ENG-1987 — Page 32

HONG KONG

BUILDING FOR THE FUTURE

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Furthermore, what is done must be within the capacity of the economy to finance and also the public sector involvement must be capable of being financed within the limits of government revenues and prudent borrowing. (The MTR is a case in point where substantial loan finance was involved).

Here it is possible to make a very rough assessment of the resources that could be available. Assuming that the economy (the GDP) continues to grow at an average of eight per cent per year in real terms and that up to 30 per cent of the GDP can be spent, in real terms, on capital investment (gross domestic capital formation), then, over the next decade as a whole, additional resources of not far short of $250 billion (at 1980 prices) should, theoretically, be available for capital investment over and above the current level of investment. On average over the 10 years this would amount to an increase of about 50 per cent over present levels in the sums available for gross domestic capital formation. Within this total, also, about $50 billion should be available over the same period for additional investment by the public sector as compared with the levels achieved in recent years. How these potential additional resources are applied will depend on priorities, but it does seem that substantial sums could be made available for spending on essential infrastructure if this were to be given the requisite priority. The availability of these resources will, of course, depend on the economy continuing to grow at close to the average rate achieved over the last 20 years and on the maintenance of confidence. But to embark on the massive projects involved would not only, in itself, help to maintain the momentum of economic growth but would also provide a significant boost to confidence. In this regard, it is worth recalling the hesitations there were in the sixties and seventies over the Cross-Harbour Tunnel and Mass Transit Railway projects, and the arguments adduced in some quarters then that they could not be afforded, or even that they would be of little benefit. Now it would be inconceivable that Hong Kong could function without either of them.

Finally, in an economy such as Hong Kong's, it is no longer possible for new develop- ments of the order envisaged to be built, financed and operated entirely by the public sector. Although the overall planning and co-ordination would need to be in the hands of the government, and much of the investment would have to be undertaken by the public sector, the private sector would also need to be intimately involved. What is required is a partnership between public and private investment which could also involve new forms of organisation and co-operation.

The general concept is not new to Hong Kong, as seen in developments ranging from the Cross-Harbour Tunnel to the Private Sector Participation Scheme for home ownership and a number of other schemes. The indications are that the private sector will be willing and eager to participate in large-scale, co-ordinated, development, as seen in the ambitious proposal, already mentioned, by a partnership of major Hong Kong companies, for port, airport and related developments. There is also a possibility that Mainland Chinese interests may wish to become involved in view of the benefit which could accrue to their own economy from a substantial improvement in Hong Kong's basic economic infrastructure.

A Better Environment through Urban Renewal

An important part of the planning outlined and assessed above concerns the proposals for urban renewal. Despite the many modern buildings and other developments in Hong Kong, it cannot be denied that, as in any large city, there are rundown and dilapidated areas and other environmental blackspots. This is not surprising, considering how rapidly Hong Kong's economy has grown. Some areas which were developed as recently as 30, or