Why Carrie Lam’s Lantau reclamation project should be seen as an investment in Hong Kong, rather than wasteful expenditure
SCMP 29th October 2018,
There has been plenty of controversy around the Lantau Tomorrow Vision since it was unveiled in Chief Executive Carrie Lam Cheng Yuet-ngor’s policy address. While constructive debate on such a huge undertaking is welcome, as a finance practitioner, I have found the opposition voices to be biased, with reasoning that does not reflect a careful evaluation of the financial facts.
The project is reported to cost around HK$500 billion, a seemingly astronomical sum. However, Hong Kong’s gross domestic product was HK$2.6 trillion in 2017. The project would cost less than 20 per cent of our GDP. Since the investment is spread over 15 years, this is less than 1.5 per cent of our GDP on an annual basis over this period.
Compare this to the “Rose Garden” project to construct the airport at Chek Lap Kok and related infrastructure. Hong Kong invested HK$155 billion in the project that was proposed in 1989 when our GDP was around HK$500 billion, equivalent to 31 per cent of annual GDP. Hence, the Lantau project is a very manageable undertaking relative to the size of our economy today. In fact, the project will add 1 to 1.5 per cent to our GDP every year during the construction phase.
The funding should be seen as an investment, not an expenditure. The project should not be compared to other welfare initiatives and government subsidies to the public since the funds invested in the project would not be immediately available for public consumption. ......