Hong Kong News

Nonpartisan, Noncommercial, unconstrained.
Thursday, Apr 25, 2024

Hong Kong coffers can’t afford 2 mega projects at same time, economist warns

Hong Kong coffers can’t afford 2 mega projects at same time, economist warns

Economist Andy Kwan echoes views of top government adviser Regina Ip, who said Northern Metropolis project should take priority.

Building three artificial islands off Lantau for a huge housing and economic hub will push Hong Kong’s fiscal reserves into deficit in as little as five years, an economist has projected, saying priority should instead be given to another major development plan near the border with mainland China.

The comments by economist Andy Kwan Cheuk-chiu, director of the ACE Centre for Business and Economic Research, on Wednesday echoed the views of Regina Ip Lau Suk-yee, the top adviser on the city’s key decision-making Executive Council, and came a day after Hong Kong’s leader said both projects should proceed simultaneously.

Exco convenor Ip had said on Monday that priority should be given to the Northern Metropolis plan, a blueprint to turn large parts of the New Territories near the mainland border into a residential and tech hub with more than 900,000 flats and up to 650,000 jobs.

Andy Kwan is director of the ACE Centre for Business and Economic Research.

The three artificial islands under the Lantau Tomorrow Vision project would provide enough land for 210,000 flats for half a million people and a new business hub on an initial 1,000 hectares (2,471 acres) of reclaimed land over two decades.

“We cannot implement both projects at the same time. The cost is too high,” Kwan said, adding the metropolis plan could help utilise idle land and foster integration between the city and neighbour Shenzhen.

While the Lantau project is expected to cost HK$580 billion, no price tag has been given for the Northern Metropolis, with the government only announcing in the 2022-23 budget that funding of HK$100 billion would be set aside to support and expedite the plan.

Kwan studied the Lantau project using three economic models with annual GDP growth forecasts ranging from 1 per cent to 4.5 per cent in the coming two decades based on government figures.

He said the city’s fiscal reserves would start to record a deficit by 2028-29 at the earliest and the shortfall could reach more than HK$7 trillion by 2041 in the worst case.

“As the government has to repay the debt with interest, the treasury will be exhausted,” Kwan said.

Regina Ip.

He said his forecast assumed the government would issue bonds for HK$65 billion annually for a decade to cover the Lantau project’s costs, and that the public coffers would gain an expected HK$750 billion from land sales on the artificial islands after 10 years.

Financial Secretary Paul Chan Mo-po last month estimated the city would run a deficit of HK$54.4 billion and fiscal reserves would fall to HK$762.9 billion in the next financial year.

Kwan said the government could hardly boost its coffers from salaries tax, land sales and stamp duties income given the shrinking labour force amid an emigration trend and ageing population, on top of recent low land premiums under a weak economy.

The government revised its estimate for land revenue to HK$71.1 billion for 2022-23, marking the lowest sales figure in the past seven years.

According to government statistics, the labour force dropped from 3.87 million in 2021 to 3.76 million between last December and February.

Kwan warned of the possible consequences of the government running a deficit.

“When the government faces financial difficulties, it will cut expenses on medical and welfare aspects and increase the tax rate. It can arouse public dissatisfaction,” Kwan said.

The Northern Metropolis scheme will cover areas near the mainland border.

Chief Executive John Lee Ka-chiu on Tuesday said both mega projects should go ahead together, especially as the city had to boost its competitiveness and outperform regional rivals.

In a Facebook post, the Development Bureau said claims that the Lantau project would empty the coffers lacked “objective basis” and were “arbitrary” as the scheme was still under preliminary planning and a comprehensive cost estimate could only be offered at the detailed design stage.

“By using different financing options, market forces can be used appropriately to help the project move forward,” the post said.

“Hong Kong is one of the world’s leading international financial centres, we are fully confident that we can brainstorm and find a suitable financing package.”


