Tin Shui Wai a blot on free market reputation

If ever there was an example of how government actions and the fine details of policy can affect the livelihoods of ordinary people decades down the line, then look no further than Tin Shui Wai. Labelled the 'city of sadness' after a string of domestic tragedies revealed a cycle of poverty, it now appears that it is a victim of a deal between the then colonial government and the development consortium. A joint venture deal between a private consortium and the government signed in 1982 included a memorandum of understanding which effectively restricted the growth of further commercial activity in order to protect the interests of the commercial outlets within the sole private estate.

With the benefit of hindsight it is easy to see how disastrous that memorandum has become, with Tin Shui Wai now the poorest region in Hong Kong even though the agreement was cancelled in 2002. The private sector has been denied space to grow and consequently job opportunities in the area are scarce, adding to the woes of an already impoverished community.

The town has 273,800 residents with a 9 per cent unemployment rate, almost double that of the rest of the city. Located at the far northwest of the New Territories, it is a predominately residential district with 11 public rental housing estates, six Home Ownership Scheme estates developed by the government and the one private residential estate, Kingswood Villas, which was the result of that joint venture. Most of the low-qualification population in Tin Shui Wai spends HK$600 a month on transportation for a job earning about HK$5,000. It now has the unenviable reputation for being the site of many instances of domestic abuse and family tragedies in which poverty and the lack of opportunities to break free from poverty has driven many to despair. As one resident put it, to live in Tin Shui Wai was not much different to living in a shelter.

For a city that has built its reputation on being one of the freest markets in the world, one would have expected the government to espouse the virtues of fair competition and job creation from a healthy private sector. Instead, a memorandum was drafted which effectively kept the development of shops, markets and commercial enterprises to a minimum to protect the stores in the single private estate.

Those involved with this joint venture may have had the best of intentions while taking into account a peculiar set of socio-political factors. The government at the time needed the land to build public and subsidised housing and in return promised to allow no businesses there large enough to compete with any on the land owned by the sole private developer. It was the trade-off for the construction of much-needed public housing that was the priority in policy over the New Territories in the 1980s.

Nevertheless, this episode reveals the consequences and extent of the government's close workings with land developers behind closed doors. Are there other areas affected by similar pledges made secretly? Deals like these highlight the difficulty of ensuring fair competition without a comprehensive review of the land policy. This deal was made decades ago during the colonial era, but due to the lack of transparency and the lack of any archival legislation it will be difficult to learn from such mistakes and prevent them from taking place again in the future. Hong Kong's strength is as a free market - and free markets demand transparency and level playing fields. We can and should ask if there are other similar agreements, or, like poverty in Tin Shui Wai, the cycle will simply continue.