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Foreign Direct Investment in the Pharmaceutical Industry: Why Singapore and not Hong Kong

  • Bryan MERCURIO (a1) and Daria KIM (a2)

Abstract

This article began as mere curiosity over what appeared to be a paradox – Singapore and Hong Kong share countless economic and geopolitical similarities and compete vigorously for foreign direct investment (FDI), yet only the former has become a pharmaceutical hub while the latter struggles to attract any FDI in the sector. To find the reason for the “drastic” difference in pharmaceutical FDI, we compare the economic, legal, policy, and regulatory frameworks of the two jurisdictions focusing on the factors that have been identified in the economic literature as having the most relevance for FDI decision-making. The analysis discounts economic and legal factors before finding variances in policy and regulatory frameworks as the critical difference accounting for the disparity in the pharmaceutical FDI. Given that Hong Kong occasionally considers transforming itself into the “pharmaceutical centre for the Asia-Pacific”, this article calls for a change in policy approach and strategy before this aspiration is considered more realistically.

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Copyright

Footnotes

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*

Professor and Vice Chancellor’s Outstanding Fellow of the Faculty of Law, The Chinese University of Hong Kong.

**

PhD candidate, Max Plank Institute for Innovation and Competition. Ms. Kim formerly served as a Research Associate at The Chinese University of Hong Kong under the GRF project “Intellectual Property Rights and the Pharmaceutical Industry: Evaluating Hong Kong’s Regulatory Framework”.

Acknowledgment: This research is supported by Hong Kong General Research Fund (GRF) Project No. CUHK450012, entitled, “Intellectual Property Rights and the Pharmaceutical Industry: Evaluating Hong Kong’s Regulatory Framework”.

Footnotes

References

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1. The People’s Republic of China resumed sovereignty over Hong Kong in 1997 while Singapore declared independence from the United Kingdom in 1963 and from Malaysia in 1965.

2. See Hong Kong SAR Legislative Council, Official Record of Proceedings (9 July 2009) at 10458 (Hon Leung Kwok-Hung), online: Legislative Council of the Hong Kong SAR <http://www.legco.gov.hk/yr08-09/english/counmtg/hansard/cm0709-translate-e.pdf> (stating “[w]hen it comes to research and development (R&D) of our enterprises, no other developed countries can rival us in the extremely low ratio between the funds devoted by us to R&D and the output of our enterprises.”) [LegCo, Record of Proceedings (9 July 2009)].

3. For discussion, see MERCURIO, Bryan C. and KIM, Daria, “Patently Lacking: A Call for Systemic Review of Pharmaceutical Law and Policy – A Case Study of Hong Kong” (2014) 9(1) Asian Journal of WTO and International Health Law and Policy 63 at 78-80.

4. Generally, FDI is cross-border investment activity whereby a resident in one economy (direct investor) establishes a lasting interest in an enterprise (direct investment enterprise) in another economy. See OECD, Benchmark Definition of Foreign Direct Investment, 4th ed. (Paris: OECD, 2008).

5. UNCTAD, Investment in Pharmaceutical Production in the Least Developed Countries: A Guide for Policymakers and Investment Promotion Agencies (New York and Geneva: United Nations, 2011).

6. See e.g. DUNNING, John H.Reevaluating the Benefits of Foreign Direct Investment” in John H. DUNNING, Global Capitalism, FDI and Competitiveness. The Selected Essays of John H. Dunning, vol. II (Northampton, MA: Edward Elgar, 2002) at 223; BORENSZTEIN, Eduardo, GREGORIO, Jose DE, and LEE, Jong-Wha, “How Does Foreign Direct Investment Affect Economic Growth?” (1998) 45 Journal of International Economics 115; JAUMOTTE, Florence, “Foreign Direct Investment and Regional Trade Agreements: The Market Size Effect Revisited” (2004) IMF Working Paper WP/04/206.

7. See e.g. TAGGART, James, The World Pharmaceutical Industry (London and New York: Routledge, 1993); JENSEN, Nathan M., Nation States and the Multinational Corporation: A Political Economy of Foreign Direct Investment (Princeton: Princeton University Press, 2006); ATKINSON, Robert D.et al., Innovation, Trade, and Technology Policies in Asia-Pacific Economies: A Scorecard (Washington, DC: The Information Technology and Innovation Foundation, 2011).

