Coronavirus, stalling economy and ageing population should force Hong Kong to rethink Lantau Tomorrow

The city’s finances are under strain, with the pandemic devastating an economy already braced for population ageing and rising public spending
Government projections of sizeable returns on the Lantau development are also a contrast with other less-rosy forecasts

Dennis Lee

Published: 6:45am, 6 Jan 2021

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Had it not been for the massive protests against the extradition bill, which broke out in June 2019, and the coronavirus pandemic that followed, the Lantau Tomorrow Vision – launched by Chief Executive Carrie Lam Cheng Yuet-ngor in her 2018 policy address – would be the most ambitious undertaking of her government for the future development of Hong Kong.

According to government projections, 1,700 hectares would be reclaimed beyond the east coast of Lantau Island. The first phase of the project would focus on building artificial islands around Kau Yi Chau (formerly referred to as the East Lantau Metropolis).

This would yield 1,000 hectares that planners hoped could become Hong Kong’s third central business district, after Central and Kowloon East. The entire project is expected to provide 260,000 to 400,000 homes for more than 1.3 million people.

The grand project is anticipated to boost employment fivefold, from the current 120,000 jobs on Lantau to about 600,000, offering opportunities to many, from skilled professionals to construction workers, for years to come.

In March 2019, after a year of feasibility and fiscal studies, the government put a price tag on the massive reclamation project of HK$624 billion, which was roughly half of Hong Kong’s fiscal reserves then of HK$1.16 trillion.

When Secretary for Development Michael Wong Wai-lun announced the plan, he stressed that the project would not deplete the fiscal reserves as land sales and commercial development – estimated at between HK$974 billion and HK$1.14 trillion – would exceed the cost of development.

Last September, an analysis of the project’s financial impact by ACE Centre for Business and Economic Research, commissioned by Greenpeace, was released.

The report projected that even in the best-case scenario – with the highest revenue generated and lowest expenditure – Hong Kong’s fiscal reserves, estimated at about HK$800 billion after pandemic relief measures, would be wiped out in about 10 years. The study contradicted Wong’s positive take on Lantau Tomorrow’s long-term returns on investment.

The pandemic has certainly not helped. Financial Secretary Paul Chan Mo-po has warned that the city would record its highest deficit in history – more than HK$300 billion – for the financial year ending in March, as both pandemic relief measures and rising recurrent spending take their toll on government coffers.

Hong Kong finance chief says next budget will ‘inevitably be in the red’

Only time will tell whether the ACE projection models will be more accurate than the government’s cost estimation for the project.

Notably, the government does not have the best track record on managing major projects. The Kai Tak Cruise Terminal, the Sha Tin-Central rail link, the Hong Kong-Zhuhai-Macau Bridge and the West Kowloon Cultural District, to name a few examples, all suffered from sub-par management on construction and operational cost overruns, delays, frequent changes of leadership, poor returns on investment, and lack of vision.

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A project like Lantau Tomorrow requires unstinting commitment. Once begun, there would be no turning back. Public funding would continue to be drained amid any escalating costs. In other words, we would be stuck pouring resources into the project, whatever the state of our fiscal reserves.

As an architect, I look forward to development opportunities, and how Lantau Tomorrow could offer a chance to build a visionary, hi-tech smart city, and environmentally responsible community that carries Hong Kong into the future.

But, at the same time, we must do so with a sense of fiscal and social responsibility. Even before Covid-19 struck, Paul Chan and his predecessor John Tsang Chun-wah often warned about the dangers of ever-rising public spending and an ageing population.

According to the Hong Kong Poverty Situation Report 2019, published last month, 1.49 million Hongkongers, or one out of five, fell below the poverty line, the highest number in 11 years.

With continuous relief spending, a higher unemployment rate, a stagnating economy with an uncertain outlook and a worsening poverty situation, should we not take a step back and rethink Lantau Tomorrow?

Dennis Lee is a Hong Kong-born, America-licensed architect with 22 years of design experience in the US and China