The following is the introduction (English only) on the Disney theme park project by the Commissioner for Tourism, Mr Mike Rowse, at the media briefing session at Government House today (Tuesday):
In a moment I'm going to introduce the hard facts about Hong Kong Disneyland in terms of economic benefits, in terms of costs and in terms of investment. But I took the opportunity this morning during the presentation to Members of the Executive Council to jot down what I thought of as four "soft" facts about Hong Kong Disneyland which in some ways may be even more important than the "hard" ones. I'll just read out what I wrote down this morning:
The first thing that Hong Kong Disneyland will be for us is a tremendous recreation outlet and destination for Hong Kong families, for children in Hong Kong, for their parents, and for their grandparents. It will be a place where you can go and spend the whole day with wholesome family entertainment.
The second aspect, the "soft" side, is that it fills a huge gap in our tourism product. We've always been a centre for the business travellers and we've always had lots of exciting things to do for adult visitors to Hong Kong in terms of shopping and dining and all the other things. But one thing missing has been an attraction that would make families sitting down together to plan their holidays think of Hong Kong as a good destination. We now will be filling that gap in our tourism product.
The third element of the "soft" side would be the standard of excellence that Disney have demanded in the negotiations in so many aspects. Of course, as you would expect, the financial negotiations were hard, but we stuck to them and we are used to those. But it was in so many other areas that the negotiations spent a lot of time. The standard of landscaping in the vicinity of the theme park, the esthetic appearance of the public pier, the look and management of the public transport interchange, these setting standards and forcing us to focus on a better product on a higher class, really pushing us towards excellence, pushing us towards being world class.
And the fourth element of that "soft" benefit - all of these, by the way, are very difficult to measure, very difficult to quantify - the fourth one is the one referred to by the Chief Secretary in her introductory remarks about the message that this sends to the international community. We kind of faded from the spotlight a little bit since 1997 when I know many people just wrote us off - that was the end of Hong Kong, Hong Kong was disappearing and would gently decline from thereon. But that's not true, and what this project tells the world is that Hong Kong is still alive and kicking and we are aiming high. We are not going to decline. We are going to grow from where we were and develop, and we are aiming to be among the world's top cities.
Let's now turn to those "hard" facts that I promised you.
And the first one would be the economic benefits. The numbers are very significant indeed. The net economic benefit in present value terms is $148 billion. The economic return - and I'm sure you'll have questions about this and the Government Economist K Y Tang is here to answer them - but the net economic return here is 25 per cent. The benefit-cost ratio is 8.1 to 1. These are really exciting numbers if you are an economist, and they should be really exciting numbers for Hong Kong people.
The additional employment created directly and indirectly at opening is over 18 000 new jobs for Hong Kong people. As the Phase 1 park develops up to full capacity, nearly 36 000 new jobs for Hong Kong people. And these numbers do not include the effect of the second theme park at all.
There have been a lot information, not all of it as accurate, perhaps, as we would have liked about the cost of developing Penny's Bay. So now let's get those - the real numbers - into the public arena.
A total of $13.6 billion will be spent on the land, the infrastructure and the transportation links to Hong Kong Disneyland. The numbers are on the screen - you have copies in your folders - I won't read them all out. These numbers, incidentally, do not include the cost of the rail link from Yam O to Penny's Bay as we believe we do not need to inject equity into the railway corporation for that purpose.
Then the second set of real numbers - how much is the park going to cost and where is the money coming from? A total of $14.1 billion to pay for the park - that is, the theme park itself - $6.6 billion, the hotels, the RD, all the infrastructure supporting it - $7.5 billion for the total. We finance by a mixture of debt and equity as is usual for a commercial project of this kind, roughly in the percentages of 60 per cent debt and 40 per cent equity.
As you can see, of the equity, the Government is injecting in cash $3.25 billion, and Disney $2.45 billion. That means the Government will hold 57 per cent of the equity compared to Disney's 43 per cent, and the directors on the board are in proportion to the shareholding. The debt is a mixture of commercial debt from banks and a government loan. As you can see, the figures are $6.1 billion and $2.3 billion. Both of those figures include interest up to the point of opening. So we will actually - when we go to Finance Committee - be seeking approval for a loan of $5.6 billion because it will be drawn down during the construction period. But on park opening it will be $6.1 billion, hence reveals that number there.
Where do the customers come from? Again, this is an area where I think there has been some, perhaps, misunderstanding. But, on opening, we are looking at something like 5.2 million visitors to the park. Of those, a minority, 1.8 million - that's just over a third - will be Hong Kong people. The majority, nearly two-thirds, will be tourists from overseas, that is, two million existing tourists, people we would have got anyway, will take the opportunity of their visit to Hong Kong to visit Hong Kong Disneyland. But the most exciting number, for me and Stephen, is the number of incremental tourists, that is, the people who would not otherwise have come to Hong Kong but who will now make this their destination, as 1.4 million in the year of operation of the park.
As you can see, the column on the right, on built- out, is ... looking towards full capacity of the Phase 1 theme park, the 10 million visitors. The proportion of local residents among those actually falls to about 27 per cent even though the absolute number increases. The benefit we get from the incremental tourists, and those extra tourists, don't just benefit Disneyland, they benefit the whole economy. These will be people who will be staying in other hotels around Hong Kong, shopping, dining and visiting our many other attractions.
I know that the community is very concerned about unemployment, so the figures on job creation should bring some considerable interest. On opening, here is how we've estimated the 18 400 jobs - will be in 2005 - new jobs for the economy growing on full built-out, to nearly 36 000. Now, there is a whole package of numbers that we have given you here today. In the briefing material tomorrow there will be even more numbers and more detail of how we are doing this. But I think that's enough for the moment by way of introduction, and now I think I'm going to give over to the moderator who is coming up now.
End/Tuesday, November 2, 1999