Members’ Motion “Establishing innovative institutional mechanisms to move full steam ahead with the development of the Core Area of the Northern Metropolis”
President, I would like to thank Dr Wendy HONG for proposing this motion. Since the Government put forward the Northern Metropolis (“NM”) Development Strategy in 2021, various sectors of the community have pinned high hopes on the development of NM, but the progress has obviously fallen short of public expectations. Take the Shenzhen-Hong Kong Science and Technology Innovation Co-operation Zone as an example, while the Shenzhen Park is already established and developing vigorously, the Hong Kong Park is still struggling. If the development of NM continues at its current slow pace, Hong Kong will miss out on the opportunities for transformation and be further marginalized in the regional competition. The entire SAR Government should break away from conventional thinking and adopt new concepts and methods to speed up development, so that Hong Kong will not be left behind in the future economic landscape.
In order to accelerate development, the Government has proposed the “large-scale land disposal” model, the concept of selling land parcels in advance, and the intention to promote an industry-led approach. Although the proposals are forward-looking, they need to be equipped with a more efficient implementation mechanism to maximize the benefits. Considering that there are already several NM-related steering committees, it is suggested that the SAR Government should consolidate the structure and designate an official to coordinate and take the lead, so as to realize a one-stop and efficient operation of planning, vetting and approval, business and investment promotion and operation management. To remove red tape, it is necessary to relax some of the statutory restrictions to enhance the procedures of vetting and approval for construction and project acceptance. However, regarding whether an authority should be set up or whether a specific law should be enacted, I believe that the actual needs and effectiveness of implementation should be carefully assessed, and I will keep an open mind on this.
The most important thing for the development of NM is capital. The Financial Secretary said in a recent interview that he would consider bond issuance and public-private-partnerships to bring in market forces and reduce the Government’s capital expenditure. Of the 85 enterprises that signed the Letter of Intent on the development of NM last year, 70% were Mainland-funded, reflecting the willingness of Mainland-funded organizations to participate actively in the development of NM. I suggest that the Government play a bridging role in promoting the formation of consortiums between Hong Kong companies and Mainland-funded enterprises, combining the Mainland-funded enterprises’ strengths in its experience in innovation and technology (“I&T”), industries and “large-scale land disposal” with the local operational expertise of Hong Kong companies to jointly promote the development of the zones.
In addition, the HKSAR Government should make full use of Hong Kong’s financial strengths and adopt a diversified strategy to provide capital protection by flexibly applying traditional and innovative financial methods according to the characteristics of the projects in the region. Attracting private capital and forming public-private partnerships in infrastructure development is a proven and efficient model for regional development, and the Government can adopt the public-private partnership model and collaborate with enterprises to bear the costs. As for the construction of parks, railways and port facilities in NM, the concession model can be used to balance the development costs through proceeds from the topside development of residential, commercial and other properties.
There are problems of land resumption and compensation with a lot of private land in NM. I have suggested in the past that the issuance of “land bonds” should be considered as a substitute for cash compensation to reduce the development costs, and to allow the owners to participate in property development or trading in the secondary market, which can not only alleviate the short-term financial pressure on the Government, but also promote the release of private land.
At the same time, credit, bonds and asset securitization can be used to finance projects in NM. Currently, the Government’s debt ratio is much lower than the international levels, and its credit rating is relatively high, so there is room for expanding the scale of debt to support the strategic investments that must be partially funded by the Government. Credit facilities include project loans, syndicated loans and green and ESG loans. As Hong Kong is currently the most active syndicated loan and green debt centre in the Asia Pacific region, similar forms of financing will likely be well-received by the public.
For infrastructure projects with stable returns, the Government can revitalize its stock of assets through asset securitization. Fixed assets such as infrastructure and office properties of NM can also be used as underlying assets to issue Real Estate Investment Trusts (“REITs”). The China Securities Regulatory Commission included REITs under Stock Connect last year, which has created favourable conditions for bringing in Mainland capital for projects in NM.
In addition, the SAR Government should make good use of the cross-boundary synergies of NM and actively explore with the State the establishment of a mechanism for facilitating cross-boundary capital transfer, setting up a special quota for Mainland enterprises stationed in NM and streamlining the vetting and approving procedures, so as to facilitate the cross-boundary flow of capital to Hong Kong at any time.
President, Hong Kong must have the determination to “take extraordinary actions at extraordinary times” to ensure that NM is not only a planning blueprint, but also a strategic engine for Hong Kong’s long-term development.
I so submit.