Financial Secretary Paul Chan Mo-po delivers a speech during a forum themed "Financing Land Creation for Hong Kong’s Future", organized by think tank Our Hong Kong Foundation, in Hong Kong on Aug 23, 2023. (PHOTO / HKSAR GOVERNMENT)

The Hong Kong Special Administrative Region government vowed at a forum to push forward with the Northern Metropolis and Kau Yi Chau Artificial Islands mega land development projects, and the administration is confident that a variety of financing options will be available to fund them.

Themed “Financing Land Creation for Hong Kong’s Future”, the forum was organized by think tank Our Hong Kong Foundation in Hong Kong on Wednesday, with the Development Bureau as the partner organization. Government officials, academic economists, researchers and financial industry practitioners were invited to share their views at this forum attended by over 1,000 people online and offline.

Financial Secretary Paul Chan Mo-po, delivering a speech at the forum, said the government has identified 7,300 hectares of land available for development. In the next decade, about 3,300 hectares of land with infrastructural facilities will be available for development, whereas the Northern Metropolis and Kau Yi Chau Artificial Islands will account for over 50 percent.

Financial Secretary Paul Chan Mo-po, delivering a speech at the forum, said the government has identified 7,300 hectares of land available for development in the next decade. Over that period, about 3,300 hectares of land with infrastructural facilities will be available for development, whereas the Northern Metropolis and Kau Yi Chau Artificial Islands will account for over 50 percent

“The government must not repeat the same mistake of the shortage of land supply in the past, and the administration has sufficient determination to promote land supply and will never be shaken by short-term market fluctuations,” the finance chief pledged.

Chan said that in undertaking mega development projects, it is necessary to manage the differences in the cash flow. “There are different financing methods to raise funds in the market, such as issuing bonds, implementing the BOT (build, operate, transfer) development model, or soliciting cooperation from long-term investment funds.” 

Secretary for Development Bernadette Linn Hon-ho said the government will make its land requirement estimation based on projected population growth and economic growth, as well as the aggressive town planning standard that aims to provide more space.

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“When we can identify land supply sources in the short-, medium-, and long-term horizon, the government can maintain its initiative in land development,” she said, adding that it will take at least five years to complete the first batch of reclaimed land for the Kau Yi Chau project.

Economists from various universities in Hong Kong are of the opinion that the two mega land development projects will endow Hong Kong with huge economic benefits in the coming decades.

Richard Wong, provost and deputy vice-chancellor and chair of economics at the University of Hong Kong, said the future infrastructural connectivity of Kau Yi Chau with Lantau Island and Hong Kong Island will create a positive spillover effect for Hong Kong’s economic development.

Secretary for Development Bernadette Linn Hon-ho delivers a speech during a forum themed "Financing Land Creation for Hong Kong’s Future", organized by think tank Our Hong Kong Foundation, in Hong Kong on Aug 23, 2023. (PHOTO / HKSAR GOVERNMENT)

“The income from land sales of the Kau Yi Chau and Northern Metropolis projects will far exceed the project cost. As Hong Kong’s population is aging and public expenditure will rise in the future, these land development projects can make money that is needed to ease financial pressure on the government,” added Francis Lui, professor emeritus and adjunct professor of economics at Hong Kong University of Science and Technology.

Secretary for Development Bernadette Linn Hon-ho said the government will make its land requirement estimation based on projected population growth and economic growth, as well as the aggressive town planning standard that aims to provide more space

Sung Yun-wing, adjunct professor of economics at the Chinese University of Hong Kong, said he expects Kau Yi Chau and Northern Metropolis projects to rationalize current town planning that focuses on the urban areas of Hong Kong Island and Kowloon, as well as change the industry layout of Hong Kong.

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Industries in innovation and technology, high-end manufacturing, logistics, as well as the cultural and creative sector, will benefit from the land development program, he said.

The Chinese Manufacturers’ Association of Hong Kong’s Permanent Honorary President David Wong said that land reclamation for the Kau Yi Chau project will instil certainty in the planning process; and because of the viability, the cost of market financing may be lower.

Liu Pak-wai, emeritus professor of economics at the Chinese University of Hong Kong, argued the city has room for issuing bonds for infrastructural development because the city’s debt-to-GDP ratio is very low compared with other advanced economies such as Japan, Singapore and the United States.

“When the economy fluctuates, it is even more necessary to promote large-scale infrastructure construction as a countercyclical measure to boost future finances and create employment,” OHKF Vice-President and Co-head of Research Ryan Ip noted.

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However, Ip said he is worried that as financial costs have risen in recent years, the government should determine the development timetable in advance and formulate a budget for manpower and reclamation materials to make the project cost more controllable.