Survey conducted by kpmg/cn Future Hong Kong 2030 Public and private sector insights for smart city developmentContents About the study Improving smart city governance and public-private cooperation Increasing liveability and reducing climate impact Executive summary Smarter solutions through open data Envisioning Hong Kong 2030 Prioritising societal needs Looking ahead: the road to Hong Kong 2030 Priorities for smart city initiatives Economic interconnectivity and innovation 02 06 04 12 24 18 32 42 50 60 © 2020 KPMG, a Hong Kong partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. Smarter solutions through open data 22 28 30 31 37 39 40 46 48 49 56 57 58 21 27 38 38 47 52 52 54 55 Viewpoints Case studies Effective smart city governance requires flexible models for public-private cooperation Jaewon Peter Chun, President, World Smart Cities Forum Creating a dynamic open data ecosystem in Hong Kong Donald Mak, Assistant Government Chief Information Officer (IT Infrastructure), Office of the Government Chief Information Officer (OGCIO), HKSAR Government Common Spatial Data Infrastructure: a critical investment for Hong Kongs smart city development Dr. Winnie Tang, Honorary President, Smart City ConsortiumData security: an essential part of a vibrant IoT ecosystem Eric Chong, President and CEO, Siemens Limited Accelerating efforts for a sustainable future Waltraut Ritter, Principal, Knowledge Dialogues Innovation to drive sustainability Austin R. Bryan, Senior Director, Innovation, CLP Smart lighting: making Hong Kong more liveable and sustainable Timothy Mak, General Manager, Hong Kong and Macau, Signify Hong Kongs smart development equals opportunities in Southeast Asia Patrick Lau, Deputy Executive Director, Hong Kong Trade Development Council Strengthening Hong Kongs role as a bridge between markets Peter Yan, CEO, Cyberport Regulation, funding and talent: three keys to boost start-up innovation Karena Belin, Co-Founder and CEO, WHub and AngelHub Affordable quality housing critical to Hong Kongs future innovation Sachin Doshi, Founder and CEO, Weave Co-Living Digital literacy and community outreach: paths to a smarter city NiQ Lai, Co-Owner 38 percent large businesses/ corporates; 9 percent independent contractors and consultants; 7 percent not-for-profit organisations/non-governmental organisations (NGOs); 2 percent government/civil service; and 2 percent academic institutions. 97 respondents (23 percent) identified their organisations as “start- ups”. 71 percent of respondents organisations are headquartered in Hong Kong. In total, 13 key industry sectors are represented, most prominent of which are technology and innovation (20 percent); professional services (12 percent); real estate (11 percent); financial services (10 percent); infrastructure (7 percent) and manufacturing (6 percent). The report also includes in-depth interviews with industry practitioners and case studies showcasing best practices in Hong Kong and other cities. Future Hong Kong 2030 2 © 2020 KPMG, a Hong Kong partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. 430 executives from business, not-for-profit organisations, government, and academic institutions Survey demographic highlights 42% 38% 9% 7% 2% 2% Small or medium sized business Large business/ corporate Independent consultant/ contractor/ self-employed Not-for-profit organisation/NGO Government/ Civil service Academic institutions 81% of respondents are respondents (23%) senior management (C-level or department head)are from start-ups 97 T op sectors represented are technology/innovation, professional services, real estate, financial services, infrastructure and manufacturing 20% 12% 11% 10% 7% 6% 4% 3% 3% 2% 2% 2% 2% Technology & innovation Professional services Real estate Financial services Infrastructure Manufacturing Retail Trade & logistics Conglomerate Education Government Healthcare/Life sciences Telecommunications Other highlights More than half (55%) of respondents have more than 15 years of experience in their industry sector of respondents companies are 71% headquartered in Hong Kong have been working in Hong Kong 64% more than 10 years have lived in Hong Kong 73% more than 10 years Future Hong Kong 2030 3 © 2020 KPMG, a Hong Kong partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. © 2020 KPMG, a Hong Kong partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. Executive summary There are a number of long term global trends, coupled with several internal factors specific to Hong Kong that will shape the citys smart transformation in the future. Many of these are interconnected and represent complex challenges for the citys leaders. Effective governance, prioritising the needs of residents, and an ongoing focus on technology innovation will be crucial for Hong Kong to achieve its smart city objectives over the next 10 years. A key finding in this years Future Hong Kong 2030 survey is that the government has an important role to play in facilitating smart city development. Having future- focused government regulation and policy, together with the development of technology infrastructure, are considered by survey respondents to be the most critical factors to support Hong Kongs continued progress. Housing affordability is seen as a top issue to address, with respondents identifying the creation of more affordable homes as the leading priority for Hong Kongs future development, closely followed by making more efficient use of land and public space. Respondents also highlight the importance of innovation to the success of the city as well as their own organisations. Three-quarters of those surveyed are planning to increase investment in research and development (R&D) in the coming year with more than half prioritising local R&D investment in Hong Kong. Ensuring the city has a workforce equipped with the necessary skills is also a major imperative. Respondents consider providing training to ensure their staff have the right skills as being just as important, if not more so, than investing in new technology itself. Three-quarters of survey respondents plan to increase specialised training in digital technologies, broadly in line with the proportion planning to increase investment in technology. Industry players interviewed for this report would also like to see Hong Kongs education system adapted to encourage more students to take up Science, Technology, Engineering and Mathematics (STEM) subjects to ensure they have a steady flow of relevant talent in the future. When it comes to their own success, having access to the right talent will be the key determining factor for Hong Kong organisations in the coming decade. Respondents see mainland China, particularly the nine mainland China cities in the Greater Bay Area (GBA), as well as ASEAN countries as important sources to fill local talent gaps. Co-creation and cooperation between the