on 14 February 1997
ITEM FOR FINANCE COMMITTEE
HEAD 106 - MISCELLANEOUS SERVICES
Subhead 711 New Technology Training Scheme
Members are invited to approve an increase in the level of grant from 50% to 75% of the total cost of a training course under the New Technology Training Scheme.
The New Technology Training Scheme (NTTS) has not realised its full potential to benefit local industries.
2. The Secretary for Education and Manpower (SEM) recommends increasing the level of grant from 50% to 75% of the total cost of a training course under the NTTS.
3. We set up the NTTS in June 1992 with a capital injection of $55 million to provide employers with financial support to train their staff in new technologies which would be beneficial to Hong Kong [FCR(92-93)3]. We provided a further capital grant of $50 million to the scheme in 1993 [FCR(93-94)5]. In seeking Members approval of the capital injections, we informed Members, among other things, that we would only make use of the interest earnings of the Fund and operate the scheme on a matching grant basis (i.e. the NTTS and the employer would each contribute 50% of the cost of training) within a ceiling of grant per trainee as SEM may adjust from time to time in consultation with the Secretary for the Treasury.
4. Up to the end of December 1996, interest earnings of the Fund amounted to $30.7 million, of which we have spent $5.7 million on administration and publicity and $6.4 million on grants to 1 114 successful applications. Details are as follows -
|Number of |
|Grants approved($ million)
|Month/Year||Local training||Overseas training ||Local training||Overseas training
|6/92 - 3/93||0||15||0.00||0.22
|4/93 - 3/94||27||19||0.09||0.33
|4/94 - 3/95||190||28||0.85||0.36
|4/95 - 3/96||398||50||1.36||0.67
|4/96 - 12/96||499||74||1.53||0.95
5. The statistics indicate that, while the number of applications under the NTTS has been increasing since its inception (in particular for local training), the scheme has not realised its full potential.
6. The Vocational Training Council (VTC), which administers the scheme, conducted in 1993 a survey of management development needs in the manufacturing sector to solicit the views of employers on the provisions and resources needed for management training. The results of the survey indicate that the 50% maximum contribution from the NTTS and the ceilings on grants are too restrictive and have diminished the attractiveness of the scheme. Employers generally feel that the grants do not provide them with adequate assistance in meeting training costs, particularly those associated with advanced technologies.
7. To encourage more applications, VTC has stepped up the promotion of the scheme by placing advertisement in bulletins, introducing it to various organisations related to the manufacturing sector, giving talks and sending promotional letters to employers in various sectors. The VTC has recently sent promotional letters with reply slips to 205 firms but only 45 respondents show interest in the scheme. The Sub-Committee on Training in New Technologies of the VTC therefore recommends that we should raise the level of grant from 50% to 75% of the training cost in order to further enhance the attractiveness of the scheme. This proposal has also the support of the Industry and Technology Development Council. The change will bring the NTTS more in line with a number of other industrial support schemes. The Applied Research and Development Scheme, for instance, offers loans or equity participation of up to 75% of costs, while the Industrial Support Fund provides grants of 100% of the fundable costs of approved projects.
Other improvement measures
8. On 17 December 1996, the Governor-in-Council endorsed the following measures to further improve the attractiveness of the NTTS -
- to further promote the scheme and make it clear that the scheme covers not only manufacturing industries but also service industries;
- to remove the ceilings on grants made under the scheme; and
- to extend assistance to forms of training other than extension courses and working attachments, if they meet the schemes objectives.
|Details of the above improvement measures to the NTTS are at the Enclosure.||Encl.|
9. Subject to Members approval of the proposal to increase the level of grant from 50% to 75% of the total training cost in paragraph 2, we will implement the proposal together with the above improvements to the NTTS.
10. The proposal has no financial implications for Government. The interest income of the NTTS from Governments capital injections is about $7 million a year. As at 31 December 1996, the Fund had an uncommitted balance of $18.6 million. While it is difficult to estimate the additional requirements for grants arising from implementation of the improvement measures, we will keep total expenditure of the scheme, including the payment of grants, within its earnings. Should the amount of grants applied for exceed the earnings, the VTC will prioritise the applications. We will review the scheme and its financial position 12 months after implementation of the proposed improvement measures.
11. We launched the NTTS in June 1992 to provide employers with financial assistance to train their employees, either locally or overseas, in technologies which would be beneficial to Hong Kong. The VTC administers the scheme under the policy direction of the SEM and with the advice of the Industry and Technology Development Council.
Education and Manpower Branch
Enclosure to FCR(96-97)104
Other Improvements to be made to the New Technology Training Scheme (NTTS)
Promoting the Scheme to Service Industries
At present, the NTTS is generally associated with training in technologies related to manufacturing industries, with the majority of the pre-approved training courses and fundable technologies falling within this category.
2. Given keen international competition, it is vital that the service industries should continue to enhance their productivity, competitiveness and quality through the application of the latest technologies. Economic restructuring and Hong Kongs rapid development as a high value-added economy also underline the need to promote the use of technology in the service sector for the overall benefit of the community. It would, therefore, be timely to bring service industries within the scope of the NTTS and to encourage them to make full use of it. In particular, we would focus on enhancing the awareness of small and medium enterprises of the availability of funding support under the NTTS.
Removing Ceilings on Grants
3.We revised the current ceilings on the grants to $37,500 for overseas training and $15,000 for local training in 1993 to allow more trainees to benefit from the scheme.
4.The Vocational Training Council (VTC) conducted a survey of management development needs in the manufacturing sectors in 1993. Employers generally consider that the ceilings on grants (and the matching contribution to the training cost as well) are too restrictive. Their view is that the grants do not provide them with adequate assistance in meeting training costs, particularly those associated with advanced technologies.
5. Lifting the ceiling will, in particular, encourage companies to provide intensive overseas training. Since the scheme started in 1992, there have only been six applications involving actual expenditure higher than the prevailing ceiling of the grants - all for overseas training in technologically-advanced countries. We believe that the ceiling may have suppressed the number of applications and that there is a case for removing it. To avoid abuse, the VTCs Sub-Committee on Training in New Technologies, which vets all applications under the scheme, will examine carefully whether the expenditure levels of individual applications are appropriate and represent good value for money.
Widening the Scope of the Scheme to Cover Different Forms of Training
6. At present, the NTTS covers mainly extension courses offered by local and overseas institutions, or overseas working attachments. We believe that there is a case for extending the scheme to cover other forms of training which can equally meet the objectives of the scheme. For example, an employer may apply for grants to bring in overseas trainers to conduct courses locally, or consider tailor-made or sector-specific courses organised by the VTC, the Hong Kong Productivity Council or other tertiary education institutions.
7. This will increase the schemes flexibility and encourage employers to develop training programmes best suit the need of their employees. The Sub-Committee on Training in New Technologies will retain control by scrutinising applications on a case-by-case basis.
Last Updated on 5 August 1999