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Following is the announcement by the Chief Executive, Mr Tung Chee Hwa, on the agreement reached with Disney on the building of a theme park in Hong Kong this (Tuesday) morning:

I am delighted to announce that we have reached an agreement to build a Disney theme park and resort in Hong Kong, subject to the approval of the Executive Council, the Finance Committee of LegCo and the Disney Board. The project will then go ahead. It has taken us just about a year to reach this successful conclusion. The negotiation at times has been difficult because both parties want a good deal. Disney needs to be accountable to its shareholders. And for Hong Kong Government, we need to be able to strike a deal which is acceptable to the six and a half million people of Hong Kong. But I am very glad that after one year of very hard work, a good agreement has been possible.

This world-class development will mark the beginning of a new era for Hong Kong as an international tourism destination.

Hong Kong Disneyland will be a key strategic infrastructural component in a renewed and reinvigorated push to strengthen and consolidate Hong Kong's position as a must-see tourism destination.

Disney's choice of Hong Kong as the site for its third international theme park destination is a vote of confidence in our city and in our future. It's a good deal for Hong Kong. It will produce substantial long-term economic returns and enhance our international image as a World City where things do happen.

The Hong Kong SAR Government and The Walt Disney Company will form a joint venture company to build the theme park, a Disney themed hotel resort and associated facilities.

It is estimated that attendance during the first year of opening will be about five million, and rising to full capacity of about 10 million a year after 15 years.

Around 6,000 jobs will be created during the construction phase of the theme park, also about 18,000 jobs at the opening and about 35,000 new jobs over a 20-year period. In addition, some 10,000 jobs are expected to be created by the land reclamation and other associated works being funded by the Government.

The Government's total expenditure on this project will be HK$22.45 billion. Of this, HK$3.25 billion will be in equity which represents 57% of the shareholding. The Government will also provide loan of HK$5.6 billion. Further, we will have HK$4 billion of subordinated shares representing the land premium. This will be repaid with interest. We will make an acceptable return both on the equity and on the loan that we have provided.

The Government will be investing HK$13.6 billion in infrastructure works such as reclamation, drainage and highway development. Much of this infrastructure would have been undertaken to develop north Lantau for tourism and recreational purposes anyway, even if a Disney theme park were not to be built.

The Government has a longstanding policy of investing in infrastructure to promote economic development. Indeed, the Disney theme park will generate substantial returns to the Hong Kong economy. In net present value terms, the project will produce an estimated HK$148 billion boost to the economy over a 40-year period, representing eight times the original investment that has been made.

The project will be an enormous boost for Hong Kong's tourism industry and will provide enjoyment to millions of Hong Kong people as well as visitors from all around the world.

Just as importantly, Hong Kong's Disneyland will enrich the quality of life of Hong Kong residents who will have easy access to a world-class theme park with the highest quality of recreational facilities.

In conclusion, there are three important points which I would very much like to make to you: Firstly, the Disney theme park will ensure that Hong Kong becomes the "favourite tourist destination" in this region. Secondly, the Disney theme park strengthens our status as a "World City". And thirdly, together with our other initiatives in the economic sphere, Hong Kong Disney will ensure that our economic recovery and growth is sustained.

Thank you very much.

End/Tuesday, November 2, 1999

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