Our Discourse and Recommendations

Land is essential for development. Housing, different types of industries and even country parks require sufficient land resources. However, land is never an inexhaustible resource, not to mention the physical topography in Hong Kong, which further limits the supply of readily developable land. It appears that the land development progress in recent years has fallen short to meet the demand from the rapid growth of the economy and society, resulting in the imbalance between the supply of and the demand for developable land, and hence in adverse impacts on the quality of life. The issue of how to make better use of the existing scarce land resources has stirred up heated debate in the city.

The current HKSAR Government has set up the Land Supply Task Force to review the existing conditions of land resources and to take a macro view of the available land supply options. Although some of the options, such as reclamation and relocation of and topside development over Kwai Tsing Container Terminals, could potentially generate large areas of urban developable land, they are controversial, not to mention that the planning and land development processes may take as long as a decade or even longer. Whether these options can alleviate the dire need of land supply with immediate effect is questionable. Meanwhile, in the New Territories, there are extensive underutilised private land with great development potential. It is our conviction that public private partnership (PPP) will effectively unlock the great potential of the land resources and supply considerable amount of developable land in short-to-medium term. This report aims to recommend ways to improve the existing mechanism and procedures in processing PPP projects through reviewing and comparing practices in Hong Kong and overseas; and to seize the opportunities arising from the current land situation and overall development in Hong Kong through PPP.

PPP in Hong Kong and the Need for Improvement

Hong Kong has started PPP many years ago, mainly in infrastructure, housing and community facilities projects. Under the existing system, government departments are the major initiators, and limited incentives or channels are provided to the private sector to initiate partnership proposals, thereby hindering cooperation. The government has so far not taken the initiative in introducing incentive scheme to encourage the private sector to engage in PPP projects. Furthermore, most PPP projects have been processed in similar way as conventional procurement projects, where the Public Works Subcommittee of the Legislative Council examines the proposals and makes recommendations to the Finance Committee of the Legislative Council for funding approval. The lengthy approval process reduces the certainty and attractiveness of the PPP projects, deterring potential private partners from participation. In addition, there is no mechanism or unified database of PPP project information at present. The absence of easy access of information makes it difficult for the public to understand the projects fully, which is in turn likely to give rise to misunderstanding and hinder smooth implementation of the projects.

Land Development Difficulties in the New Territories

Physical topography is only one of the land development constraints facing Hong Kong. For instance, in spite of the extensiveness of private land with great development potential in the New Territories, the complex land ownership and the conflict of interests among different stakeholders aggravate the difficulty in development and uncertainty. Most rural areas do not have access to transport, social and other infrastructure. The development potential of these sites is also largely reduced as their uses are constrained under different ordinances, rendering it difficult, if not impossible, for high-density development, and resulting in underutilisation of the land. The uncoordinated requirements and technical definitions under different department purviews might also contribute to the overwhelming lengthy development approval process. Furthermore, citizens and stakeholders have actively been involved in socio-political affairs in recent years. They have more diverse demands and higher expectations on the government. Regrettably, the government had formerly failed to meet their expectations. With surging conflicts with the public, governance in Hong Kong has become increasingly difficult, dragging the overall development process.

Principles in Policy Recommendations

The following two policy recommendations are based on our principles as below :

1. (1)  Ensure good use of existing land resources;

2. (2)  Increase developable land supply in short-to-medium term;

3. (3)  Enhance the quality and effectiveness of PPP;

4. (4)  Create a more open, diverse and free environment for PPP in the future; and

5. (5)  Providechannelstoencouragepeoplefromallwalksoflifetoproposeinnovative

   and bold land development ideas.

Recommendation 1 : Launch the “Comprehensive Land Readjustment Program”

We propose launching the “Comprehensive Land Readjustment Program” (“the Program”) as a new way of PPP in Hong Kong. Land Readjustment (LR) is a method of implementing urban development proposals through partnership between public and private sector. It is applicable on the land in the New Territories and other areas. The private sector (including non-governmental organisations and individuals) may try to assemble sites which are irregularly shaped, have dispersed ownerships, are different from the town plans and difficult to develop. The private sector would then submit a comprehensive LR proposal to the government. Upon the approval of LR proposal, the government will reserve parcels of land for public uses and will be responsible for the public facilities and utilities, public open spaces and community facilities for the benefit of the whole community. At the end, parts of the readjusted land will be returned to the private sector.

