Suggesting $148 billion in economic benefits will be brought by the Disneyland project over 40 years may amount to a 'serious over-estimate', according to a prominent economist. Professor Leonard Cheng Kwok-hon, head of the economics department at the University of Science and Technology, said government economists were 'conceptually wrong' in their assessment. He pointed to the assessment of net economic benefit based on the spin-off gains to be generated by the project. Under government estimates, the project can generate 'added value' which accrues as profits for businesses and income for the workers they employ. In a submission to Legco's economic services panel, Professor Cheng argued the total spin-offs brought by the project would only match government estimates if the factors taken into account while calculating them, such as the number of people unemployed, remained unchanged over the 40-year period. He said that while the SAR currently had high unemployment and would probably continue to do so in the near future - meaning the park would help soak up the manpower surplus - it might not be true for the entire period to 2045. If Hong Kong had much lower unemployment, the added value of the park to the economy would diminish. Failing to recognise that meant the Government's figures were 'biased upward, perhaps quite seriously.' But he said there were substantial indirect benefits to be derived from the project. 'I do not see any better project than the Disney theme park to help Hong Kong's international image as a cosmopolitan city.' Professor Cheng said the focus now should be on getting the best possible deal. He said Disney should be asked to take a larger equity stake. Of the $14.1 billion theme park cost, Disney will invest $2.45 billion and raise $2.3 billion in loans, plus a government loan of $6.1 billion. It holds a 43 per cent share of the joint venture. 'It seems clear that Walt Disney is not keen to take a majority stake. Instead, it tries to minimise its exposure to risk by collecting management and franchise fees,' Professor Cheng said. 'Perhaps it is not optimistic about the financial results of the venture. To ensure Walt Disney's commitment and to reduce the risks to the SAR Government, it would be desirable to increase the equity stake of Walt Disney,' he said.
