Artificial islands project: a white elephant that’s cheaper to abort now

In fiscally challenging times, the government has delayed the Kau Yi Chau reclamation project and is considering private financing for it
Instead, the time should be used to rigorously re-examine whether the project ought to move forward at all

Tom Yam

Published: 9:30am, 7 Mar 2024

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Given Hong Kong’s fiscal deficits and dwindling reserves, clearly the government cannot simultaneously implement two colossal infrastructure projects, the Kau Yi Chau Artificial Islands and the Northern Metropolis. Financial Secretary Paul Chan Mo-po recently said that the former, a controversial reclamation project off Lantau Island, would be delayed by two to three years, though he vowed it wouldn’t be abandoned.

While the government has rightly postponed the Kau Yi Chau project, it should use the delay to rigorously re-examine whether the project should move forward. A white elephant that is stillborn would cost far less than one that dies fully grown.

As the project stands, seldom has so colossal, costly and complex a scheme come with such shoddy analysis, unproven assumptions and slogan-driven publicity akin to real estate marketing. Since the government announced the initial version of the project in 2014, it has focused on a handful of numbers – the area to be reclaimed, the number of residents – plus a proposed central business district.

On that slim basis, officials and supporters of the reclamation have made sweeping claims about its necessity and benefits. The government has also skipped the critical feasibility study, and jumped into spending HK$550 million (US$71 million) on a planning and engineering study.

Already, the proposal is on its third iteration. When he was chief executive, Leung Chun-ying proposed the project in 2014 as the East Lantau Metropolis, which would be around 1,000 hectares. The next chief executive, Carrie Lam Cheng Yuet-ngor, changed the name to Lantau Tomorrow Vision in 2018, increasing the area to be reclaimed from 1,000 hectares to 1,700 hectares with no explanation. The current administration under John Lee Ka-chiu changed the name of the project to Kau Yi Chau Artificial Islands and reverted to reclaiming 1,000 hectares, again with no explanation.

People visit the Civil Engineering and Development Department’s exhibition on proposals for the Kau Yi Chau Artificial Islands project on February 9, 2023. Photo: K. Y. Cheng

The marketing strategy also keeps changing: East Lantau Metropolis was apparently intended to drive the development of Lantau, while Lantau Tomorrow Vision was to help integrate Hong Kong further into the Greater Bay Area. The Kau Yi Chau project is now marketed as an extension of western Hong Kong Island that would form a harbour metropolis. This is as good as selling the same drink in three different bottles, as beer, wine and champagne.

Constructing 1,000 hectares of land for 500,000 residents in the middle of the sea, connected only by a tunnel to Hong Kong Island 4km away, should be a non-starter conceptually. This tunnel also would have to carry vehicle traffic between Hong Kong Island and other districts in Kowloon, Lantau and beyond, following the government’s rationale for creating a north-south transport network integrating Hong Kong into the Greater Bay Area and providing an alternative route to the airport.

Tsing Yi Island, with the same area as the Kau Yi Chau project, has about 200,000 residents; yet it has several bridges and tunnels connecting it to different points in Lantau and Kowloon. Imagine the immense congestion in a single tunnel. Then imagine the tunnel during a No 8 signal typhoon. Residents would be rushing home via this one tunnel.

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The claim that the Kau Yi Chau project will create more living space, improving quality of life, is belied by simple facts: with 500,000 residents on 1,000 hectares, the population density of 50,000 residents per square kilometre would approach that of Hong Kong’s most congested district, Kwun Tong, which has 60,000 residents per square kilometre.

The proposed creation of a new business district is merely declarative: there’s no analysis of how it will fit into Hong Kong’s overall economy. Which industries and what skilled people will it attract? How will they be encouraged to relocate to reclaimed land with no neighbouring communities?

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The capital requirement of HK$580 billion (as forecast in October 2022) for the Kau Yi Chau project exceeds the combined cost of the Hong Kong-Zhuhai-Macau Bridge, the Hong Kong-Guangzhou high-speed rail link and the third runway. Calculated in money-of-the-day prices, which include expected inflation before and during the construction period, the cost may well exceed HK$1 trillion.

The government plans to issue more bonds to finance its infrastructure projects. But Chan said the bonds planned in his recent budget did not cover the Kau Yi Chau project, and that the government is exploring financing options involving private money. Given the six recent failed tenders for ready-to-build land, are private parties about to jump into investing in yet-to-be-formed islands in the middle of the sea amid Hong Kong’s economic and demographic uncertainties? Small wonder that no developers are raising their hands to be included.

With the delay in the implementation of the Kau Yi Chau project, the government has the opportunity, and duty, to scrutinise the fundamental viability of this project. And it must be prepared to abandon it should it prove unfeasible.

It would not be the first time that a major infrastructure project has been scrapped after a feasibility study. A 1983 proposal for an East Lantau Island project similar to the Kau Yi Chau project, and a Green Island reclamation project proposed in 1985 to extend Kennedy Town, were abandoned after feasibility studies because of changed priorities and environmental concerns.

The HK$550 million that the government is spending on the planning and engineering study is minuscule compared to the immense cost burden and damage that will result if it proceeds with the Kau Yi Chau project without addressing its many unanswered questions and contradictions.

Tom Yam is an independent management consultant and a member of the Citizens Task Force on Land Resources