8. For developing countries, the importation of advanced technologies is often highlighted as one of the chief reasons to embrace FDI as it is generally considered to improve productivity and assist the recipient economy in moving up the value chain. See e.g. MASKUS, Keith E., “The Role of Intellectual Property Rights for Technology Transfer in Encouraging Foreign Direct Investment and Technology Transfer” (1998) 9 Duke Journal of Comparative and International Law 109; JAVORCIK, Beata S., “Does Foreign Direct Investment Increase the Productivity of Domestic Firms? In Search of Spillovers Through Backward Linkages” (2004) 94 The American Economic Review 605.

9. It should be noted that empirical studies differ in their conclusions on the actual contribution of FDI to the technological upgrade of industries and overall benefit of FDI to the recipient economy and suggest that the benefits of FDI on economic growth and development are dependent upon a host of local factors. See e.g. Borensztein, de Gregorio, and Lee, supra note 6; CARKOVIC, Maria and LEVINE, Ross, “Does Foreign Direct Investment Accelerate Economic Growth?” (2002) University of Minnesota Working Paper; NARULA, Rajneesh and PORTELLI, Brian, “Foreign Direct Investment and Economic Development: Opportunities and Limitations from a Developing Country Perspective” (2004) MERIT-Infonomics Research Memorandum Series.

10. The Hong Kong Census and Statistics Department neither lists the pharmaceutical industry, nor provides detailed sector-specific statistics. Industry analysts view Hong Kong’s local pharmaceutical production capacity as “shrinking or at least consolidating” in the face of increasing competition from China. Business Monitor International, Hong Kong Pharmaceuticals & Healthcare Report, Q4 2013 (London: Business Monitor International, 2013) at 43-44.

11. See e.g. WONG, Joseph, “Biotechnology in Hong Kong: Prospects and Challenges” (2009) Hong Kong Innovation Project, Report No. 9, online: Savantas Policy Institute <http://www.savantas.org/wp-content/uploads/2014/06/9_JWong.pdf> (acknowledging that “Hong Kong is a late entrant into the life sciences sector. Hong Kong is a laggard in technological innovation more generally. Research and development (R&D) spending amounted to just 0.38 percent of GDP in 1995 and had increased to only 0.79 percent in 2005.”).

12. As of August 2014, 33 pharmaceutical companies hold manufacturing licence. See the Drug Office of Hong Kong SAR Department of Health, “List of Licensed Pharmaceutical Manufacturers (English Address Only)”, online: Drug Office Hong Kong SAR <http://www.drugoffice.gov.hk/eps/do/en/pharmaceutical_trade/news_informations/relicList.html?indextype=ML>.

13. The Hong Kong Association of the Pharmaceutical Industry claims its members account for 70 percent of prescription sales in Hong Kong. See HKAPI, “Introduction”, online: HKAPI <http://www.hkapi.hk/introduction.asp>. As of August 2014, HKAPI represents 41 pharmaceutical multinational and regional companies.

14. Business Monitor International, supra note 10 at 15.

15. Ibid. at 43 (“Hong Kong does not have a significant research and development (R&D) sector, and multinationals dominate the high-tech end of the market through imports.”). See also LegCo, Official Record of Proceedings (9 July 2009), supra note 2 at 10458 (highlighting Hong Kong’s underinvestment in R&D in comparison with other jurisdictions in the region: “Research and development (R&D) is the foundation of the support for innovation and advancement towards high value-addedness. However, Hong Kong’s annual total expenses on R&D are only $12.4 billion, accounting for only 0.77% of its gross domestic product, which is obviously lower than that of the Mainland, Taiwan, South Korea and Singapore. The Government should increase the subsidies for R&D projects, and of course it should also closely monitor the effectiveness of the commercialization of R&D results and provide the necessary support to the industry.”).

16. Singapore Economic Development Board, “Overview of Singapore’s Pharmaceutical and Biotechnology Industry”, online: EDB <http://www.edb.gov.sg/content/edb/en/industries/industries/pharma-biotech.html> [EDB, “2014”].

17. Ibid.

18. For a list of multinational pharmaceutical subsidiaries in Singapore with the dates of establishment and scope of business operations, see WONG, Poh-Kam, HO, Yuen-Ping, and SINGH, AnnetteIndustrial Cluster Development and Innovation in Singapore” in Masatsugu TSUJI and Akifumi KUCHIKI, eds., From Agglomeration to Innovation: Upgrading Industrial Clusters in Emerging Economics (New York: Palgrave MacMillan, 2009), 50.

