Carrie Lam needs to act on Link Reit ‘mountain’

Hong Kong’s legislative system is designed to make the enactment of non-government bills difficult, if not impossible.

That is why a proposal targeting Link Reit, a real estate investment trust that took over shopping malls and wet markets from the Housing Authority in 2005, stands a slim chance of being passed.

Nonetheless, it still puts pressure on the government to come up with better ways to rein in runaway prices fuelled by hefty rent increases.

Under the proposal from Regina Ip Lau Suk-yee, rents would only rise according to a formula based on changes in inflation, household income and the rateable values of property. A levy on vacant shops would also be imposed.

The move has won support from fellow lawmaker Alice Mak Mei-kuen, of the Federation of Trade Unions, but raised reservations from pro-business members.

Hong Kong proposal to cap shop rents labelled communist

The proposed move arguably does not square with Hong Kong’s free market economy, but government intervention is called for when public interest is undermined. There are also laws governing public utilities.

Since privatisation in 2005, the rents of shopping malls and markets are said to have jumped 132 per cent, outstripping the 73 per cent rise in the government rent index for retail premises during the same period.

Soaring rents have inevitably priced out smaller shops and pushed up commodity prices. However, shoppers have been compensated with better facilities.

Whether the bill is the best way to go is open to discussion. Intriguingly, it comes from Ip, a member of the Executive Council, the chief executive’s de facto cabinet.

The bill has to clear many hurdles yet, including the consent of Chief Executive Carrie Lam Cheng Yuet-ngor, before it can be tabled and passed. Lam yesterday stopped short of rejecting it right away, but the government is unlikely to endorse the move, given all bills are to come from policy bureaus under the so-called executive-led model.

The Link Reit issue was described by Lam as one of the three “mountains” facing the previous administration. Now that she has stepped up, she needs to take action.

With the district council and Legislative Council elections coming, the government is under growing pressure to address the problem.