Date
24 March 2017
After CY Leung announced a "proactive" approach, the government awarded New World Development the right redevelop the Tsim Sha Tsui promenade without a public tender. Photos: HKEJ, Bloomberg
After CY Leung announced a "proactive" approach, the government awarded New World Development the right redevelop the Tsim Sha Tsui promenade without a public tender. Photos: HKEJ, Bloomberg

Why a proactive approach to everything is a bad idea

Hong Kong is not the world’s freest economy for nothing.

This year, the Index of Economic Freedom compiled by the Washington-based think tank Heritage Foundation and the Wall Street Journal, ranks Hong Kong ahead of Singapore, New Zealand, Australia and Canada.

Hong Kong was cited for its “competitive and transparent regulatory framework” that supports “dynamic business formation and operation”, among other things.

But how long will Hong Kong remain the freest economy under a government that promotes a “proactive role” in everything?

The latest example is the controversial plan to redevelop the Tsim Sha Tsui promenade without a public tender.

The proposal was put forward by New World Development (NWD) and the Leisure and Cultural Services Department and involves 3.7 hectares of the waterfront promenade.

NWD manages Avenue of Stars, a popular tourist attraction, through a non-profit subsidiary, and has the right to operate it until 2024.

In return for an extension, NWD will expand the walk eastward to Hung Hom.

The Town Planning Board approved the plan despite receiving 340 comments from the public, all but nine of which were opposed to the idea.

What’s going on here?

The government not only approved the plan without opening it to competitive bidding but also gave an incredibly lame excuse.

Since NWD is already operating most of the promenade facilities anyway and paying for the entire redevelopment, handing it the entire project makes sense, goes the government reasoning.

Anyone who has heard of monopolies and closed markets will quickly detect something odd.  

To be sure, other developers would agree to pay for the project if they won the tender, which means NWD’s offer to spare the government any expense is not that compelling.

But the fact that the government awarded the tender to NWD post-haste is compelling evidence of its overaching “proactive” approach.    

Newly appointed Home Affairs Minister Lau Kong-wah called the decision “a matter of course”.

Really? When is public interest not important enough to be simply a matter of course?

Professional groups are decrying the lack of transparency.

Professionals Commons’ Albert Lai is accusing the government of violating its own efficiency guidelines which state that the private sector may bring unsolicited ideas to the government but “a competitive bidding is required”.

Harborfront Commission member Vincent Ng agrees that a public tender in this case was needed to ensure the best use of the harborfront.

That’s not to mention that the promenade is an explosive public issue in its own right.   

Hong Kong people complain that they’re being squeezed out of the promenade by foreign tourists.

Also, some attractions such as statues and other markers have been damaged by overcrowding.

Others say the promenade is not its own draw but Victoria Harbor and the scenery across the water.

If more restaurants and shops are added, they could either result in more overcrowding or end up being a serious misallocation of resources, with Chinese visitors declining in recent months.

Sure, NWD can say it’s not running the promenade for profit but there are intangible benefits from it. Foot traffic to its new New World Center shopping complex is one.

Hong Kong people won’t oppose the government playing a proactive role to support key industries such as tourism, but in this case, it’s raising public concern about transparency and fair competition.

– Contact us at [email protected]

SC/JP/RA

EJ Insight writer

EJI Weekly Newsletter

Please click here to unsubscribe