THE AIRPORT CORE PROGRAMME
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The ACP is based on sound financial principles, with good returns for government investments and substantial involvement of the private sector. Project management and control mechanisms have been put in place to ensure that the ACP projects will be completed within budget and to the maximum extent possible by mid-1997.
In 1994, good physical progress was maintained on the ACP. By the end of the year, 102 major contracts at a cost of about $66.1 billion had been awarded by the government, the Provisional Airport Authority (PAA), the Mass Transit Railway Corporation (MTRC) and the Western Harbour Crossing franchisee -the Western Harbour Tunnel Company Limited (WHTC).
Major developments on the works front during the year included the commencement of physical works for the airport railway, construction of the towers and spinning of the main suspension cables for the Tsing Ma Bridge, tower construction on the Kap Shui Mun Bridge, foundation work for the airport passenger terminal and the breakthrough of the Cheung Ching Tunnel on Route 3. Good progress was also made on the Tung Chung new town infrastructure works, the North Lantau Expressway and the Central reclamation.
The Need to Replace Kai Tak
A new airport is urgently needed because the international airport at Kai Tak, which has only one runway, is operating near its designed capacity. The economic importance of the airport is illustrated by the fact that in 1994, over 25 million passengers passed through Kai Tak, making it the third busiest airport in the world in terms of international passengers. A total of 68 per cent of all visitors to Hong Kong arrived by air. Tourism receipts amounted to nearly $64 billion, representing 6.4 per cent of Hong Kong's gross domestic product. In term of international air cargo, Kai Tak handled over 1.3 million tonnes of air cargo, making it the second busiest airport in the world. Moreover, 31.6 per cent of domestic exports, 13.7
per cent of re-exports and 19.8 per cent of imports by value went through Kai Tak. In the past 10 years, the territory has seen an annual average growth rate of over 10 per cent in air traffic at Kai Tak. In 1994, mainly due to the limitation of Kai Tak's capacity, the passenger throughput grew by only 3.1 per cent. But continued robust growth in demand is predicted. This means that Kai Tak will be unable to accommodate the forecast passenger demand before the new airport opens. Hong Kong will stand to suffer serious economic losses if Kai Tak is permitted to operate at, or beyond, its designed capacity for a protracted period of time. For example, the economic disbenefits to Hong Kong of not going ahead with the new airport have been estimated to be at least $420 billion, in money-of-the-day (MOD), over the period 1997-2010. This represents only quantifiable losses; it does not include indirect losses caused by the declining effectiveness of Hong Kong as an international trading and financial centre providing comprehensive business services, which could double the estimate.
Memorandum of Understanding
In September 1991, the British and Chinese Governments signed the Memorandum of Understanding Concerning the Construction of the New Airport in Hong Kong and Related Questions (MOU). The memorandum recognises the 'urgent need for a new airport in Hong Kong in order to ensure and develop its prosperity and stability', and the 'need for the airport to be cost-effective'. It requires the Hong Kong Government to complete the ACP