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1. Call for land sales transparency

1. Call for land sales transparency
PEGGY SITO and FOSTER WONG, SCMP 16 February 2005

Transactions in the most valuable of Hong Kong commodities - land - are seen by some as a friendly arrangement between government and big business.

Academics observing the claims and counterclaims between various parties say that, while the policy is fair, there is room to enhance transparency in the execution process, especially for ad hoc projects, and that this will help restore public confidence in the administration.

But they warn that greater transparency will undermine the government's administrative efficiency, blunting Hong Kong's competitive edge over nearby mainland cities and Macau.

Land auctions so far this financial year have generated $18.5 billion for the government - surpassing the $12 billion estimated for the whole year. But the government has come under criticism for the way it handled Cyberport and the West Kowloon cultural district project.

In 2000, the government awarded development rights for Cyberport in Pokfulam to PCCW, owned by Richard Li Tzar-kai, without open tender.

In the latest controversy, the government wants to award the estimated $40 billion West Kowloon project to one developer to build and manage for 30 years.

Democrats believe the two projects are clear evidence of the government's policy bias in favour of large developers, even going as far as to say there is potential for collusion between business and government officials.

Alan Leong Kah-kit, of the Article 45 Concern Group, urged the government to sell land by auction but to avoid private negotiations.

He called for enhanced transparency in calculating the land premiums that developers are charged for changes in land use.

Under the land policy, all land in Hong Kong is leased or owned by the government, with all leases expiring after June 30, 2047 - 50 years after the handover. The government sells or grants land to the private sector through public sale and private treaty. Developers wanting to change land use can do so, but have to pay a premium reflecting the difference between the "before" and "after" value of the land.

In response to talk of big business and government officials being far too cosy, Deputy Secretary for Housing, Planning and Lands Thomas Tso Man-tai said the government had already adopted a land sale system aimed at minimising interference in the market. He said the government was stepping up efforts to allow the public to take part in city planning.

The government introduced the application list system in 1999. "The move is aimed at moving land supply towards a market-driven approach," Mr Tso said.

Under the application regime, the administration decides which sites will be included in the list of land for sale in a fiscal year. An applicant who wants to buy a site must guarantee the government a minimum price. If the offered price meets the government's reserve price, which is the administration's valuation, the site will be put up for public auction.

"Under the current system, land supply is determined by market demand," said Mr Tso, adding that the government also granted land through MTR Corp and Kowloon-Canton Railway Corp. The two rail firms will release land for the development of more than 15,000 flats at stations along rail lines this year.

UBS property analyst Franklin Lam Fan-keung said: "I see no problem in the current land granting system and land premium discussion process."

Mr Lam criticised political parties for politicising the issue, warning that the knock-on effect would slow the execution process and delay the city's development.

Academics say there is no problem with the land sale system but there is room for improvement for some ad hoc projects. Eddie Hui, associate professor at the Hong Kong Polytechnic University's department of building and real estate, said: "Cyberport was probably a mistake. The project was not sold through public tender. But the government has made an improvement with the West Kowloon project because at least it will be granted through public tender."

Professor Chau Kwong-wing, of the University of Hong Kong's department of real estate and construction, said the problem with the West Kowloon project was that the government had from the outset failed to clearly disclose the investment cost of all items, such as land and cultural facilities. This gave the public a bad impression.

Mr Hui said the government had not adopted a land sale policy of total non-intervention because it decided which sites would be included in the application list.

"But it is OK if the government enhances transparency and consults the public before making decisions, if it wants to restore public confidence," he said.

"More public involvement may lead Hong Kong to miss chances of development in the wake of the economic turnaround."

How to strike a balance between efficiency and a consensus was up to citizens to decide, he said.