19. EDB, “2014”, supra note 16.

20. Espicom Business Intelligence, The Pharmaceutical Market: Singapore (London: Business Monitor International, 2012).

21. The other two prominent manufacturing FDI sectors are Computer, Electronic, and Optical Products, with S$41.4 billion, and Refined Petroleum Products, with S$21.2 billion. Singapore Department of Statistics, Foreign Equity Investment in Singapore (Singapore: Department of Statistics, Ministry of Trade and Industry, 2011).

22. Tim WILSDON, “Encouraging Pharmaceutical Innovation in Middle-Income Countries” WIPO Magazine (April 2013), online: WIPO <http://www.wipo.int/wipo_magazine/en/2013/02/article_0008.html> (mentioning Singapore among regional centres where “[e]arly-stage research is undertaken by international pharmaceutical companies working closely with leading academic centers in research hubs. Historically, these have focused on regions such as Boston and San Francisco in the US and London and Cambridge (UK), Uppsala (Sweden) and Munich (Germany) in Europe, and Singapore in Asia.”).

23. UNCTAD, “UNCTAD STAT”, online: UNCTAD <http://unctadstat.unctad.org/>.

24. Singapore Department of Statistics, supra note 21.

25. In Singapore, the leading FDI sector is Financial and Insurance Services, accounting for 43.1 percent of the total inward FDI. In Hong Kong, the category comprising investment and holding, real estate, professional and business accounted for 66.9 percent of total inward FDI in 2011, followed by the banking sector at 11.3 percent and import/export, wholesale, and retail trades at 9.5 percent. Hong Kong SAR Census and Statistics Department, External Direct Investment Statistics of Hong Kong 2012 (Hong Kong: Census and Statistics Department, 2013). This trend is unlikely to change the near future. A survey of the Hong Kong Census and Statistics Department found 94 percent of enterprises representing manufacturing FDI in Hong Kong intend to maintain status quo, while only 3 percent of enterprises reported on plans to expand business operations, and the remaining 3 percent intending to phase out manufacturing in Hong Kong. Ibid. at 32.

26. STOKER, Stuart M.I., ed., Hong Kong 2013 (Hong Kong: Information Service Department, 2013) at 87, online: Hong Kong Yearbook <http://www.yearbook.gov.hk/2013/en/pdf/E05.pdf>. Admittedly, the figure has steadily shrunk from 41.3 percent in 1981. Hong Kong Census and Statistics Department, Hong Kong 1991 Population Census: Summary Results, GovC&S-163-001, (Hong Kong: Census and Statistics Department, 1991) at 54, online: Hong Kong Census and Statistics Department <http://www.statistics.gov.hk/pub/hist/1991_2000/B11200731991XXXXE0100.pdf>.

27. InvestHK, “Biomedical”, online: InvestHK <http://www.investhk.gov.hk/business-opportunities/biomedical.html>. See also Legislative Council Panel on Commerce and Industry, “Supplementary Information on Completed Projects of Invest Hong Kong and Hong Kong’s Investment Incentives” (2010) LC Paper No. CB (1)2768/09-10(01), online: Legislative Council <http://www.legco.gov.hk/yr09-10/english/panels/ci/papers/ci0119cb1-2768-1-e.pdf> (accounting for investment projects by sector completed by Invest Hong Kong in 2009. According to the report, the technology was second largest category (35 projects) after Business and Professional Services (39 projects and followed by categories of Special Projects (32 projects); Consumer, Retail and Sourcing (31 projects); Financial Services (30 projects); Tourism and Entertainment (26 projects); Transportation (25 projects); Information Technology (24 projects); Telecommunications, Media and Multi-media (23 projects)).

28. As succinctly summarized by Yamane, the decision-making process: “…companies would look at the market size, education and training potential, consider IPR protection, evaluate the overall research/business environment for investment, and provide technologies that are adapted to the overall environment thus evaluated”. YAMANE, Hiroko, Interpreting TRIPS: Globalisation of Intellectual Property (Oxford: Hart Publishing, 2011) at 53. See also Dunning, supra note 6; Maskus, supra note 8; CAMPOS, Nauro F. and KINOSHITA, Yuko, “Why Does FDI Go Where It Goes? New Evidence from the Transition Economies” (2003) IMF Working Paper WP/03/228.