This kind of program has been adopted and successfully put into practices for many years in the USA, Germany, France, Japan, and South Korea. Implementation of the Program is beneficial to both private sector and the public (including the government). The private sector can initiate and take the lead in the Program as a bottom-up community planning practice. Besides, by practising the Program, the hitherto “dead-end” problem can be resolved, i.e. the provision of public facilities and public transport connection that are essential for a proper development. The potential increase in the value of their private land after the implementation of the Program will encourage them to participate in developing the idle land. Moreover, since the Program allows private sector to submit proposal freely with focus on road layout and infrastructure, for instance, as long as it is supported with strong justifications, development intensity of private land as well as development flexibility can be enhanced. Since the original land types and land uses such as brownfields, abandoned agricultural land, or even land with existing operations or structures will not affect the effectiveness of the Program, private sector can submit proposal whenever and wherever they see fit, as long as there is potential for future development.

For the government, as no statutory resumption of land is required, social conflicts can thus be minimised by allowing voluntary public participation in the Program. Negotiation cost for the government intervention among private sector can also be minimised, as the Program requires groups in the private sector to reach consensus before submission of a proposal. The government does not bear any capital risks as it is the responsibility of the private sector to raise enough fund for the project. The detailed land ownership distribution within the community is not the major concern of the government or the approving authority when they look at a proposal. Both private landowners and developers can initiate to participate in the Program. Furthermore, if soundly based, private applicants can submit proposal to the government without being unduly affected by the existing development restrictions. In this manner, it is expected to be more open and diversified than the existing development framework, which would encourage bold and innovative new development directions.

The Program does not only provide private sector with a new way to explore the potential of their land, but will also suggest to the government a quick, simple and flexible way to make good use of private land, thus unleashing the potential of private land reserves in the short-to-medium term. The following diagram illustrates an example of LR:

Recommendation 2 :Establish the “PPP Authority”

We propose that, in long term, the government should set up an independent statutory body—“PPP Authority” (“the Authority”) to handle, manage, and review PPP projects. The Authority will create a mechanism for the private sector to submit proposals under the Program or any type of PPP proposals to the government. Under the new system, the approval process can be streamlined, greatly improving communication and negotiation among government departments, providing one-stop services, and hence raising the attractiveness of development. Also, the Authority will be responsible for the approval procedures of all submitted LR proposals. This would encourage and attract people from all walks of life to actively participate in PPP, hence maximising the development potential of the land resources, and accelerating the land development process.

To set up a PPP statutory body will need detailed studies and have to go through legislative process, which is time-consuming. We recommend that the government should set up the “PPP Coordination Office” (“the Office”) as a start, so as to demonstrate the government’s intention and determination to promote PPP. The authorities and responsibilities of the proposed Office should include: (i) performing as a PPP platform to receive and initially evaluate PPP proposals which are privately initiated; (ii) coordinating comments from different government departments with regard to the PPP proposals to reach consensus ; (iii) strengthening public participation in the current PPP approval process; (iv) preparing for the establishment of the Authority, which includes formulation of laws and ordinances, operational details of the Authority and implementation details of the Program; and finally, (v) monitoring and reviewing the effectiveness of approved PPP projects, and acting as an advisory body for the corresponding Project Steering Committee at the time being.

As the current procurement projects require different government departments to participate at various stages of approval, assessment and implementation procedures, we believe that official members should be included in both the Office and the future Authority, and that a platform should be provided for the professionals from various departments to reach consensus and compromise. Apart from that, non-official members with extensive background, such as professionals from the town planning, architectural, surveying, engineering, environmental, transport, commercial and legal sectors, should also be included in the Office, and later on, in the Authority, so as to maintain the representativeness of the approving board. In order to promote cooperation across government departments and bureaux, we propose the Office and the future Authority should directly report to the Chief Executive, who would appoint all the members.

The Office must be developed into a statutory body empowered by law to exercise its authorities fully and to deal with all matters relating to PPP projects. The major goal of setting up the Office is to create a suitable PPP development environment to encourage the private sector to actively submit PPP proposals and to streamline its development procedures. This would help the government respond to society’s needs more effectively by accelerating the land development process and by making good use of the advantages of the private sector, including its talents, skills, efficiency, and land resources.

The following diagram illustrates the functions of the Office: