Leaving them down and out in the cold

PUBLISHED : Tuesday, 14 December, 2010, 12:00am
UPDATED : Tuesday, 14 December, 2010, 12:00am

To many people in Tin Shui Wai, the 'City of Sadness', jobs can be few and far between. The town of more than 270,000 residents has a 9 per cent unemployment rate, the highest in Hong Kong. Locals face long commutes to jobs elsewhere - if they can find them at all.

Now it turns out their troubles owe much to a secret deal that was intended to keep them down.

A private memorandum between the pre-handover government and developer Mightycity Company - owned by Li Ka-shing's Cheung Kong (Holdings) and China Resources - has come to light. It reveals a plan not to develop the town commercially to avoid creating competition to Kingswood Villas, the district's sole private estate.

This has meant that while public housing estates occupy much of the town, they have only small local businesses, shops and markets. The secret deal, which was not made fully public, shows that the government bought almost 500 hectares of former fish ponds and farms from developers in 1982 at an above-market price. It then agreed to develop the land in a joint venture.

'The government's decision to purchase back land at a premium from developers and the contents of the private memorandum is unimaginable by today's standards,' said Dr Law Chi-kwong, an associate professor at the University of Hong Kong and one of a few people outside the government who have seen the document.

The saga begins 1977, when the Special Committee on Land Production commissioned a study on developing Tin Shui Wai. Sensing a chance to make profit, Mightycity began buying up land in 1979. It bought 488 hectares.

The developer then approached the government with a proposal to build a new town for more than half a million people. Its original plan was to give up land for public housing in exchange for a deal in which the government would build all local infrastructure.

The government rejected the proposal in 1982, but tabled its own. Nicky Chan Nai-keong, secretary for Lands and Works, proposed that the government pay Mightycity HK$2.258 billion to buy back all the land it now owned. It would also grant the developer almost 40 hectares for HK$800 million.

In a joint venture, 169 hectares was designated as a development zone. Nearly 39 hectares of that was given to Mightycity to build a private residential estate, while 130 hectares was set aside for public and subsidised housing. The rest of the land was placed in reserve.

In 1988, the multibillion-dollar building project was launched, and Cheung Kong was appointed project manager. Mightycity went on to build Kingswood Villas, which included 75,000 square metres of commercial areas including the Kingswood Ginza mall and the Harbour Plaza Resort City.

The same year, the government proposed building a local market in Tin Shui Wai Area 33, but the developer objected to the plan.

'A permanent market was planned on the site ... to cater for the needs of the private residential development,' the Territory Development Department wrote. '[Mightycity] however objected to it on the grounds that the market may compete with the commercial facility within their private developments.'

So the department removed the project from its 1993 programme and the market has never been built, a University of Hong Kong study said.

'I met some housing department officials to find out why the department was unable to build more markets and shopping centres in Tin Shui Wai to stimulate the local economy,' Law said.

'They leaked to me that they were constrained in developing commercial properties as a result of a private memorandum between the government and Mightycity.'

Law said he then asked a 'very senior government official' to show him the secret memorandum as he understood the Housing Authority had kept a copy of it.

Replying to inquiries, the Housing Authority neither denied nor confirmed whether it had a copy of the document. After two weeks, a spokesman from the Development Bureau finally responded. He said that as the 1982 agreement had been cancelled in 2002, 'there were no outstanding obligations remaining to be fulfilled by any of the parties'.

By then, a master development plan for the 318 hectare reserve zone in Tin Shui Wai North had been endorsed in 1995. The latest outline zoning plan for Tin Shui Wai was approved in 1998. These plans assigned most of the land for residential purposes, in which 75 per cent was for public housing and the rest for private housing.

These are edited versions of articles published on December 6 in The South China Morning Post