The Hong Kong government and MTR Corp. (00066.HK) are on full-court press to secure funding for the high-speed rail link that will connect the city to Shenzhen and Guangzhou.
The rail operator’s shareholders have given the green light to a revised budget plan that caps funding for the project at HK$84.4 billion.
MTR said more than 99.83 percent of the votes approved the funding plan, which provides for the government to pay HK$19 billion to cover the extra cost of the project.
In turn, the company will pay back the amount via two dividends of HK$4.4 per share; the government owns 70 percent of the company.
As to be expected, the shareholders welcomed the funding plan mainly because of the special dividends, but they took the opportunity presented by the shareholders’ meeting to question the government’s decision to follow Beijing’s plan to build the rail project which may take decades to recoup the investment costs.
They know that the project shouldn’t have been approved in the first place.
Still, any opposition was bound to be defeated; less than 1 percent of the votes rejected the motion.
In the shareholders’ meeting on Monday morning, several minority investors expressed their doubts about the project’s outlook.
One investor, Mr. Lee, a retired engineer of the Highways Department, said he did not support the plan because it sacrificed the MTR shareholders’ interest to complete the project.
Lee said while he welcomed the special dividend, he found it odd that the company had to borrow money for the payout.
Another shareholder, Ms. Chin, said she earned HK$4 per share when the company’s stock rose to HK$38 from HK$34 two months ago.
But she said she was worried about the stock’s outlook.
“The gearing ratio of MTR will surge to 29 percent, and the project still faces uncertainties. That could have negative impact on the share price,” she said.
Chin also criticized the consultant’s report that described the funding plan as a “fair deal” to convince shareholders to approve it.
“My husband also promised a lot when he proposed to me,” she quipped.
Some investors admitted they lacked confidence in the project, and the best solution was to stop it to avoid further losses.
Others criticized MTR and the government for dragging minority shareholders into the “funding trap”, noting that they didn’t have sufficient vote to reject the plan.
After about an hour, the company concluded the question-and-answer session and proceeded with the voting.
It cannot be denied that the entire project is part of the government’s political agenda, which is to step up Hong Kong’s integration with the mainland. The government is merely following Beijing’s plan.
The special dividends are nothing but a financial sleight of hand, but such trickery cannot hide the fact that the government is wasting the people’s money and the city’s reserves to pump cash into a project that is certain to become a white elephant.
The government, with the help of the pro-Beijing camp, is bullying the people into approving the plan, warning them that without the project, Hong Kong would collapse.
The whole process of funding request is nothing but a show where the result has been decided beforehand.
There is no comprehensive discussion of the rail link’s return on investment, its benefits and risks as far as the Hong Kong people are concerned.
The government is intent on securing the fund; it doesn’t matter what Hong Kong people think.
The next battlefield will be in the Legislative Council, whose approval is needed for the budget plan.
Some lawmakers have vowed to resort to filibustering after the government failed to ease fears that the joint immigration checkpoint at the West Kowloon Terminus would erode Hong Kong’s autonomy.
Chief Executive Leung Chun-ying said the co-location of immigration clearance has been practiced in other jurisdictions such as the United States and Canada, and is possible under the “one country, two systems” principle.
As the pro-Beijing camp enjoys a majority in the Legislative Council, there is no doubt that the government funding request will be approved on time to avoid the construction’s suspension.
But that doesn’t mean the government can deprive the people of their right to express their concerns and opposition to the project.
The government is expected to bypass the panel committee discussion and directly submit the funding request to the Legco finance committee for approval.
Indeed, the government is willing to turn a deaf ear to the voice of the opposition in order to complete a political task ordered by Beijing authorities.
While the lawmakers’ filibuster will not stop the approval of the project, the pan-democrats should link arms with civic organizations to make their voices heard.
There is a need for all Hong Kong people to know that this is another white elephant in the making.
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