits of research for the public good.

Combining research in bioscience with traditional engineering skills plays to Hong Kong's strength. I look forward to learning more about synthetic biology, and the potential for further exploration of this field.

Financial Secretary John Tsang gaves this address at the 4th International Conference on Synthetic Biology at Hong Kong University of Science & Technology.