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Denise Tsang

Enoch Yiu

Plans to sell a string of prime government assets over the next five years in a bid to raise $112 billion have prompted speculation about which pieces of family silver will be up for grabs.

Financial Secretary Antony Leung Kam-chung said yesterday he expected the sell-off to raise $21 billion in the next financial year.

He did not specify what the government intends to sell.

But government sources said assets at stake in the coming year include $15 billion in government loans and several tunnels worth $6 billion.

Other assets involved were likely to be the remaining government loan portfolio of nearly HK$23 billion and stakes in the semi-privatised MTR Corporation (MTRC), the wholly owned Kowloon-Canton Railway Corporation (KCRC) and the Airport Authority.

Mr Leung shed no light on the controversial merger of the MTRC and KCRC.

Some tax experts said the asset sales would allow the government to harvest the fruits of its investments but sale prices were vulnerable to market forces.

Some argued that the government should introduce recurring revenue in the long run.

Lloyd Deverall, who heads KPMG taxation services, said: 'As long as these are not fire sales, it is a good idea.

'If good prices cannot be achieved, the government must introduce a sales tax to broaden its tax base and secure a stable source of revenue.'

During the next 12 months, the government is expected to sell $15 billion in housing loans.

Tim Lui Tim-leung, chairman of the Hong Kong Society of Accountants' taxation commitee and a tax partner of PricewaterhouseCoopers, said the loans would be sold through the government-owned Hong Kong Mortgage Corporation (HKMC).

HKMC director Bernard Charnwut Chan said the Housing Authority was selling $18 billion worth of public housing loans to the mortage corporation. They would be sold on to investors.

The HKMC, which purchases and repackages mortgage loans from banks and sells them to investors, aims to reduce banks' risk exposure and boost the bond market.

'As the HKMC is wholly owned by the government, it will be an ideal vehicle to carry out the securitisation plans,' Mr Lui said.

According to a Civic Exchange study on the Budget, co-funded by South China Morning Post,  the government's net assets stood at almost $1 trillion on March 31 last year.

Sources said the revenue from tunnels such as the Cross-Harbour Tunnel, Lion Rock, Shing Mun, Aberdeen, Cheung Tsing and Tseung Kwan O would be involved in the programme.

Sales also were expected to include the second tranche of MTRC shares, they said.

The government plans to raise $30 billion next financial year, $24 billion in 2005/2006, $21 billion in 2006/2007 and $16 billion in 2007/2008.

Graphic: SALE06GET



Sell-off of 'family silver' is expected to generate $112b