New World, which was granted the right to operate the avenue for 20 years in 2004 and is now seeking to extend the period, has promised to cover all the revitalisation costs. But many, including some board members, have questioned the lack of a competitive bidding process in letting it handle the project.

"Some opponents have queried: 'Why was the project handed to New World? Is it a government-business collusion? Is it a transfer of benefit?'" said board member Clarence Leung Wang-ching.

Another member, Wilton Fok Wai-tung, asked: "Why is it New World but not any other developer?"

But the Town Planning Board's power is limited to land use, and it has no say over who gets to manage the site.

"How the applicant is going to find its partner is outside of our scope of approval," said director of planning Ling Kar-kan, who chaired the meeting.

"The board supports the proposal because it will attract many visitors to the promenade," was how board spokeswoman Lily Yam Ya-may explained the decision.

"The government is not transferring one single inch of land or its management right to a private company," deputy chief of the leisure department Louis Ng Chi-wa added.

The plan was passed amid controversy following a three-week public consultation last month, with 328 out of 348 submissions opposing it.

Some complained about the three-year closure of the promenade which would deny people access to a public area.

Businesses and property owners said the closure would put off customers and their harbour views would be blocked.

Yesterday's approval came with 10 conditions, a key one stipulating the proposed film gallery must not narrow the 7.5-metre wide passageway outside. This means the developer will have to change its original design of the structure, which would block 2.5 metres of the walkway.

But New World, as the biggest commercial landlord in the area, could benefit from the plan by attracting many more people there. The proposed new facilities are near its New World Centre, a HK$18 billion project still under construction that would feature a hotel, a mall and offices.

“Although the management is a non-profit company, New World makes money by making it a great environment,” Zimmerman said.

He said once the government takes over management of the development, it will pocket any surplus income from those businesses. New World, which is a major business owner in the area, hopes to increase the amount of foot traffic by as much as 10 times.

He said the project would also breach a pledge by the government not to encourage private companies to manage public space.

But Ng said the plan was not required to go through tendering as it did not involve the sale of any land.

In their joint application to the board, the department and New World estimated that pedestrian flow on the now-quiet eastern section of the Tsim Sha Tsui promenade would increase by more than 10 at peak hours after the construction of more attractions - from the present 200 people per hour to 3,000.