TNAG-2472-FCO40-3599-Confidential-talks-between-the-UK-and-China-regarding-financ-1992 — Page 30

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P.28

Paper 6 (P. 4 of 13)

On land acquisition

Major causes include difficulties in identifying land owners, delay caused by disputes over the level of compensation and owners'

coming forward to collect their compensation etc.

not

5. Under-estimation of land revenue

The most

in respect

market in

volatility.

significant capital revenues are those of land sales/leases. The property Hong Kong has a history of It is, therefore, extremely difficult to predict land sales revenue which is a function of the state of the market, location and characteristics of the particular sites made available (this latter area isin itself influenced by the state of the market at any particular time).

- Table C shows that the deviation of actual

revenue from the revised estimate reflected in

the "Suspense Account" ranges from -20.6% in

1990-91 to +6.4% in 1991-92 resulting from higher or lower than expected land premia, although it is the "Works Account" figures which determine the surplus or

or shortfall from the

original estimate. (Note : the Capital Works

Reserve Fund is operated through 3 accounts : "Suspense" (which accounts for land receipts and production costs and the share between Hong Kong Government and the future Special Administrative Region Government "works" (to which Hong Kong Government's share of land premia is credited and from which all capital payments are made) and "Reserve" (to which transfers from general revenue are first credited))

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