“Tomorrow Lantau”, Hong Kong’s Mega Reclamation Project — Dotting the ‘i’s and crossing the ‘t’s
Following the departure of 27 “pro democracy” opposition lawmakers from Hong Kong’s Legislative Council, the government quickly re-sent to the legislature its request for funding for consultancy studies related to artificial islands in the “Central Waters”, the area between east Lantau Island and Hong Kong Island, at the price tag of HK$550m.
The funding request has a tortuous history. It was first submitted to the Legislative Council’s Public Works Sub-committee in June 2014. The request was withdrawn in November after it failed to obtain approval after six meetings. It was re-submitted in June 2016, but the 2015–16 legislative session ended before legislators got round to discussing it.
This ambitious reclamation project, which involves the formation of artificial islands in the Central Waters to provide reclaimed land amounting to 1,000 hectares, and transport infrastructure linking West New Territories to Northeast Lantau and Hong Kong Island via the artificial islands, is estimated by the government to cost roughly HK$600 billion on completion.
The project was controversial from the time it was mooted; and more so after it made its way into Chief Executive Carrie Lam’s Policy Address 2018 as “Tomorrow Lantau Vision”. Critics decried the high costs involved, the long time span for completion, the potential damage to the environment, the threat to the habitat of the Chinese white dolphins and the encroachment on waters for local fishermen.
I, for one, have always doubted whether this mega project will ever get completed, not even in 20–30 years’ time. Since 1997, the government’s major infrastructural projects are a sorry tale of massive cost overruns, time delays and engineering scandals. It is most unlikely that this ambitious project of reclamation for housing and a new CBD, plus transport infrastructure, could be completed within the government’s conservative estimate of H$600 billion. It is more likely to cost H$1 trillion, or more.
The time required for completion is likely to take much longer than estimated by the government, taking into account unanticipated engineering problems, and most worrisome of all, judicial review challenges.
The “pan democrats” are united in their opposition, slamming the project as “pouring money into the sea”. Given that the government’s fiscal reserves have been significantly whittled down after several rounds of financial assistance to businesses and workers wrecked by Covid-19, worries about about depletion of our coffers are entirely understandable.
Despite Mrs. Lam’s determination to take advantage of the absence of the “pan democrats” to bulldoze this project through the Finance Committee, this reclamation-cum-transport infrastructure project is far from her brainchild.
Government planners and engineers had identified reclamation in the Central Waters as a promising way of producing substantial land supply back in 2011. In fact, the interest in reclamation in the waters east of Lantau dates back to the 1980s, when the British Hong Kong Government was exploring options for a site to build a new international airport. Sir Gordon Wu, chairman of the board of Hong Kong-listed infrastructure and real estate company Hopewell Holdings Limited, is well known to have advocated building the new airport east of Lantau, in the area now dubbed “Central Waters”.
The British picked Chek Lap Kok. But Sir Gordon, no doubt a far-sighted engineer with big dreams and credited with advocating building a bridge linking Guangdong, Macau and Hong Kong 30 years before the project came to fruition, never gave up this grand idea.
Sir Gordon is a supporter of the the “Enhanced East Lantau Metropolis” (EELM) project unveiled by Our Hong Kong Foundation, founded by first Chief Executive Mr, Tung Chee Hwa and currently the most influential think tank in Hong Kong. Pinpointing the waters east of Lantau as the best spot for a mega reclamation project, the EELM is of an even grander scale than that proposed by the government. Sir Gordon is likely to be a key financial backer of the EELM project.
As the government gets ready for debates on this controversial project in Finance Committee, a businessman named Wong Sing launched a publicity drive by placing full-page advertisements in Hong Kong newspapers under the banner of “Speed up Lantau, Home for Everyone”. Mr. Wong thinks the government can get round asking for public funds to finance this project. He recommends “forming a company jointly owned by all Hong Kong citizens on a one person one share basis” to finance the project which he estimates to cost HK$1 trillion. He calls it “Popular Public Private Partnership”.
Although Mr. Wong is not a household name, he is well known in financial circles. A native of Yunnan province, China, he became the CEO of the Tom Group Limited, a media company founded in 1999 by “Superman” billionaire Li Ka Shing’s Cheung Kong-Hutchison Group, Miss Solina Chau and other investors. After leaving the Tom Group, Mr. Wong is known to have taken part in various PE and M&A deals.
The idea that the ordinary Hong Kong citizen would benefit from financing this trillion-dollar project by buying a share or two is a fantasy and a hoax designed to beguile the unsuspecting. Owning a share or a modest quantity gives you no control over any company. The Hong Kong Government, being a 75% shareholder of the listed company Mass Transit Railway, has as little control over the finance and management of the MTR as it has over the Hong Kong International Theme parks, a joint venture between the Hong Kong Government and the Walt Disney Company.
Even if the share of this future company goes through the roof, what would the Hong Kong people gain? Any gains from share price appreciation would be dwarfed by the high price of any private housing built on the artificial islands, compounded by the high cost of constructing the vital transport infrastructure.
Then why are businessmen supporting this project, likely to be the most expensive in Hong Kong’s history?
In the case of Sir Gordon, probably because it is his long-cherished dream to reclaim and build east of Lantau.
In the case of some real estate developers, possibly because they know in their hearts this mega project would never get completed, not even in 20–30 years, which means Hong Kong’s land and housing prices will continue to stay high.
In the case of Hong Kong’s construction industry, they prefer reclamation within Hong Kong waters instead of reclamation in the Greater Bay Area, adjacent to Guishan Island in Zhuhai (as advocated by some), because they don’t want the $1 trillion-worth of investments to end up in the Greater Bay Area, outside Hong Kong’s administrative boundary.
Not all developers are in support. Mr. Donald Choi, the CEO of Chinachem Group, one of Hong Kong’s oldest and most formidable developers, and the incoming President of the Hong Kong Institute of Architects, said that building public housing on an reclaimed island without adequate commercial and community facilities, and job opportunities, could turn it into a “city filled with sadness”. If the Stage One development is 100% public housing, why would private developers want to chip in?
If construction costs are high and completion long delayed, Hong Kong people would have to endure, for a long time, high land price. Maybe that’s the hidden reasons why some businessmen are rooting for this project — to make sure Hong Kong’s land prices stay high.
