The plan includes construction of two folk museums showcasing its past as a fishing village; boardwalks that will lead visitors to views of mangrove wetlands; an open-air salt-production exhibition at a disused salt pan; and an anchorage and entrance plaza. Tin Lee House, an under-used government housing block, will be converted into a youth hostel and streets are to be repaved to beautify shopping areas.

The Hong Kong Heritage Conservation Foundation, an organisation set up by developer Sino Land, has also been awarded the right to turn the Victorian-era Old Tai O Police Station into a boutique hotel to attract high-end tourists. The refurbishment is expected to be completed by the third quarter in time for a December opening.

Many business owners and clan representatives hope the scheme will rejuvenate their village by attracting more visitors and related business. With young people moving out to urban centres and livelihoods vanishing in the traditional areas of fishing and farming, the village has shrunk to 3,000 people - a fraction of the 30,000 who lived there 50 years ago. The ageing community now derives much of its income catering to weekend visitors, selling souvenirs, home-made snacks, shrimp paste and other traditional foods.

Others are more sceptical, arguing that the exhibition centres and other beautification efforts will do little to attract tourists and instead obliterate much of the village's original charm.

'People come to Tai O to see the face of the old fishing village, not the reproduction structures,' says Eddie Tse Sai-kit, a resident and key member of sustainability lobby group, the Association for Tai O Environment and Development. 'Tai O does not need to be revitalised as it is already alive.'

A cloth seller, who gave only her surname, Tang, also has doubts: 'Tai O's appeal comes from its nature, quiet and the warmth of its people. We don't need artificial things; they will affect our beauty.'

Still, Chui Chun-wah, 57, who runs a dried seafood shop, reckons the makeover can bring long-term benefits. 'If the tourists can stay overnight, they can spend more. It will boost our economy,' he says.

Trinket seller Lo Ping-siu shares his hopes. 'On weekdays there are few visitors. I've only made HK$40 so far today. If there were more people coming here, there's a greater chance they would buy things,' she says.

The idea to redevelop the Lantau village as part of a 'new tourism node with religious, cultural and leisure themes' was mooted about 10 years ago. Some details were sketched out in a 2007 consultancy study that suggested that pagodas, lotus ponds and fountains be built to give the fishing village a facelift. However, these proposals got nowhere in the face of objections from Tse's group and others, which disparaged them as 'cliched' ornamentation.

Officials gathered more ideas from the public through a 2008 design competition for rejuvenating Tai O before presenting their concept plan at a public forum the following year. As before, opinions were divided.

Nevertheless, some works are going ahead while officials try to work out designs that will have broader appeal. Construction of a flood-prevention wall along the river and upgrading of a temple garden started last August.

The next planned projects are an entrance plaza with new paving, a promenade, heritage trails, footbridges and an open event space; but initial designs are still being 'worked out based on the views gathered in the earlier public engagement', a Civil Engineering and Development Department spokeswoman says, adding 'further public engagement and detailed design will be carried out in due course when the preliminary design is completed'.

The spokeswoman stresses the plan is based on ideas collated from the design contest, as part of its strategy is to help enhance visitor appeal and local employment by highlighting the cultural heritage and natural attributes of Tai O.

The Tai O Rural Committee and the Islands District Council support their aim 'to proceed as soon as practicable', she says, and other improvement works will be implemented in phases

Architect Gary Yeung Wai-keung and his friends, who won a certificate of merit in the design competition, argue that instead of putting up new structures the government should help preserve Tai O's pang uk (literally 'shed houses'), which now attract hordes of camera-toting sightseers.

Mostly assembled from plywood and tin sheet - some older ones are made from old boat timbers - these picturesque shacks on stilts are clustered around the tidal creeks cutting through the settlement. A fire in 2000 destroyed 100 of them, but about 400 have survived in various states of disrepair.

Many villagers lack funds or are unwilling to repair the homes because they are informal structures occupying government land and can be demolished with three months' notice, Yeung says.

To preserve such examples of vernacular construction, he suggests the government help fund restoration and give residents longer leases as an incentive to maintain their homes.

Critics such as Yeung and Tse say they are not opposed to developing tourism but feel funds would be wasted on fancy walkways and new museums, which are not what attract visitors to Tai O. Instead, the money would be better spent on improving transport (more frequent bus and ferry services) and community facilities (a sports centre, for instance). This would persuade young people to remain in the village and might encourage others to move in, they say.

Visitors seem to share their opinion: Scottish tourist Karen Smith, who was exploring Tai O's alleys on a recent afternoon, reckons new exhibition centres or museums won't be much of an attraction.

Unlike historical cities such as Edinburgh, she says, 'I don't think bringing in museums [to Tai O] will make people come. Most tourists come to see the normal, day-to-day life. Keeping things in a natural way is better.'

At one of the village restaurants, waiter Yu Hoi-keung fumes at expectations that the village should remain a rustic backwater to meet tourists' expectations. 'Tai O has no progress. It has been like this for decades. I am so bored with these old things,' Yu says. 'Of course, the tourists want to admire the old things, they want Tai O to never change, but I want it to develop.'

The vice-chairman of the Tai O Rural Committee, Lou Cheuk-wing, says residents should be pragmatic as the proposals are meant to help the village's survival. If the projects can boost business in shops and restaurants, it will create more jobs and stop people from moving out.

'Tai O cannot revive fishing, as fish stocks have declined and educated young people will not work as fishermen. We must change our industry or everyone will leave,' the 76-year-old says.

Old-timers like Kwok, however, remain sceptical of calls for further beautification and development.

'Some people are not clear-minded. They don't know that calling for such development is like suicide,' he says. 'When the government sells our land to developers, we will be evicted and we will be left with nothing.'

Village facelift

The government's proposals to revitalise Tai O fall into three categories:

Local connectivity

Entrance plaza

New folk museum Tai O Experience Centre

Footbridges in Yim Tin and Po Chue Tam

Coach parking area

Promenade and garden

New or improved existing jetties

Provision of a boat tour route

Upgrade of existing helipad

Improvements to existing paving, streetscape and signage.

Heritage/Culture

Upgrades at Yeung Hau and Kwan Tai temples

Heritage trail, with free MP3 guide

Hand-pulled ferry

Space for events, such as Chinese opera and flea markets

Folk museum and hostel (rebuilt stilt houses for experience centre or hostel)

Salt-panning demonstration area with viewing deck and information boards

Nature

Wilderness campsite

New trekking route or improvement to existing route

Nature trail, with free MP3 guide

Boardwalk and viewing decks for mangrove area

Use of Tin Lee House as youth hostel

Bird and wildlife watching hides