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Sunday, May 31, 2020

Ocean Park’s fate still hanging in balance after Hong Kong lawmakers fail to vote on HK$5.4 billion bailout

Lawmakers are expected to decide on Tuesday whether to support the controversial bailout for the struggling 43-year-old theme park. Livelihoods of 2,000 full-time workers and another 2,000 part-timers as well as the welfare of 7,500 animals at risk

The fate of Hong Kong’s cash-strapped Ocean Park has been left hanging in the balance after highly sceptical lawmakers failed to vote on a HK$5.4 billion (US$687 million) government rescue package on Friday.

Legislators were expected to decide on Tuesday whether to support the controversial bailout for the struggling 43-year-old park, which faces the prospect of going bust in June without the emergency funding. The livelihoods of 2,000 full-time workers and another 2,000 part-timers, as well as the welfare of 7,500 animals, are at risk.

Construction of Tai Shue Wan Water World, which had been expected to open by the end of this year, and the top-end Fullerton Hotel may also be put on hold without the funding.

Secretary for Commerce and Economic Development Edward Yau Tang-wah appealed for legislators’ support for the rescue plan, pledging to reposition the home-grown theme park’s operating strategy to seek its long-term financial sustainability.

“We are now studying how to reposition Ocean Park and revamp its operating models to generate more income. We’ll come up with a plan in six months. Our goal is to maintain the park’s long-term sustainability,” he told a Legislative Council Finance Committee meeting.

If the funding request was approved, a cross-departmental committee would be created to consider the way forward for the attraction, including its sources of financing, operating models and structure, he said.

“Ocean Park has contributed an economic benefit of about HK$7.6 billion a year … We’ll consider relaxing the commercial restrictions for the park. Our purpose is to save the jobs of the employees first,” Yau said.

The park had said that without the funding it would run out of cash by June, given it was spending more than HK$140 million every month. Chairman Leo Kung Lin-cheng earlier revealed the park had a negative cash flow of about HK$700 million over the past few months.

Yau warned of the park’s instant demise should lawmakers vote down the bailout.

The cash injection is a little over half of the HK$10.64 billion the government proposed in January as a longer-term approach for rescuing the park. The funding was watered down following the collapse of the tourism industry with the onset of the Covid-19 pandemic.

The coronavirus’ economic ravages were the last straw for the troubled resort, which was forced to close its doors temporarily on January 26 to contain the contagion’s spread.

Yau admitted the new funds could provide a window for management to come up with a better plan for the park’s survival and allow payment of HK$3 billion in commercial debt. Another HK$5 billion is owed to the government.

However, lawmakers from across the political spectrum raised concerns over the park being a “financial black hole” as the emergency funding could only buy enough time for it to stay afloat for one year.

Many said it was a tough decision as the park is fondly thought of by many Hongkongers and is an icon of the city, but they feared the attraction would become a long-term financial burden for taxpayers.

“This is a dilemma. The park has been a part of Hongkongers’ collective memory and given us a lot of joy. It’s hard not to save it. But for how long do we need to fill this financial abyss?” asked Lo Wai-kwok, who represents the engineering sector.

Holden Chow Ho-ding, of the Democratic Alliance for the Betterment and Progress of Hong Kong, called for the government to amend the park’s regulations to allow external investment for generating revenue. “On a sentimental level I want to save the animals. But we cannot burn money without an end,” he said. “The government should allow the park to attract investments.”

Ted Hui Chi-fung of the Democratic Party questioned whether the government could resolve the park’s financial plight. “No doubt Ocean Park is in our collective memory. But does it mean we need to cope with this financial abyss indefinitely? How can you ensure a way out for the park?” he asked.

The park, established in 1977 as a self-financing statutory body, underwent a major redevelopment between 2005 and 2012 that took the number of attractions from 35 to more than 80. Its attendance peaked at 7.7 million in 2012-13.

But it recorded successive annual deficits of more than HK$200 million since the 2015-16 financial year, which more than doubled to HK$557 million in the most recent one. Battered by the impact of the city’s social unrest, which erupted last June, the park earlier projected its deficit would exceed HK$600 million for the 2019-20 financial year.

Just 1.9 million people visited the park between July and December, a 30 per cent decline over the same period the previous year.

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