public and private sector also play an important role in smart city development. Survey respondents expressed a strong willingness to partner with the government on projects in this area. However, only a minority of organisations surveyed are currently working with the government on smart city initiatives, with most saying there are insufficient opportunities for partnerships. Developing a broader base of shared data for the public to use is another area requiring improvement. Open data can greatly contribute to smart city development, allowing government departments, individuals and businesses to harness analytics tools to optimise city management and urban planning. The past year has seen some progress in this area with around 4,000 data sets now available on the governments open data portal, data.gov.hk. However, the survey highlights the need to continue to raise awareness about the platform, Future Hong Kong 2030 4 © 2020 KPMG, a Hong Kong partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. with nearly half of respondents saying they are either not familiar with it or do not plan to use it. Private businesses also showed a lack of awareness or a lack of willingness to share their own data through the platform, with only a small minority of those polled currently contributing to it. Sustainability plays an important role in smart city development, and technology can be used to help conserve resources and reduce Hong Kongs impact on the environment. Organisations recognise this and are focused on improving their own sustainability, with more than a third of respondents investing in technology to reduce their energy usage, carbon footprint or waste levels. Integrating environmental, social and governance (ESG) into their overall digital transformation strategy is also a top consideration for a similar proportion of respondents. The ability to reduce costs is the key motivation among organisations for implementing ESG practices, followed by a desire to stay competitive with other leading brands, the survey finds. Demand from customers is also a key factor driving the adoption of ESG. Hong Kong is economically connected with substantial markets in close proximity. A significant proportion of the citys economic activity is linked to Greater China and within that the GBA as well as the ASEAN region. The GBA is viewed by Hong Kongs larger corporates as the preferred destination for outbound direct investment including R&D. Meanwhile, small and medium- sized enterprises, including start-ups, plan to prioritise trade and investment with ASEAN countries, according to the survey. Continued development of Hong Kongs trade and investment links with these markets will be fundamental to Hong Kongs economic prosperity, acting as drivers for growth and the creating of future employment opportunities for its citizens. The survey also suggests that start-ups also need to more effectively leverage the benefits of the GBA. While many start-up respondents say their organisation currently partners with Hong Kong-based corporations or universities on R&D projects, only a minority said the same for similar organisations in the rest of the GBA. There is also a need for deeper collaboration between corporates and start-ups on smart city projects, in order to develop solutions that can most effectively benefit the community. Although nearly half of corporates plan to partner with start-ups on pilot projects in the coming year, a smaller number plan to develop new products or services with them, or to partner on go-to-market initiatives. Next steps The report analyses next steps to help optimise Hong Kongs development as a smart city. These include greater connectivity between individual government departments, best practices for effective governance as well as increased collaboration between the public and private sector. Corporates should also expand their partnerships with universities, start-ups and other companies, while focusing on sustainability and talent development. Start-ups and SMEs need to make full use of the resources available to them, and proactively seek out opportunities to collaborate with both larger businesses and universities. Please see p. 60 for a summary of key takeaways. Future Hong Kong 2030 5 © 2020 KPMG, a Hong Kong partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. © 2020 KPMG, a Hong Kong partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. Envisioning Hong Kong 2030 Building a smarter, more sustainable, more liveable city together The starting point for this report is the challenges Hong Kong will face in the coming decade and how effective governance, smart infrastructure and technology can be harnessed to address these issues and enhance residents lives. There are a number of long-term global trends that will impact Hong Kong and shape its development. Any future vision for Hong Kong must respond to where the city sits economically, socially and demographically in both the region and the world. Global trends such as increasing empowerment of individuals, ageing populations, climate change, resource scarcity, economic interconnectivity, the geopolitical climate, and rapid technological disruption all present both risks and opportunities to cities. The impact of these factors must be clearly understood and factored into Hong Kong as it plans for the future. At the same time, there are a range of internal factors specific to Hong Kong which need to be considered. These include the amenity and liveability of the city, land use and urban redevelopment, resource and waste management, and the need to boost R&D and innovation. In addition, there are several societal issues impacting Hong Kong that will need to be addressed for it to realise its 2030 ambitions. These include tackling income inequality and poverty, housing affordability, equipping the workforce with skills needed for the future, and taking care of the citys growing elderly population (see Figure 1). Factors that shape Hong Kongs development Amenity & Liveability UN Sustainable development goals Ageing Population Resource Scarcity Geopolitical Climate Economic interconnectivity Capital Markets and Investment Trends Individual Empowerment Global Climate Change Addressing income inequality Affordability of housing Transportation & Mobility Building a future-focused workforce Healthcare and elderly care Resource and waste management Climate change readiness Economic Growth Employment and Job Creation Future-focused policy and regulation R&D and Direct Investment Land use and urban redevelopment Innovation & T echnology as an enabler Sustainability & Resources People Figure 1: External and internal factors shaping Hong Kongs development as a smart city Economic and geopolitical factors Global trends Future Hong Kong 2030 6 © 2020 KPMG, a Hong Kong partnership and a member firm of the KPMG network of independent me