29. MODY, Ashoka and WHEELER, David, “International Investment Location Decisions: the Case of U.S. Firms” (1992) 33(2) Journal of International Economics 57.

30. For an overview of various categories of macro- and microeconomic factors of FDI, see e.g. Maskus, supra note 8, at 139-143.

31. See generally HEAD, Keith, RIES, John, and SWENSON, Deborah, “Agglomeration Benefits and Location Choice: Evidence from Japanese Manufacturing Investments in the United States” (1995) 38 Journal of International Economics 223; KINOSHITA, Yuko and MODY, Ashoka, “Private Information for Foreign Investment Decisions in Emerging Markets” (2001) 34 Canadian Journal of Economics 448; Jaumotte supra note 6.

32. Statistics are taken from World Bank, Worldwide Governance Indicators (Washington, DC: World Bank, 2013).

33. ROOT, Franklin R. and AHMED, Ahmed A., “Empirical Determinants of Manufacturing Direct Foreign Investment in Developing Countries” (1979) 27 Economic Development and Cultural Change 751; SCHNEIDER, Friedrich and FREY, Bruno S., “Economic and Political Determinants of Foreign Direct Investment” (1985) 13(2) World Development 161; NOORBAKHSH, Farhad and PALONI, Alberto, “Human Capital and FDI Inflows to Developing Countries: New Empirical Evidence” (2001) 29(9) World Development 1593; UNCTAD supra note 5.

34. As of 2012 in Hong Kong, the composition of labour force with post-secondary professional educational attainment was: 5.4 percent with post-secondary-postgraduate; 8.7 percent post-secondary-non-degree and 20.2 percent post-secondary-degree. Hong Kong SAR Census and Statistics Department, Hong Kong as a Knowledge-based Economy: A Statistical Perspective (Hong Kong: Hong Kong SAR Census and Statistics Department, 2013) at 30, online: Census and Statistics Department <http://www.statistics.gov.hk/pub/B11100092013BE13B0100.pdf>. In the same year in Singapore, 12 percent of the population has post-secondary non-tertiary education, 18.7 percent a diploma or professional qualification and 29.4 percent a degree. See Manpower Research and Statistics Department, Labour Force in Singapore, 2013 (Singapore: Ministry of Manpower, 2013) at XIII, online: Ministry of Manpower <http://app.msf.gov.sg/Portals/0/Files/CEDAW/mrsd_2013LabourForce%20%282%29.pdf>.

35. HEWITT, Louise, “Singapore Government Supports Pharmaceutical Training Programs with Millipore” BioTechniques (23 February 2009), online: BioTechniques <http://www.biotechniques.com/news/Singapore-government-supports-pharmaceutical-training-programs-with-Millipore/biotechniques-117684.html>.

36. Wheeler and Mody, supra note 28; KRAVIS, Irving and LIPSEY, Robert E., “Location of Overseas Production and Production for Export by U.S. Multinational Firms” (1982) 12 Journal of International Economics 201.

37. UNCTAD, World Investment Report 2012: Towards a New Generation of Investment Policies (New York and Geneva: United Nations, 2012) at 29.

38. See generally Schwab, Klaus, World Economic Forum’s Global Competitiveness Report 2012-2013 (Geneva: World Economic Forum, 2012), online: WEF <http://www3.weforum.org/docs/WEF_GlobalCompetitivenessReport_2012-13.pdf>.

39. Atkinson et al., supra note 6 at IX.

40. Political Risk Services Group, International Country Risk Guide Researchers Dataset (ICRG) (Syracuse, New York: PRS Group, 2011).

41. Bank, World and Corporation, International Finance, Doing Business 2014: Understanding Regulations for Small and Medium-Size Enterprises, 11th ed. (Washington, DC: World Bank, 2013).

42. This data can be accessed from World Bank, “Worldwide Governance Indicators”, online: World Bank <http://info.worldbank.org/governance/wgi/index.aspx#home>.

43. AGRAST, Mark D.et al., The World Justice Project. Rule of Law Index 2012-2013 (Washington, DC: The World Justice Project, 2012).

