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Time to take a stake in The Link Reit?

Chris Yeung

In an 11th-hour legal challenge in 2005, public housing tenant Lo Siu-lan temporarily derailed a government plan to privatise shopping centres and parking facilities run by the Housing Authority. In the end, the government won the legal battle. But, inaugurated at the end of 2005 following a public listing, The Link Reit is embroiled in a fresh row, over rent rises, with tenants in some commercial premises.

Pressure for the government to buy back shares, so that it can stop the company raising rents on its premises, has been building ahead of a motion debate in the Legislative Council today. Leung Ka-lau, who sponsored the motion, will urge the government to buy 20 per cent of the shares to gain a say in the company's management.

The Democratic Party has said that its decision to support the listing plan in 2005 was wrong, and it hoped that the buy-back option could remedy the situation.

Three other major political parties and groups - the Civic Party, the Federation of Trade Unions and the League of Social Democrats - also support the idea. The Democratic Alliance for the Betterment and Progress of Hong Kong has reservations.

Aside from the huge cost involved, the government will no doubt also have grave reservations about the idea, which is in effect a negation of its policy of privatisation of public assets.

The plan to hand over the operation of commercial space in public housing estates won support in society when it was floated, largely because of the strong hope that it would lead to an improvement in services, and for practical financial considerations.

Not only could the listing help finance the building of public rental housing by the Housing Authority, but The Link could also inject new ideas and vigour into commercial activities in housing estates, it was believed.

To be fair, massive spending by The Link to renovate shopping centres in public housing estates has brought about marked improvements. Increases in rents, however, have put enormous pressure on small businesses, which have found it hard to cope with the changes. Public housing tenants complain that they have no alternative but to bear the burden of any rent rise if they want to retain these businesses.

Knowing there is little they can do to influence The Link management, tenants and political parties have put pressure on the government to intervene. Indeed, the idea of 'relying on the government' has become more prevalent in the wake of the increasingly competitive economic environment and, importantly, the financial and economic meltdown in recent months.

In a subtle change of rhetoric, Chief Executive Donald Tsang Yam-kuen has sought to justify government intervention to remedy market failure. He said in his policy address: 'The market is not omnipotent. Intervention is not necessarily an evil. If the market fails, the government should intervene. We also need government supervision when public interests are compromised.'

The new thinking on the role of government has prompted officials to decide to fund the cruise terminal project from the government treasury after the failure to lure private investors through open tender. And officials have not ruled out running ferry services to and from outlying islands, given that the private sector finds that business unattractive.

Calls for the government to buy back the Western Harbour Tunnel have also grown, with complaints that high fares there have prompted more drivers to use the Cross-Harbour Tunnel, creating more traffic jams.

Gripped by fears of recession, western governments have intervened in financial institutions to help rescue their national economies. Given that the market has not always functioned as people expected, pressure for government to play a bigger role in matters ranging from tunnels and ferry services to commercial rents in public housing estates is set to grow - for better or worse.

Chris Yeung is the Post's editor-at-large.

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