Hong Kong coffers can’t handle cost of building 2 mega projects at same time, top economist warns

Building three artificial islands off Lantau for a huge housing and economic hub will push Hong Kong’s fiscal reserves into deficit in as little as five years, an economist has projected, saying priority should instead be given to another major development plan near the border with mainland China.

The comments by economist Andy Kwan Cheuk-chiu, director of the ACE Centre for Business and Economic Research, on Wednesday echoed the views of Regina Ip Lau Suk-yee, the top adviser on the city’s key decision-making Executive Council, and came a day after Hong Kong’s leader said both projects should proceed simultaneously.

Exco convenor Ip had said on Monday that priority should be given to the Northern Metropolis plan, a blueprint to turn large parts of the New Territories near the mainland border into a residential and tech hub with more than 900,000 flats and up to 650,000 jobs.

The three artificial islands under the Lantau Tomorrow Vision project would provide enough land for 210,000 flats for half a million people and a new business hub on an initial 1,000 hectares (2,471 acres) of reclaimed land over two decades.

“We cannot implement both projects at the same time. The cost is too high,” Kwan said, adding the metropolis plan could help utilise idle land and foster integration between the city and neighbour Shenzhen.

While the Lantau project is expected to cost HK$580 billion, no price tag has been given for the Northern Metropolis, with the government only announcing in the 2022-23 budget that funding of HK$100 billion would be set aside to support and expedite the plan.

Kwan studied the Lantau project using three economic models with annual GDP growth forecasts ranging from 1 per cent to 4.5 per cent in the coming two decades based on government figures.