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Development of high-tier data centres and high-end manufacturing industries
2015-12-15

Following is a question by the Hon Charles Peter Mok and a reply by the Secretary for Innovation and Technology, Mr Nicholas W Yang, in the Legislative Council today (December 2):

Question:

Some members of the information technology industry have relayed to me that with the rapid development of technologies such as cloud computing, e-commerce, artificial intelligence, data analysis and Internet of Things, the development of high-tier data centres and high-end manufacturing industries will bring about a new driver of growth for Hong Kong’s economy. It is learnt that due to the unique site requirements of such industries and the shortage of land in Hong Kong, such industries have difficulties in identifying suitable sites in Hong Kong. As a result, some international and local enterprises have relocated their businesses to other Asian cities, such as Singapore. These people have pointed out that this trend is not conducive to the competition for large enterprises and production facilities to settle in Hong Kong, and stifles the continuous development of innovation, information and communication technology industries in Hong Kong. In this connection, will the Government inform this Council:

(1) whether it has assessed, in the coming five years, the total floor area that can be provided by the industrial estates managed by the Hong Kong Science and Technology Parks Corporation (HKSTPC) for the development of high-tier data centres, and the total floor area that such data centres may need; whether it has formulated measures to attract multi-national enterprises to locate their high-tier data centres in Hong Kong so as to promote the development of digital economy in Hong Kong; if it has, of the details; if not, the reasons for that;

(2) of the measures currently taken by the HKSTPC to increase the land for accommodating the production facilities of high-end manufacturing industries; whether the Government has plans to allocate additional land to the HKSTPC for the development of the Hong Kong Science Park (Science Park) Phase Four and reserve part of the land for such use, so as to promote the development of high value-added industries in Hong Kong, encourage investment in innovation, information and communication technology industries, and create jobs; if it has such plans, of the details; and

(3) of the authorities’ measures to promote “re-industrialisation” in Hong Kong, including how to attract and support high-end manufacturing industries to locate their production facilities in Hong Kong, as well as the objectives, implementation schedule and details of such measures?

Reply:

President,

To promote sustained and diversified social and economic development, the Government of the Hong Kong Special Administrative Region is determined to drive the development of local innovation and technology (I&T) industries. The provision of sufficient land, advanced production facilities and quality support services is one of the important policies.

Hong Kong possesses numerous advantages, including strategic location in the Asia-Pacific region, proximity to the huge Mainland market, intellectual property protection regime of international standards, sound legal system and independent judiciary, and comprehensive information technology infrastructure, etc. These advantages make Hong Kong well-positioned to develop high value-added and high-tech I&T industries.

Data centre is a key infrastructure in a knowledge-based economy. It supports the operation of various business sectors in Hong Kong. In view of its significance, the Government is committed to promoting the development of high-tier data centres in Hong Kong by providing suitable land and other support services, with a view to attracting multi-national data centre operators to set up operations in Hong Kong, thereby boosting Hong Kong’s overall competitiveness. Given our various advantages, Hong Kong is the prime location for setting up data centres in the Asia Pacific region and a number of multi-national corporations have set up their data centres in Hong Kong.

My replies to the three parts of the question are as follows:

(1) With the vibrant development of high-frequency securities trading, cloud computing services and e-commerce, as well as the emergence of financial technologies and various mobile application services, the market demand for safe and reliable data centre services has surged. According to the latest market information, the current gross floor area (GFA) of local data centres, including facilities developed by private companies, has exceeded 460 000 square metres, representing an increase of nearly 50 per cent from some 300 000 sq m in 2012.

Currently, 12 sites with a total of about 19 hectares of land in the Tai Po and Tseung Kwan O Industrial Estates (IEs) are designated for the development of high-tier data centres, providing a floor area of over 300 000 sq m. Upon completion of several data centres in Tseung Kwan O, Kwai Chung and Tsuen Wan (including IEs and those provided by the private sector) in the coming two years, the GFA for data centre development in Hong Kong will increase to 660 000 sq m to meet the market demand in the next few years. Moreover, we have reserved three hectares of land in Tseung Kwan O for data centre development by the private sector. The first site of about one hectare was sold in October 2013, and the second site of a similar size is expected to be put up for bidding next year. These two sites will provide a total GFA of about 100 000 sq m.

Apart from providing land for building data centres, the Government has also introduced two incentive measures to encourage the industry to convert industrial buildings into data centres and to develop data centres on industrial lots. The Office of the Government Chief Information Officer (OGCIO) also provides support and inter-departmental co-ordination services to enterprises that are interested in setting up data centres in Hong Kong. Besides, the OGCIO, together with Invest Hong Kong, have been launching campaigns in the Mainland and overseas to promote Hong Kong as the prime location for setting up data centres in the Asia Pacific region.

(2) Under the revised IE Programme, the HKSTPC will in future actively recruit I&T industries which are vital to the sustained growth of our economy. The facilities provided will be suitable for housing different production activities in the entire value chain. Regarding business model, the HKSTPC will in future mainly build and manage multi-storey industrial buildings designated for science and I&T industries for leasing, in order to ensure that the sites of the IEs available for development can realise their full development potential.

To better utilise the land resources in the IEs, the HKSTPC has negotiated with some factory operators and obtained their agreement to surrender some of the unused plot ratio involving a permissible GFA of approximately 70 000 sq m. In addition, the HKSTPC also launched a pilot scheme in May this year to encourage factory operators to surrender premises which had not been fully utilised. So far, the applications for surrender received involve a GFA of about 50 000 sq m.

The HKSTPC also plans to develop one to two pilot projects on vacant sites or sites surrendered by existing users in the next few years. The new industries being considered are technology industries which Hong Kong enjoys development advantages, such as information technology, robotics technologies, and high-end manufacturing industries relating to medical service and ageing population, etc.

Upon completion of Phase Three of the Science Park in 2016, its GFA will be increased by 105 000 sq m to 330 000 sq m, which should be able to meet the short-term demand for office space by research and development activities. The HKSTPC is also examining the feasibility of suitably increasing the development density of the Science Park so as to provide additional floor area for meeting the medium-term demand of the development of technology industries in Hong Kong.

(3) Due to the re-structuring of our economy in the past, some factory operators in Hong Kong had moved their production lines to the Pearl River Delta in the Mainland. With rising labour and other costs in the Mainland in recent years, coupling with the unique advantages of Hong Kong, including well-established systems and world-class infrastructure, some factory operators, especially those engaging in high-end manufacturing, are well-positioned to consider performing high value-added production processes that require less amount of land and labour in Hong Kong. We hope to perform a facilitator role in actively promoting and fostering development in this regard. The aforementioned revised IE Programme is one of the measures in promoting re-industrialisation in Hong Kong.

Innovative application and technological development are the driving forces for industrial upgrading and restructuring. The Innovation and Technology Bureau will seize the opportunities brought about by re-industrialisation and the development of Internet of Things to promote smart manufacturing. We will continue to work with relevant stakeholders on how to leverage Hong Kong’s unique foundation and advantages to complement the development of new industries, with a view to putting forth more measures to attract and support the development of high-end manufacturing industries in Hong Kong.

Ends/Wednesday, December 2, 2015
Issued at HKT 14:39

Office Of Hon. Charles Mok, Legislative Councillor (IT)