44. Schwab, supra note 38, at 485, 388, 393, and 397, respectively.

45. See generally HELPMAN, Elhanan, “Innovation, Imitation and Intellectual Property Rights” (1993) 61 Econometrica 1247; OECD, Working Party of the Trade Committee, The Impact of Trade-Related Intellectual Property Rights on Trade and Foreign Direct Investment in Developing Countries, Doc. No. TD/TC/WP(2002)42/FINAL (28 May 2003), online: OECD <http://www.oecd.org/trade/tradedev/2960051.pdf>; BRANSTETTER, Leeet al., “Does Intellectual Property Rights Reform Spur Industrial Development? (2011) 83 Journal of International Economics 27; KASHCHEEVA, Mila, “The Role of Foreign Direct Investment in the Relation between Intellectual Property Rights and Growth” (2013) Oxford Economic Papers; IVUS, Olena, PARK, Walter G., and SAGGI, Kamal, “Intellectual Property Protection and the Industrial Composition of Multinational Activity” (2013), online: Vanderbilt University <https://my.vanderbilt.edu/kamalsaggi/files/2011/08/IPR_AccessMode_072213-revised.pdf> (submitted to Journal of International Economics at time of writing). However, empirical studies vary in findings regarding the impact of IPRs on industrial development and innovation; for an overview of the literature, see WIPO, Secretariat, Report on International Patent System to the Standing Committee on the Law of Patents, Twelfth Session, Geneva, June 23 to 27, 2008, SCP/12/3 REV.2, at 9-12 (3 February 2009), online: WIPO <http://www.wipo.int/edocs/mdocs/scp/en/scp_12/scp_12_3_rev_2.pdf>.

46. See MANSFIELD, Edwin, “Intellectual Property Protection, Foreign Direct Investment, and Technology Transfer” (1994) IFC Discussion Paper No. 19; MANSFIELD, Edwin, “Intellectual Property Protection, Direct Investment, and Technology Transfer: Germany, Japan, and the United States” (1995) IFC Discussion Paper No. 27; Maskus, supra note 8; BRANSTETTER, Leeet al., “Intellectual Property Rights, Imitation, and Foreign Direct Investment: Theory and Evidence” (2007) NBER Working Paper 13033; Park and Lippoldt, supra note 45.

47. Javorcik, supra note 8.

48. See e.g. MANSFIELD, Edwin, SCHWARTZ, Mark, and WAGNER, Samuel, “Imitation Costs and Patents: An Empirical Study” (1981) 91 The Economic Journal 907; DIMASI, Joseph A., HANSEN, Robert W., and GRABOWSKI, Henry G., “The Price of Innovation: New Estimates of Drug Development Costs” (2003) 22 Journal of Health Economics 151; ADAMS, Christopher Paul and BRANTNER, Van Vu, “Spending on New Drug Development” (2010) 19 Health Economics 130; LEVIN, Richard C.et al., “Appropriating the Returns from Industrial Research and Development,” (1987) Brookings Papers on Economic Activity 783 at 796; MANSFIELD, Edwin, “Patents and Innovation: An Empirical Study” (1986) 32 Management Science 173 at 175; ORSENIGO, Luigi and STERZE, Valerio, “Comparative Study of the Use of Patents in Different Industries” (2010) KITeS Knowledge, Internationalization and Technology Studies Working Paper 33/2010, online: European Commission Joint Research Centre <http://is.jrc.ec.europa.eu/pages/ISG/patents/documents/OrsenigoandSterzi2010.pdf>.

49. For instance, Singapore provides so-called TRIPS-Plus provisions (i.e., provisions exceeding standards of intellectual property rights protection adopted under the WTO Agreement on Trade-Related Aspects of Intellectual Property Rights) such as patent term extension (Patents Act (Cap. 225, 2005 Rev. Ed. Sing.) ss. 1, 36A), five-year data exclusivity protection under Article 19D of the Medicines Act (Cap. 176, 1985 Rev. Ed. Sing.), and patent linkage under Article 12A of the Medicines Act. Likewise, Hong Kong provides for 8-year data exclusivity protection. Hong Kong SAR Department of Health, Guidance Notes on Registration of Pharmaceutical Products/Substances of the Department of Health (Hong Kong: Department of Health, 2015), note 8(D)(i), online: Hong Kong Drug Office <https://www.drugoffice.gov.hk/eps/do/en/doc/guidelines_forms/guid.pdf>.

