Our initial suggestions and comments are provided in the following areas:-

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1 The British Chamber of Commerce in Hong Kong Submission on the Public Engagement for: Hong Kong 2030+: Towards a Planning Vision and Strategy Transcending 2030 Introduction 11 th April, 2017 The Chamber welcomes the development of and the accompanying public engagement exercise, with the vision of Hong Kong as a liveable, competitive and sustainable world city. It is important to take a long term strategic view. We consider two clear priorities should be: supporting Hong Kong s position as a place to do business, and improving its liveability. These are key aspects of Hong Kong s overall competitiveness. Both are essential to attract and retain business talent and to make our home a sustainable and attractive place to live. While Hong Kong continues to rank highly in business efficiency, measures of its liveability are often far less positive 1. The master plan will need to show flexibility and optionality. Over the life of the plan, there are certain to be unplanned and unanticipated developments. Population changes may be greater or less than the central forecast. Hong Kong s small and open economy may take a different direction than anticipated. Crucially, there will be the impact of new technology on the economy, on how we work, how we live, and how we develop the urban environment. We understand that other jurisdictions (e.g. Singapore) frequently review and change their master plans. We recommend that Hong Kong does not freeze in stone the current proposals. Our initial suggestions and comments are provided in the following areas:- Assumptions and Costs We are concerned that the plans are based on relatively high forecasts for population growth, many of which in the past have not been met. We understand that the Government has suggested that this has not historically been important because the development that actually takes place has fallen short of the population estimates used at the time the plans were prepared (a just-in-time approach). We question why should be different. The margin of error quoted is around 10%, which in terms of development potential and infrastructure spending is high for small city and may lead to considerable overinvestment. It might be better to have a tighter central case for population assumptions and a narrower development programme more certain of successful implementation. The published plans do not appear to set out any clear estimate of the costs or economic benefits of the proposals. We understand that Government may be keen to allow society to look at the proposals on their own planning merits basis. But costs and anticipated benefits are an 1 Hong Kong is ranked 71 st in the latest Mercer survey. Page 1

2 important part of the evaluation process, and would allow the proposals to be properly considered by the community in relation to other priorities for public expenditure. Press reports have suggested, for example, that the development cost for the East Lantau Metropolis (ELM) is close to $400 billion. In considering this major proposed investment, businesses and the wider community need a better exposition of the costs and benefits. We do not see a clear economic justification for such a large inflexible project at this stage without a clear presentation of alternatives. For example, if population growth is at the lower end of estimates, then ELM may not be required. Global and Regional Contexts We support the recognition of the need for stronger cross boundary ties, and the development of more crossing points, as well as strengthened links to the western Pearl River Delta (PRD) and eastern Shenzhen in particular. This will facilitate access to PRD land and labour resources, reducing pressures locally for these. Nonetheless much of the plan seems quite narrowly Hong Kong-focussed and we would welcome further consideration of the wider regional planning context and of the strategic implications of Hong Kong s connectivity with the Greater Bay area. While maximising the opportunities for cooperation with the region, in particular the Greater Bay area, it is important that Hong Kong continues to differentiate itself. Living, working and doing business in Hong Kong is different from Shenzhen or Shanghai. That is a competitive strength we must retain. We note the use of a comparative liveability matrix for 2030+, using the Mercer 2016 Quality of Living Survey. The target of moving Hong Kong from a ranking of around 70 towards a ranking of around 25 in just 20 years is admirable, but we are not sure given the implementation difficulties in Hong Kong that it is achievable. Equivalent changes would be like moving Mexico City to the level of Seoul, or Shanghai to the level of London in a generation. It may be better to focus on a more limited range of goals which will clearly get implemented well on a timely basis. Planning for a Liveable High-Density City We welcome the analysis of some of the key challenges that our city faces on a 20 year basis, for example the need to plan for ageing society, the impact of planning on public health, the need for adequate living space, and, in particular, the challenges presented by the redevelopment of our ageing housing stock. Regarding the latter, revitalising (whether renovating or re-developing) aged multi-ownership buildings, often on difficult sites, can be challenging and it may be necessary to set up specific corporations for local areas to do this. A key element in the proposals is to ensure that Hong Kong plans for a liveable and vibrant city. Smart cities thinking and new technologies provide an opportunity for a generational change in our approach to urban development, which should not be missed. In this context, we suggest a reform and updating of our building codes, which we feel are a long way behind other Page 2

3 jurisdictions in allowing development on the basis of more diverse, sustainable, and vibrant design criteria. We welcome the planning approach to leverage our green and blue assets. The single biggest opportunity for this is Victoria Harbour. We are concerned by the announcement which suggests the downgrading of the statutory authority originally expected to lead the development of this asset. A Harbourfront Authority, with statutory powers and $ multi-billion capital budget could have a major impact in the regeneration and development of this area in a holistic, sensitive and community-oriented fashion, as in cities such as New York, Sydney and Toronto. We consider the decision to downgrade this to an Office is retrograde and should be re-examined. Embracing New Economic Challenges We acknowledge the consideration given to the economic framework necessary to continue Hong Kong s growth. However it is the private sector which will provide the economic growth. We believe that government should be providing space for the uses that the market demands, not those government would like the market to demand - which is what the directive approach in the proposals implies. The need for adequate land and space for economic growth is clear. Vacancy rates in key sectors such as grade-a office space, good quality industrial space and private commercial premises are close to historical lows. This will need to be addressed in the most cost-effective manner if Hong Kong is to remain a competitive place to locate and expand businesses. The term industrial in relation to land use is poorly defined due to outdated planning and land use structures and as a result it is often hard to get approval for new industries. The foundation of much of Hong Kong s business success rests on successful and lively SME sector. The provision of flexible, temporary and mixed-use premises is critical to their future development. We recognise the importance of the adequate and timely provision of supporting infrastructure. It is likely that will involve major investment by government to provide much of the land and basic infrastructure needed. But we strongly suggest that the government explores opportunities for the private sector to participate in its provision and financing. This would allow for innovative approaches in financing, would reduce the burden on public spending; and could create an opportunity for the development of a much more vibrant bond market in Hong Kong. We believe that the cost of infrastructure development would also be reduced if the recent volatility in investment was removed. More steady flow of investment would create a sustainable and efficient industry with production levels which would allow international standards to be met. We recognise the need for greater resilience in the provision of transport infrastructure, at a reasonable cost, so that key corridors (such as that to the airport) are not vulnerable to single route transit interruptions. We support the focus on rail as the primary means of mass transit and the strategy to create more jobs closer to residential areas, as well as increasing the walkability of our city. Page 3

