Unblocking the talent log jam

There is a global war for talent. The rapid development of e-commerce and internet technology has led to a shortage of IT manpower. Those countries that have addressed immigration
barriers to attract entrepreneurs and a skilled workforce into hi-tech sectors will probably have the cutting edge over the next 10 years.
Several countries, including the UK, recognise that closed-door immigration policies are no longer applicable. The UK has undergone the most radical changes in its immigration policies over the past 30 years, including the introduction of the Innovator Category, designed to attract hi-tech entrepreneurs. Similar developments are happening throughout Europe. On 23 November, the European Commission launched a paper calling for a radical rethink of European immigration policy. Against this background, what is the Hong Kong Government doing and is it enough?
Statistics show a shortage of manpower in Hong Kong, particularly in the IT and hi-tech industry. A report by PricewaterhouseCoopers into the manpower and training needs for the IT industry in 1999 estimated that the gap between supply and demand for IT manpower could be more than 50,000 by 2010, while the November 2000 government Manpower Projection to 2005 report suggests that the demand for IT staff is expected to almost double from 50,000 in 1999 to 98,200 by 2005. There is concern throughout the industry that the shortage of IT workers is driving up labour prices and putting financial strains on businesses.
The extent to which Hong Kong immigration policies are facilitating the entry of new talent and IT investment into Hong Kong to bridge the gap between supply and demand is debatable.
An individual wishing to come to Hong Kong to invest or start a new company must apply for an employment (investment) visa.
But there are several problems that may deter potential IT investments in Hong Kong. The application process is bureaucratic and it takes between 10 to 15 weeks for a visa to be granted. For a dotcom, 10 to 15 weeks at this critical stage might as well be 10 to 15 years. Applications need to be processed rapidly to reflect the fast pace at which the technology sector moves. Visas are granted subject to the condition that the applicant will only engage in the particular employment or investment that is approved, so there is no scope for entrepreneurial activity.
The People’s Republic of China (PRC) is seen as an important source of talent. In December 1999, the Hong Kong Government introduced the Admission of Talents Scheme in an attempt to attract more skills from mainland China and energise the technology sector. Under normal employment visa rules, before 1 November, 2000, PRC nationals had to have lived overseas for at least two years immediately preceding their visa application. This requirement was introduced as a result of fears that Hong Kong would be flooded with PRC workers after its handover to China. This requirement has been reduced to one year.
The Admission of Talents Scheme allows PRC nationals to enter Hong Kong without having
to fulfil overseas residency requirements. When the scheme was introduced, the Government expected at least 2,000 professionals from the PRC to relocate to Hong Kong in 2000. As at 23 December, 2000, 415 visa applications had been received under this scheme and only 97 applications were approved, 42 of which were in IT/ multimedia. When these figures are compared with the statistics relating to the need for IT workers, it is clear that the scheme is not helping to bridge the gap between supply and demand for manpower in Hong Kong.
The scheme fails to recognise that many young entrepreneurs do not have such high qualifications or enough years of relevant experience and is not geared to attracting the type of talent needed to energise the technology sector. Applicants must not only show they possess skills and knowledge that is not readily available in Hong Kong (clearly ironic when statistics show that there is a lack of technical talent), but they must also have a strong academic background, normally consisting of a relevant doctoral degree and proven research or work experience with recognised institutes. Applicants must be employed in jobs relevant to these academic qualifications and skills. Eighty-eight per cent of those admitted under the scheme had a master’s degree and 50% of applicants had a doctoral degree.
In the 21st century, global economic competition will be predominantly based on knowledge, innovation and brainpower. Innovative human capital and entrepreneurial spirit will often be more important than physical and financial capital. If Hong Kong is to become Asia’s technology and innovation hub, it must retain local talent, Hong Kong’s only natural resource, and attract talent from different countries, such as India, the US or the UK. Hong Kong must rethink its immigration policy and look at introducing immigration categories that are designed to attract entrepreneurs.
The Trade and Industry Bureau recognised the dangers of inadequate immigration policies in its consultation paper before the introduction of the Admission of Talent Scheme:

“If Silicon Valley had limited its talent pool to people within its geographical boundary, instead of absorbing the best talents from outside, it would not have achieved the economic success it enjoys today. The immigration restrictions on mainland China and other overseas talents detrimentally affect the building up of intellectual capital in Hong Kong and its future economic development.”
Chief executive Tung Chee-hwa announced in his policy address last year that the immigration policy on the entry of professionals would be reviewed prudently but proactively to admit more talent from the mainland and abroad. Hong Kong’s secretary for security, Regina Ip, announced in November 2000 that the review would be guided by an objective of facilitating economic development while safeguarding job opportunities for locals. The review is expected to be completed in the first half of this year. The Task Force on IT Manpower, set up under the information infrastructure advisory committee, is also assisting the Government in addressing the issues of IT manpower needs in Hong Kong.
Other countries across Asia have liberalised their immigration policies as part of an aggressive programme to attract new talent. Singapore, an obvious rival of Hong Kong, has attracted its talent by simplifying visa application procedures and offering attractive remuneration packages. Singapore has pursued an aggressive policy for the development of IT since the early 1980s (in comparison to Hong Kong, which has only embarked on its strategic IT development plan in the last few years). Last year, Singapore was ranked fourth in the world for its emphasis on technology behind the US, Sweden and Finland. By 2002, it is expected to be second only to the US.
Hong Kong is investing substantial sums of money into the technology sector in a bid to realise the dream of becoming the centre of innovation and technology in Asia. Multibillion-dollar projects such as Cyberport and the Hong Kong Science Park are intended to attract overseas technology companies to Hong Kong and the Innovation and Technology Fund, into which hk$5bn (£0.4bn) has been invested by the government, was established to support projects that contribute to the promotion of technical innovation and the development of the local IT industry.
According to recent Forrester research, Hong Kong has the potential to be a leading economy in the Asia-Pacific region, seeing e-commerce growth from $2bn (£1.36bn) in 2000 to $70bn (£47.6bn) by 2004. But these developments and predictions are worthless unless Hong Kong can adequately compete to attract the skilled manpower and knowledge necessary to convert innovation and technology into commercial products.
Hong Kong is investing substantial sums
into IT education and training, including the implementation of the Information Technology for Learning in a New Era: Five Year Strategy programme. While this may help to alleviate the problem in the long term, Hong Kong’s immigration policies need to be relaxed to allow the flow of talent needed to bridge the gap. Without a substantial dose of entrepreneurs in Hong Kong, its economic star will fade in this tough, competitive, global environment.