50. That being said, the underlying methodology of the GP Index has been criticized for being “based on laws as written and not as they are enforced” (Ashish ARORA, “Intellectual Property Rights and the International Transfer of Technology: Setting Out an Agenda for Empirical Research in Developing Countries” in WIPO, The Economics of Intellectual Property: Suggestions for Further Research in Developing Countries and Countries with Economies in Transition (Geneva: WIPO, 2009), 41 at 51) and not reflecting specifics of patent protection in particular areas of technology. On the methodology, see GINARTE, Juan C. and PARK, Walter G., “Determinants of Patent Rights: A Cross-National Study” (1997) 26 Research Policy 283 at 285, as amended in PARK, Walter G., “International patent protection: 1960–2005”, (2008) 37(4) Research Policy 761 at 762-763.

51. Ming LIU and Sumner LA CROIX, “A Cross-Country Index of Intellectual Property Rights in Pharmaceutical Innovations” (2013) University of Hawai’i at Manoa, Department of Economics Working Paper No. 13-13, online: University of Hawai’i <http://www.economics.hawaii.edu/research/workingpapers/WP_13-13.pdf>.

52. The construction of the PIPP Index differs from the GP Index in two key respects: first, by aggregating and weighting factors of patent protection and, second, by adding the factor of data exclusivity protection. It is also worth noting that the PIPP Index does not take into account some specific aspects of pharmaceutical patents such patent linkage or patent term extension for delays in regulatory approval.

53. See Hong Kong SAR Commerce and Economic Development Bureau, Intellectual Property Department, Report of the Advisory Committee on Review of the Patent System in Hong Kong, online: Intellectual Property Department <http://www.ipd.gov.hk/eng/intellectual_property/patents/review_report.pdf>. For commentary on the Report’s recommendations, see Mayer Brown JSM, Legal Update, “An Original Grant Patent System and Other Changes Recommended” (18 February 2013), online: Mayer Brown <https://www.mayerbrown.com/files/Publication/e342afad-e0d0-4080-83bb-ddfc7fb49648/Presentation/PublicationAttachment/955aae1f-b516-4746-a4b9-e15c245cf6b0/130218-ASI-IP.pdf>.

54. Under the Innovation and Technology Fund (ITF), R&D projects for the manufacture of western drugs and proprietary Chinese medicines are covered under the category of biotechnology. The ITF database lists funded projects: see The Government of the Hong Kong SAR, “Innovation and Technology Commission, Innovation and Technology Fund”, online: Innovation and Technology Fund <http://www.itf.gov.hk/l-eng/Prj_SearchResult.asp>.

55. E.g., under the GSK-Singapore Partnership for Green and Sustainable Manufacturing, GSK contributed S$30 million and the Singapore Economic Development Board S$20 million to the mutual endowment fund. See GlaxoSmithKline Singapore, “Partnerships”, online: GSK <http://sg.gsk.com/en-sg/partnerships/>.

56. Economic Review Committee of Singapore, The Pursuit of Competitive Advantage: Value Manufacturing in Singapore (Singapore: Ministry of Trade and Industry, 2002) at 18.

57. LIM, Hank and WEI, Lim T., Sustainable Development Impacts of Investment Incentives: A Case Study of the Pharmaceutical Industry in Singapore (Winnipeg: International Institute for Sustainable Development, 2010), online: International Institute for Sustainable Development <http://www.iisd.org/tkn/pdf/sd_impacts_singapore.pdf>.

58. LAN, Chao-Wei, “Singapore’s Export Promotion Strategy and Economic Growth (1965-84)” (2001) Working Paper No. 116, ISSN 1474-3280, online: The Bartlett <http://www.bartlett.ucl.ac.uk/dpu/latest/publications/dpu-working-papers/wp116.pdf>.

59. YUEN, Belinda, “Singapore Local Economic Development: The Case of EDB” (Paper submitted for the Workshop “For the City Economic Development: The Agency Question”, World Bank HQ, 14-15 May 2008) at 1.

60. Singapore Economic Committee, Report of the Economic Committee: The Singapore Economy: New Directions (Singapore: Ministry of Trade and Industry, 1986), s. 98.

61. Ibid., s. 95.

62. WONG, Lawrence, “Development Strategy: Designing Markets & Growth” (2007), online: World Bank <http://siteresources.worldbank.org/EDUCATION/Resources/278200-1121703274255/1439264-1242337549970/Economic_Development_Strategy_Lawrence_Wong_v3.pdf>.

