Hong Kong economists urge rethink of funding for major infrastructure projects after developers shy away from government land sales
- Experts warn government unlikely to reach estimated income of HK$85 billion from land sales and suggest issuing more bonds, using build, operate and transfer model
- Proposals follow developers’ tepid response to government sales, with only one of 18 plots sold so far during current financial year
Hong Kong economists have called for a rethink of funding strategies for major public infrastructure projects, warning developers’ frosty reception to government land sales could see authorities struggle to reach their target income of HK$85 billion (US$10.8 billion) for the current financial year.
Authorities would have to issue more bonds to make up for the potential drop in income from land sales, a primary source of funding for major government construction projects, they said.
“In the short term, there will be pressure on the government’s fiscal account and its fiscal reserve,” said Liu Pak-wai, an emeritus economics professor at Chinese University.
“That is why I propose issuing infrastructure bonds to manage the cash flow problem in the next few years, when capital works expenditures are high and land premium is low, because of the current weak property market and the newly formed land from the reclamation project will not be available for sale until later.”
But developers’ lukewarm response to government pitches for other spots has led to a series of failed land tenders, including plans for a site in Tsuen Wan that was called off earlier this month.