|Beneath Mickey Mouse's innocent, happy masked face lines
the very serious business of investing billions of dollars
of our taxpayers' hard-earned savings. The announcement
of the Disneyland project has brought with it almost instant
jubilation for the Hong Kong people. Everyone seems eager
to find a dream at the end of a long dark tunnel of economic
The Disneyland project provides just the right ingredients:
hope, colour and fun, all of which offer an attractive
way to escape from our harsh and gloomy reality. The
timing is also good; after much teasing and wooing,
the Hong Kong public must be close to accepting almost
any kind of deal, and all that seems to be required
is a hard sales job to wet public appetite, followed
by the ceremonial squeezing of money out of LegCo.
A huge project with an expensive price tag of HK$22.45
billion would normally deserve the most careful and
thorough vetting. Such a project has a significant impact
on the whole economy, i.e. Hong Kong's financial position,
tourism, the environment, immigration control, infrastructure
and even our cultural heritage. But in the name of efficiency
and the need to clinch a 'quick' deal, LegCo and the
Hong Kong public were given only less than a month to
say yes or no - an almost impossible task given LegCo's
constitutional obligation and composition.
First of all, the project is a huge one to consider
and one that puts us under significant pressure given
that our every word on the matter is being scrutinised
by the press. As a result, all of us politicians have
suddenly become instant experts on the Disney project
and questions are being fired sporadically in all directions.
However, since each legislator has to take turns to
ask the Administration questions, there needs to be
better co-ordination to ensure the line of questioning
is more focused. The resulting situation is that questions
are being easily evaded by officials who are still keeping
sensitive commercial information close to their hearts.
Also, as the queue for questioning is so long, each
legislator may only get a couple of chances to question
officials before having to arrive at a conclusion. What
all this boils down to is that legislators will only
get the chance to scratch the surface of the Disney
When considering the project, legislators also need
to look at the numbers. However, and not surprisingly,
most of the financial data is regarded as being 'commercially
sensitive' by the Administration, which of course provides
a useful shield with which they can fend off really
tough questions. This explains why so little financial
information has been made public even at the time of
writing (mind-November) and even though substantial
funds will have to be voted though in the near future.
When the announcement was made on 2 November 999, all
we were initially told was that the estimated net economic
benefit would be HK$148 billion which represents an
economic rate of return of 25%. We were also given a
brief summary of the project costs and of how they would
be financed. The rest was the hard sales pitch to sell
us the 'magical' concept behind the whole thing.
I was so dissatisfied that I instantly pressed for
more detailed financial information, as well as details
concerning the service contracts, the royalty arrangements
and the intellectual property rights awarded to Disney.
I also asked for information on the terms of the Administration's
loans and the interest rates.
Furthermore, the next day I demanded the detailed basis
of assumptions adopted by the Administration in projecting
economic benefits and income for the joint venture.
In particular, I said that the Disneyland project must
not be masked by a happy face and that no 'magic' tricks
should be employed when calculating the figures and
preparing the financial analysis. The Administration
promised to give LegCo an additional report subject
to the 'secret' provisions included in the agreement
with Walt Disney.
On 7 November 1999, I indicated my initial support
for the project, but urged the Administration not to
confuse the public on the financial implications of
the project with various other economic projections
which will benefit the whole economy. As a result, the
Administration clearly distinguished the project's economic
implications from the financial analysis presented by
the joint venture company and its shareholders.
As you can see, it look me nearly a week and three
separate occasions to get this simple message across:
The project may be economically worthwhile for the whole
economy, but there is still a significant risk of an
operating loss, which will have to be borne by the public
purse, on top of the funds will need to be used to build
up the necessary infrastructure.
Another point is that although I accept the Administration's
claim that it needed to intervene quickly in order to
clinch this deal, I think the Administration should
step back as soon as the project has got off the ground.
This could be done by privatising its shares in the
joint venture company through a tender to strategic
investors and a public offering.
Preferably, all this could be done before the theme
park opens to minimise the risks of an operating loss
and to ensure the Administration is free from having
to run a commercial business which may well compete
directly with other theme parks which we may build in
I have no doubt, that the Disneyland project is right
for Hong Kong and we should be happy that we are the
chosen destination. However, it is also an expensive
venture and one that Hong Kong can ill-afford to rush
into. 'More haste, less speed' should be our motto and
our Administration must take responsibility for a high
level of transparency and systematic explanation, especially
as LegCo is fragmented and ill-equipped to deal with
serious financial analysis.
It would be extremely embarrassing for the Hong Kong
Government if Walt Disney tells its shareholders about
the benefits and provides transparent information which
tells a different story to that of the Hong Kong Administration.