4 Long Term Land Requirements and Supply Government suggests that the outstanding developable land requirements total more than 1,200ha. We believe that to secure this much more focus should be placed on tackling the large number of brownfield sites. We appreciate the political difficulties that may be involved, and the time implications, but believe this should be the priority given the liveability implications of turning to greenfield sites and reclamation to produce this land. We understand that existing businesses occupying such sites will need land on which to continue functioning, but trust that this can be done on a much more efficient basis. There is also the opportunity for the development of economic partnerships with the owners of New Territories land, perhaps using new financial instruments and thinking rather than simple land exchange. In addition, it should be noted that additional land needs to be made available for the construction industry (for example for pre-fabrication, storage), if the development expected in is to be delivered. One concern in relation to the use of brownfield sites is the difficulty of assembling sufficiently large areas for development. Traditionally, government has been reluctant to use resumption powers except for critical infrastructure projects or in the planning of major new towns. We suggest these needs to change. Consideration should be given to a scheme to allow for the resumption of land for the implementation of rational development areas (to make these better planned and implementable) and to actively pursue non in situ land exchanges. Where developers have amassed considerable parcels of unused land, consideration should be given to a use it or lose it time limitation for development. Rezoning and land lease modification are often long, tedious and difficult processes again changes need to be made. It has recently been suggested that changing the planning rules takes time and exposes government to the judicial review process. In our view, making what some stakeholders have referred to as expedient but suboptimal choices is not a sustainable approach for a land planning and development policy. Further delay just prolongs the difficulties in providing adequate supplies of land fit for succeeding administrations. We remain concerned at the potential use of country park land; and do not consider that the government has yet fully justified looking to these for development. We do not agree that only country park land of the highest ecological value should be sacrosanct in terms of future development. In summary the Chamber believes that the main thrust of the new development strategy to provide significant quantities of extra development land should be an aggressive redevelopment of brownfield sites on a large well-planned scale, even if this is at the cost of sacrificing some property rights in particular locations (for well-judged and appropriate compensation). In addition, many older buildings which are inefficiently used may be re-purposed. Spatial Development Framework for As noted above, we believe it is an important principle that the market should lead the pattern and nature of economic development. Consideration should be given to a more flexible and step-by-step planning and implementation approach, adapting the framework as the economy Page 4

5 evolves, as the impact of new technologies becomes clear, as society changes (for example flexibility for home/work co-location) and as population estimates become more certain. More understanding of the costs and benefits of the proposed framework will need to be provided to the wider community to gain full buy-in. We also believe that some consideration of alternative proposals and strategies is necessary to allow the public to express informed preferences and choices on the costs and benefits of different approaches. Situated on the Eastern Knowledge and Technology corridor proposed under HK2030+, the NTN could be an ideal location for the New Science Park / Industrial Logistics Park / Estate to support the development of research development and high-tech Industries. The boundary location benefits the complementary functions and tech ecosystems of Hong Kong and Shenzhen and should host multiple, large scale modern logistics properties combining multi-users with built-tosuit facilities and related transport infrastructure and connections. Implementation and Moving Forward Much more emphasis should be placed on the integration of objectives between Departments and Bureaux in government; and on the need for a more flexible approach to cope with rapid changes in technology, especially if we are truly to deliver on the promise of a Smart City approach to this next stage of development. A wide range of government departments and bureaux would be involved in implementation. Many Chamber members can quote examples of where they have not been able to bring forward business proposals successfully because of the gaps and overlaps between government agencies. More coherent cross department working and collaboration will be a key to implementation. An alternative would seem to be a new statutory body with overarching powers, such as the Harbourfront Commission in the case of Victoria Harbour, or District Development Corporations, which are common in overseas cities to overcome this problem. The proposals do not demonstrate a clear implementation strategy and framework, and lack detail of costs, funding and timing. These issues must be addressed in the next stage of engagement. Land supply is undoubtedly tight. Put simply, there are three workable alternatives to increase supply better use of existing buildings and brownfield sites, reclamation, or greenbelt land. Only when all three alternatives are compared and contrasted in a cogent and transparent way by government or, put together in a step-by-step phased combination will the community be able to endorse a clear direction to give implementation a clear chance of success. A critical task will be to get the community on board. This public engagement exercise should be seen as an ongoing dialogue rather than a one-off exercise. We would welcome both further clarity on the way in which the Development Bureau will consider comments received from the Chamber and the wider community during this exercise and would also like to better understand how this will be used to further refine and develop the proposals themselves. Page 5