63. MIRZA, Hafiz, Multinationals and the Growth of the Singapore Economy (New York: St. Martin Press, 1986) at 110-111.

64. Economic Review Committee of Singapore, supra note 56 at 6.

65. Lim and Wei, supra note 57.

66. Ibid. at viii.

67. OECD, Innovation in Southeast Asia (Paris: OECD, 2013).

68. The Economic Strategies Committee, High Skilled People, Innovative Economy, Distinctive Global City (Singapore: Economic Strategies Committee, 2010) at 20.

69. Benjamin TY CHAN, “Pharmaceutical Policy in Hong Kong: Defining an Evolving Area of Study” (2009) at 10, online: SSRN <http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1487662>.

70. Hong Kong Census and Statistics Department, The Four Key Industries and Other Selected Industries in the Hong Kong Economy (Hong Kong: Hong Kong SAR Statistics Census and Statistics Department, 2013) at FC1.

71. Hong Kong Commerce and Economic Development Bureau consists of the Commerce, Industry and Tourism Branch and the Communications and Technology Branch, neither of which are implementing policy initiatives directed at the pharmaceutical industry. See Hong Kong SAR Commerce and Economic Development Bureau, “2015 Policy Address – Major Policy Initiatives”, online: CEDB <http://www.cedb.gov.hk/about/policy.htm>.

72. Business Monitor International, supra note 10 at 55.

73. The Government of Kong Kong SAR, Hong Kong SAR 2013 Policy Address: Seek Change, Maintain Stability, Serve the People with Pragmatism (2013) at paras. 43-45, online: Government of Hong Kong SAR <http://www.policyaddress.gov.hk/2013/eng/pdf/PA2013.pdf>.

74. Ibid. at para. 43.

75. See Hong Kong SAR Legislative Council, Official Record of Proceedings (20 March 2013) at 7731-7733 (Hon Chan Kin-Por), online: Legislative Council of the Hong Kong SAR <http://www.legco.gov.hk/yr12-13/english/counmtg/hansard/cm0320-translate-e.pdf> [emphasis added].

76. Ibid. at 7679.

77. The Mainland and Hong Kong Closer Economic Partnership Arrangement (CEPA) was signed in 2003. As of February 2014, 12,200 applications were filed for Certificates of Hong Kong Origin for pharmaceutical products (a figure which accounts for approximately 11 percent of applications). See Trade and Industry Department, “Mainland and Hong Kong Closer Economic Partnership Arrangement (CEPA)”, online: Hong Kong Trade and Industry Department <http://www.tid.gov.hk/english/cepa/statistics/cocepa_statistics.html>.

78. See Hong Kong SAR Legislative Council, Official Record of Proceedings (24 October 2012) at 587 (Hon Hon Dr Chiang Lai-Wan), online: Legislative Council of the Hong Kong SAR <http://www.legco.gov.hk/yr12-13/english/counmtg/hansard/cm1024-translate-e.pdf> [emphasis added] [LegCo, Official Record of Proceedings (24 October 2012)].

79. Ibid. at 588.

80. Ibid. [emphasis added].

81. At the same session, another member stated that without departmental networks and support for implementation and compliance, “the claim to develop Hong Kong into a pharmaceutical centre is just a fake, overstated and vague statement”. LegCo, Official Record of Proceedings (24 October 2012), supra note 78 at 593 [emphasis added].

82. The Legislative Council discussion focused on issues of safety and efficacy of drugs and traditional Chinese medicines (i.e., drug registration, quality control and compliance with GMP standards) and briefly addressed the prospects of expanding production and trade in Chinese medicines. Ibid. at 587-597.

* Professor and Vice Chancellor’s Outstanding Fellow of the Faculty of Law, The Chinese University of Hong Kong.

** PhD candidate, Max Plank Institute for Innovation and Competition. Ms. Kim formerly served as a Research Associate at The Chinese University of Hong Kong under the GRF project “Intellectual Property Rights and the Pharmaceutical Industry: Evaluating Hong Kong’s Regulatory Framework”.

Acknowledgment: This research is supported by Hong Kong General Research Fund (GRF) Project No. CUHK450012, entitled, “Intellectual Property Rights and the Pharmaceutical Industry: Evaluating Hong Kong’s Regulatory Framework”.

Foreign Direct Investment in the Pharmaceutical Industry: Why Singapore and not Hong Kong

  • Bryan MERCURIO (a1) and Daria KIM (a2)

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