Doubts expressed over Lantau reclamation's financial feasibility

October 11, 2018 15:52
Carrie Lam has unveiled a plan for creation of artificial islands in waters off Lantau to resolve the land supply and housing problem, but has provided no figure for the estimated cost of the project. Photo: HKEJ

Chief Executive Carrie Lam Cheng Yuet-ngor's announcement that the government is looking at building artificial islands to create new land for housing has been greeted with skepticism by some lawmakers, who are questioning the economic feasibility of the proposal.

Lam, in her annual policy speech Wednesday, unveiled a plan for large-scale reclamation in waters off Lantau as part of efforts to resolve Hong Kong's land supply and housing problem.

Under the "Lantau Tomorrow Vision", artificial islands can provide as much as 1,700 hectares of land in the seas surrounding Lantau which can then be used for construction of up to 400,000 residential units, Lam said.

The units would be able to accommodate up to 1.1 million people, helping ease the population congestion in other parts of the city, according to the plan. 

Given the ambitious nature and scope of the proposal, lawmakers have begun casting doubts as to whether it is workable and even if so, whether the costs would be justified.

The project would prove too much of a financial strain, the skeptics say, arguing that it could jeopardize the government's fiscal position.

A pro-democracy lawmaker said the government may end up spending all of its reserves, which rose to HK$1.06 trillion as of end-2017, if it takes up the project.

Civic Party's Tanya Chan Suk-chong said the government will be very vulnerable to financial risks in the future if most of the reserves are deployed for development of artificial islands.

Neo Democrats, another opposition political party, said the reclamation will likely cost as much as HK$1 trillion, and the project could also have an adverse effect on marine ecology in the Lantau area.

Development of the East Lantau Metropolis (ELM) was first proposed by the government in 2014 with the aim of creating artificial islands through reclamations in the waters near Kau Yi Chau and the Hei Ling Chau, which are situated between Hong Kong Island and the main island of Lantau.

The government had said in its “Hong Kong 2030+: Towards a Planning Vision and Strategy Transcending 2030” report that ELM, along with the New Territories North, can meet Hong Kong’s long-term social, economic and environmental needs beyond 2030.

Lam said Wednesday that it is her responsibility as Hong Kong's leader to plan for the city’s future and try to resolve the problems, especially on the housing front.

Given the situation, land reclamation is necessary and should be taken up in earnest, she said.

In her policy address, Lam revealed that the government has decided to commence immediately a study on phased reclamation for construction of the artificial islands.

The aim is commence the first phase of reclamation in 2025, she said, adding that the first batch of residential units is envisaged for completion in 2032.

Lam told lawmakers that the government currently has no estimate of the reclamation cost, which would admittedly be quite high. But one should not focus only on the cost element, she said, describing such approach as short-sighted.

Lam suggested that Hong Kong should take bold measures for the long-term development needs, but the case for artificial islands is not convincing as far as some opposition lawmakers are concerned.

Civic Party and Neo Democrats are among those that have expressed reservations already, and there could be more such voices in the coming days. 

Defending Lams’ decision, Stanley Wong Yuen-fai, who chairs the Task Force on Land Supply, reiterated that the plan regarding the artificial islands should not be seen as one that circumvents the task force but one presented after the Chief Executive took reference from its preliminary observations of public views.

The Hong Kong Economic Journal cited a government source as estimating that the artificial islands could cost several hundreds of billions of Hong Kong dollars, including expenditures on reclamation and construction of railways, roads and public facilities,

Ryan Ip Man-ki, a senior researcher of Our Hong Kong Foundation, a local think-tank which suggested in August that the government should double the initially proposed size of reclamation, claimed that the high costs of building the island will not come all at once but in tranches during a period of more than a decade.

He also argued that it is not too difficult to recover the costs through sale of land on the newly created islands.

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