Related Articles

Hong Kong News
It's always the people with the dirty hands pointing their fingers
Paper straws found to contain long-lasting and potentially toxic chemicals - study
FTX's Bankman-Fried headed for jail after judge revokes bail
Blackrock gets half a trillion dollar deal to rebuild Ukraine
Steve Jobs' Son Launches Venture Capital Firm With $200 Million For Cancer Treatments
Google reshuffles Assistant unit, lays off some staffers, to 'supercharge' products with A.I.
End of Viagra? FDA approved a gel against erectile dysfunction
UK sanctions Russians judges over dual British national Kara-Murza's trial
US restricts visa-free travel for Hungarian passport holders because of security concerns
America's First New Nuclear Reactor in Nearly Seven Years Begins Operations
Southeast Asia moves closer to economic unity with new regional payments system
Political leader from South Africa, Julius Malema, led violent racist chants at a massive rally on Saturday
Today Hunter Biden’s best friend and business associate, Devon Archer, testified that Joe Biden met in Georgetown with Russian Moscow Mayor's Wife Yelena Baturina who later paid Hunter Biden $3.5 million in so called “consulting fees”
'I am not your servant': IndiGo crew member, passenger get into row over airline meal
Singapore Carries Out First Execution of a Woman in Two Decades Amid Capital Punishment Debate
Spanish Citizenship Granted to Iranian chess player who removed hijab
US Senate Republican Mitch McConnell freezes up, leaves press conference
Speaker McCarthy says the United States House of Representatives is getting ready to impeach Joe Biden.
San Francisco car crash
This camera man is a genius
3D ad in front of Burj Khalifa
Next level gaming
BMW driver…
Google testing journalism AI. We are doing it already 2 years, and without Google biased propoganda and manipulated censorship
Unlike illegal imigrants coming by boats - US Citizens Will Need Visa To Travel To Europe in 2024
Musk announces Twitter name and logo change to X.com
The politician and the journalist lost control and started fighting on live broadcast.
The future of sports
Unveiling the Black Hole: The Mysterious Fate of EU's Aid to Ukraine
Farewell to a Music Titan: Tony Bennett, Renowned Jazz and Pop Vocalist, Passes Away at 96
Alarming Behavior Among Florida's Sharks Raises Concerns Over Possible Cocaine Exposure
Transgender Exclusion in Miss Italy Stirs Controversy Amidst Changing Global Beauty Pageant Landscape
Joe Biden admitted, in his own words, that he delivered what he promised in exchange for the $10 million bribe he received from the Ukraine Oil Company.
TikTok Takes On Spotify And Apple, Launches Own Music Service
Global Trend: Using Anti-Fake News Laws as Censorship Tools - A Deep Dive into Tunisia's Scenario
Arresting Putin During South African Visit Would Equate to War Declaration, Asserts President Ramaphosa
Hacktivist Collective Anonymous Launches 'Project Disclosure' to Unearth Information on UFOs and ETIs
Typo sends millions of US military emails to Russian ally Mali
Server Arrested For Theft After Refusing To Pay A Table's $100 Restaurant Bill When They Dined & Dashed
The Changing Face of Europe: How Mass Migration is Reshaping the Political Landscape
China Urges EU to Clarify Strategic Partnership Amid Trade Tensions
The Last Pour: Anchor Brewing, America's Pioneer Craft Brewer, Closes After 127 Years
Democracy not: EU's Digital Commissioner Considers Shutting Down Social Media Platforms Amid Social Unrest
Sarah Silverman and Renowned Authors Lodge Copyright Infringement Case Against OpenAI and Meta
Why Do Tech Executives Support Kennedy Jr.?
The New York Times Announces Closure of its Sports Section in Favor of The Athletic
BBC Anchor Huw Edwards Hospitalized Amid Child Sex Abuse Allegations, Family Confirms
Florida Attorney General requests Meta CEO's testimony on company's platforms' alleged facilitation of illicit activities
The Distorted Mirror of actual approval ratings: Examining the True Threat to Democracy Beyond the Persona of Putin
40,000 child slaves in Congo are forced to work in cobalt mines so we can drive electric cars.