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Carrie Lam's policy address 2018

Is Hong Kong ready to splash HK$500 billion (or more) on Lantau Tomorrow Vision reclamation?

  • Carrie Lam’s plan to create a cluster of islands as the city’s future housing and business centre has drawn criticism since she announced it last month
  • This three-part series will look at questions that need to be answered, starting with an analysis of costs
PUBLISHED : Monday, 19 November, 2018, 8:00am
UPDATED : Monday, 19 November, 2018, 12:40pm

For HK$500 billion (US$64 billion), Hong Kong could pay for a universal pension system 10 times over, or buy up all its damaged farmland for better planning.

Instead, the government intends to use this amount – equivalent to half of its fiscal reserves – to build a group of islands to house 1.1 million people.

Lam to press ahead with reclamation, whether public likes it or not

The HK$500 billion estimate for the 1,700-hectare development came from a government source, but some concern groups estimated the cost could balloon to HK$1 trillion or even more.

The astronomical numbers have sparked an uproar over the proposed project to the east of Lantau Island, with detractors likening it to “pouring money into the sea” and supporters saying it would be a profitable investment.

Experts said many varying factors could affect costs substantially, and while supporters want an official feasibility study, civil groups urged the government to think twice.

Lantau plan distracts from the real short-term need for land

“This is a proposal that will cost the largest amount of public money in Hong Kong’s history,” said Chan Kim-ching, founder of land concern group Liber Research Community.

“Many people are worried that the project will drain our fiscal reserve into the construction sector’s pocket.”

The project, dubbed Lantau Tomorrow Vision, was introduced by Chief Executive Carrie Lam Cheng Yuet-ngor in her policy address in October.

This is a proposal that will cost the largest amount of public money in Hong Kong’s history
Chan Kim-ching, Liber Research Community

A group of 38 economists said the plan would be “an ideal investment”.

They said the government could make HK$840 billion from selling some 40 million sq ft of commercial space and about 120,000 private flats, at prices below today’s market rates.

Some 280,000 affordable public housing flats are also expected from the development.

However, concerned parties like Tom Yam, a member of the Citizens Task Force on Land Resources, put the cost estimation at HK$1.5 trillion – or HK$8,200 per square foot – by 2025, when the reclamation was expected to start.

Yam, who is also a management consultant and an engineer, said that was based on past infrastructure projects and an annual inflation rate of 3 per cent.

Even some experts in favour of the plan accepted that many factors could affect the cost.

Raymond Chan Kin-sek, retired head of the government’s geotechnical engineering office, said expensive giant rocks – each weighing more than a tonne – would be needed for building a breakwater around the artificial islands.

He added that a non-dredge reclamation method to prevent marine pollution was “going to be painful and expensive, yet unavoidable”.

Ambrose Linn Hon-chung, chief executive of the Hong Kong Construction Materials Association, said rising labour costs – at an average rate of 3 to 4 per cent each year – could also inflate the price tag.

Here’s how to convince Carrie Lam to give up Lantau reclamation

He added that Asian countries’ increasing appetite for marine sand used for reclamation could drive up prices. He urged the government to plan ahead and sign a long-term contract with suppliers to control the cost of sand.

Former director of planning Ling Kar-kan said the project involved a tunnel through the East Lamma Channel, which has busy marine traffic, and that would lead to technical difficulties and higher costs.

However, there were also factors to bring the cost down, Ling added.

He said current estimates were based on the Airport Authority’s urgent third runway reclamation project, which used costlier reclamation material to reduce the time for newly created land to settle.

Majority of Hongkongers worried about cost of reclamation plan, survey finds

Ling said local recyclable construction waste could also be used for reclamation but required longer settling time.

He believed a feasibility study could identify how much of the new land would be for long-term reserve and therefore suitable for the construction waste method. This would bring the total cost down, he said.

The chief executive has also previously said that the amount spent on the project would be spread over a decade, so the annual cost would be an affordable 10 per cent of the total budget.

Secretary for Development Michael Wong Wai-lun said the government aimed to seek Legislative Council approval for funding a feasibility study on the project in the first half of next year. He said a rough estimate of the total cost, based on “a lot of assumptions”, would be presented by then.

Why the Lantau Tomorrow Vision is an investment in Hong Kong

But Chan of Liber Research Community said seeking funding implied an official start to the controversial reclamation. He urged the authorities to instead engage NGOs to look at the cost-effectiveness of the project compared with other land supply measures.

“Our group, for one, would be happy to work on the study for free,” he said.

Additional reporting by Joyce Ng