Hong Kong may issue retail bonds to fund part of HK$580 billion artificial islands project off Lantau, finance chief Paul Chan says

Finance minister says land sale potential of reclamation project exceeds total cost and private market should be tapped to generate some funding

Government must move ‘full speed ahead’ on Lantau development and Northern Metropolis plan along border to tackle housing crisis, he adds

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A government artist’s vision of the Lantau artificial islands project. Photo: Legco

Published: 5:32pm, 14 May 2023Updated: 8:32pm, 14 May 2023

Hong Kong’s finance chief has suggested issuing retail bonds to fund a large part of the controversial HK$580 billion (US$73.95 billion) reclamation project off Lantau, after critics raised concerns over the burden the development may place on public coffers and the government’s ability to secure enough money.

Financial Secretary Paul Chan Mo-po on Sunday stressed that the government had to “move ahead at full speed” with the artificial islands project and the planned Northern Metropolis near the mainland China border to tackle the city’s housing shortage.

Once completed, the two projects will supply more than half of the 7,300 hectares (18,040 acres) of land the city needs to cope with demand beyond 2048.

Hong Kong’s border with Shenzhen. The Northern Metropolis plan calls for constructing a new residential and economic centre in the area. Photo: Martin Chan

Writing in his official blog, Chan acknowledged the concerns over the cost of the artificial islands project, but he argued: “I would like to point out that there are good conditions for this project to raise funds from the market.”

“As a matter of fact, many enterprises or institutions have also acknowledged the development potential of the project and have expressed interest in taking part in it. The proposals include structured finance or a public-private participation model to allow greater flexibility and wider choices for financing the project,” he added.

“Furthermore, we can also issue retail bonds. By doing so, we can also allow members of the public to share stable and sound investment returns while financing the project.”

Financial Secretary Paul Chan says the government has received about 8,000 submissions during the three-month public consultation on the Lantau project and roughly 60 per cent were in support of it. Photo: Yik Yeung-man

In his February budget, the finance chief proposed setting up an infrastructure bond scheme and allowing public subscription to meet the cash flow needs of major local projects.

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