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Motives behind secret deal for City of Sadness
7 December 2010
SCMP

Rapid population growth and the need to build a new frontier town quickly in Tin Shui Wai led to a secret deal between the government and a consortium of developers, says a scholar who studied the agreement.

The poverty-stricken satellite town, dubbed the "City of Sadness" because of its association with domestic violence, murders and suicides, might have had a happier history were it not for the secret pact in the 1980s to limit commercial development - and the jobs that might have come with it.

The deal, revealed in yesterday's South China Morning Post, ensured retail businesses in government-owned buildings posed no serious competition to those in privately developed sections of the district.

The pact put limits on shops, markets and commercial enterprises in an area that could have sorely used the employment opportunities.

Dr Law Chi-kwong, associate professor in the department of social work and social administration at the University of Hong Kong, explained why the colonial government made such a deal.

Law, one of the few people outside the government to have actually seen the agreement, said: "There was a pressing need to build more new towns in Hong Kong to satisfy the growing population.

"But the government itself was not able to do it without the participation of private developers." He said the government had to rely on the private sector to realise its 10-year housing policy and thus offered incentives to the private sector during the 1970s and '80s to increase development. "To the government, it was a win-win solution to sign the joint venture agreement," he added.

In the 1982 deal, the then-territorial government bought 488 hectares of Tin Shui Wai land for HK$2.3 billion from a consortium called Mightycity, now owned by Li Ka-shing's Cheung Kong (Holdings) and China Resources.

The government immediately sold back almost 40 hectares to Mightycity for HK$800 million.

The consortium eventually built private residences, including Kingswood Villas, as well as the Kingswood Ginza mall and the 1,102-room Harbour Plaza Resort city. The government used the remaining land to build public and subsidised housing, together with local-scaled shopping centres and markets. But it also secretly promised not to allow businesses in those areas to become large enough to compete with businesses on the land owned by Mightycity.

Law noted: "The colonial government was not comfortable to see the 488 hectares of land in the hands of Chinese government-controlled China Resources, and thus the government decided to buy back all the lands from Mightycity and entered into a joint venture agreement with them."

A leading member of the Consumer Council said there seemed to be no good commercial reason for the business restrictions placed on the government-developed sections of Tin Shui Wai.

Thomas Cheng, chairman of the council's competition policy committee, said the government had the right to sign any agreement with any private company. But he couldn't see a reason for the authority to conceal a pledge that affected the livelihoods of 270,000 people.

He said: "There was no justifiable reason, from a competition perspective, for the Hong Kong government to sign a private memorandum to protect Mightycity's interest in commercial properties."

He added: "While there may be other policy reasons for signing such a memorandum, these reasons should be explained to the public."
 
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