23 October 2016
A harbourfront redevelopment plan will allow New World Development to monopolize a vast stretch of prime area in Tsim Tsa Tsui, critics say. Credit: wikipedia
A harbourfront redevelopment plan will allow New World Development to monopolize a vast stretch of prime area in Tsim Tsa Tsui, critics say. Credit: wikipedia

Why TST harbourfront project grant to NWD is unfair

The Tsim Sha Tsui harbourfront enhancement project, which has come under fire for not being contracted out through open tender, was approved by the Town Planning Board (TPB) even as 95 percent of the written submissions received during a consultation exercise were against the plan.

To make matters worse, officials from the Planning Department stated that the TPB only approved the plan on grounds of land use, and it wasn’t its main concern as to how the new promenade will be managed in the future, adding even more variables to the already controversial and scandal-ridden project.

In the past the Leisure and Cultural Services Department (LCSD) kept a very low profile and never publicized details of the project.

It was only after the government had received repeated enquires from the media about the project that the LCSD eventually made public an important truth: this project, which allows New World Development (NWD) to basically monopolize the prime location along the Tsim Sha Tsui waterfront in the name of renovating the Avenue of Stars, is in fact implemented as a “Public Private Partnership” program rather than through just another outsourcing contract.

And that immediately raises a grave concern, as our government has a poor record in running public-private partnership programs, and projects of this nature have been notorious for failing to live up to public expectations and wasting an enormous amount of public resources.

Striking examples of such failures include the Western Harbour Tunnel, which has failed miserably to alleviate the traffic congestion that has plagued the Hunghom Cross Harbour Tunnel for years and been notorious for its low traffic flow and ever-increasing tolls, and the lesser-known Chemical Waste Treatment Centre in Tsing Yi.

Both of these massive and costly infrastructures were built by and franchised to private operators for up to 30 years, but it has already been proven that they both failed to fulfill their intended function, resulting in a massive waste of public resources.

Moreover, private operators tend to fully exercise the rights guaranteed by the franchises to their advantage whenever and wherever possible to maximize their profits even at the expense of public interest.

Learning the lessons of public-private partnership the hard way, the government issued a 139-page comprehensive guideline on this issue in 2003, and renewed it in 2008, detailing all the steps and procedures all government departments should follow when it comes to forming public-private partnership.

In short, the guideline requires that when forming partnership with the private sector on social or infrastructural projects, government departments must follow a set of established steps such as carrying out feasibility studies and market research, formulating a “public sector comparator” against which the cost-effectiveness of the partnership can be measured, laying down service requirements and performance benchmarks for contractors, setting up a minimum investment threshold, consulting the Legco, carrying out public consultations, and above all, opening up tenders for projects to promote competitive bids.

As far as the enhancement project of the Tsim Sha Tsui harbourfront is concerned, it has become obvious that the LCSD has basically failed to meet most, if not all of the above requirements.

When asked by reporters whether the project marks yet another case of collusion between the government and big business, all the chief government officials responsible for the project did was evade the question and make misleading statements.

For example, Secretary for Home Affairs Lau Kong-wah argued that it is “reasonable” the NWD will lead the plan as the firm has already been managing the Avenue of Stars.

What he said is completely misleading since the area of the new site franchised to the NWD will total nearly 400,000 sq ft, which is almost five times larger than the Avenue of Stars currently managed by the company, and of which 80 percent will be built on government land.

With a high degree of public interest involved, how can the administration justify its decision to give the project directly to the NWD instead of opting for an open tender route? How is the government going to convince the public that this is the most cost-effective way to renovate our one and only Tsim Sha Tsui harbourfront?

Michelle Li Mei-Sheung, director of the LCSD, said during a television interview that the NWD was granted the franchise because it has a proven track record and experience in running the Avenue of Stars and making it a world class attraction.

The truth, however, is that the Avenue of Stars was named one of the world’s 12 worst “tourist traps” by CNN four years ago, not to mention that the facilities and site attractions along the avenue are poorly maintained. How could anybody possibly call this a “proven track record”?

Besides, even though the NWD has promised that the new site will be run by one of its non-profit seeking subsidiaries, it can still give the group an unfair advantage since its subsidiary can easily bring in more customers for the shopping malls and more guests for the hotels owned by its parent company through the way it manages the site.

What is even more worrisome is that the franchise to run the newly expanded harbourfront may give the NWD considerable leverage with the government in the future re-development program for Tsim Sha Tsui East which is poised to kick off over the next 20 years or so.

If that happens, it will be difficult to predict if the whole area will be re-built and re-developed in keeping with the best public interest, or merely to serve some corporate needs.

This article appeared in the Hong Kong Economic Journal on Aug. 25.

Translation by Alan Lee

[Chinese version 中文版]

TST harbourfront project grant in best public interest (Aug. 26, 2015)

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