Among all the policy initiatives proposed by Chief Executive Carrie Lam Cheng Yuet-ngor in her latest policy address, the “Lantau Tomorrow Vision” project is definitely the most eye-catching and controversial.
Under the proposal, the government will build several gigantic man-made islands east and north of Lantau and off the Tuen Mun coast.
Together, these huge artificial islands are envisioned to provide 1,700 hectares of land, where an estimated 260,000 to 400,000 new homes can be built to accommodate 700,000 to 1.1 million people.
If everything goes smoothly, these new homes would be available by 2032. According to government projection, the project would cost between HK$400 billion to HK$500 billion.
Will this ambitious project reignite the people’s hopes of having their own homes? In our opinion, it would largely depend on whether the administration can convince the public that land reclamation is the most viable option to address the shortage of land for housing and that it is their best interests that it should be implemented.
One thing noteworthy about this year’s policy address is that it hasn’t mentioned a word about other land supply options such as taking back the Fanling golf course. In fact, the Task Force on Land Supply has yet to submit its final report after its five-month public consultation exercise.
Nevertheless, regardless of what the Task Force will suggest in its final report, the government is determined to boost Hong Kong’s land supply through large-scale reclamation.
That brings us to the next question: Is the gigantic man-made island project truly in the best interests of the people as the chief executive has insisted?
Those who are skeptical about the project have raised three main concerns: 1) the proposal is too costly (HK$500 billion) and would drain half of the government’s fiscal reserves; 2) the environmental destruction it may cause; and 3) all the profits may end up in the pockets of mainland and Hong Kong conglomerates.
In our opinion, when evaluating whether the Lantau Tomorrow Vision proposal is worth doing, the public must stay focused on the fundamental issue: the reason for boosting land supply is to meet the growing demand for housing, and if land reclamation is really the most effective and viable option to balance the demand and supply of land, then all other concerns should take a backseat.
To put it more precisely, we believe even though HK$500 billion may appear an astronomical amount, we simply can’t see any reason why the government shouldn’t spend that money if the proposed land reclamation project can truly drive down our city’s irrational property prices back to affordable levels and substantially shorten the average waiting time of Public Rental Housing applicants.
As regards concerns that the project could drain the government’s reserves, we believe such worries are unwarranted.
The proposal is a long-term undertaking that would span at least two or three decades, and given that the government has a substantial budget surplus every year, it is highly unlikely that the project would bankrupt the administration.
In fact, government investments in the project can generate economic benefits in the long run, thereby offsetting part of the costs.
However, while the Lantau Tomorrow Vision might be a feasible option in theory, it doesn’t necessarily deserve the unconditional support of the public.
Nor should it be the only option on the table, as it would take 14 years at the earliest for the project to bear fruit, which means it can hardly ease our land shortage in the short to medium term.
That said, the government should clearly explain to the public why reclamation is inevitable, why it is worth boosting home supply even at the expense of our natural environment, and why the conspiracy theory about government-business collusion doesn’t stand up to scrutiny.
This article appeared in the Hong Kong Economic Journal on Oct 11
Translation by Alan Lee
[Chinese version 中文版]
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