The Hong Kong Government firmly believes we should play a proactive role to promote applied research and development as our economy continues to grow and move up the value chain. We provide financial support through the $5 billion Innovation & Technology Fund to encourage more applied R&D activities by research institutes and the industry.

About half of the fund, or $2.3 billion, has been set aside to establish and finance the operation of new R&D centres in five areas, which are automotive parts and accessory systems; information and communication; logistics and supply-chain management; nanotechnology and advanced materials; as well as textiles and industry.

These five centres have commenced operation and will soon embark on their first batch of research projects.

Science Park a flagship

The Government also promotes applied R&D through the provision of dedicated infrastructure, with the Hong Kong Science Park being our flagship project. Here, 22 hectares of land has been reserved for development in three phases so that technology-based firms can carry out applied R&D, new product development and design work.

Tenant companies are selected on the basis that they will bring into the Science Park new investments in physical and human capital to nurture Hong Kong's R&D capacity. In return, these tenants, as well as start-up companies under the Science Park's incubation programme, will benefit from various state-of-the art facilities at competitive prices.

At 90% occupancy, Phase One of the Science Park - costing $2.9 billion with a total lettable floor space of 84,000 square metres - has been taken up by 130 local, Mainland and overseas companies in the four clusters of Electronics, Biotechnology, Precision Engineering, and Information Technology & Telecommunications.

Companies create 1,700 new jobs

In cumulative terms, these companies have created more than 1,700 new jobs, of which 85% are R&D related, and invested $4.7 billion in their first three years of operation.

Today, we witness here the ushering in of the next stage of Science Park development - the topping out of Phase Two. Starting from early 2007, 78,000 square metres of lettable space will be coming on stream. When fully commissioned in 2008, Phase Two will comprise two dedicated laboratory buildings, six R&D office buildings, two energy towers, plus a world-class auditorium, landscaped open space, lakeside amenity areas and a beautiful promenade along the Tolo Harbour.

This development will integrate with Phase One and enlarge Hong Kong's strategic base for innovation and creativity.

Challenge: To sustain momentum

With the construction programme charging in full steam, the challenge for the Board of Directors of the Science Park is to sustain the momentum of attracting the best enterprises and talent, both local and outside Hong Kong, to move into the new and expanded areas.

I am convinced that our enlarged pool of Science Park enterprises and entrepreneurs will develop strategic alliances with R&D institutes, and commercial and industrial operations throughout the Pearl River Delta, with regional as well as international linkages to business opportunities.

The Hong Kong Science Park is an important testament to the Government's commitment to promote innovation and technology development as the growth engine of our knowledge-based economy in the 21st century. I am sure it will continue to grow and develop as our economy continues to move along its technology path.

Secretary for Commerce, Industry & Technology Joseph Wong gave this address at the topping-out ceremony of Science Park Phase Two.