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Following is a question by the Hon Cheung Man-kwong and a reply by the Secretary for Planning and Lands, Mr Gordon Siu, in the Legislative Council today (June 26):

Question:

With regard to compensating the factory operators who have not yet moved out of Wah Kai Industrial Centre in Tsuen Wan, will the Government inform this Council:

(a) given that in the past it usually compensated people affected by clearance arising from urban renewal with an amount higher than the market value of the property concerned, of the reasons for not offering to these factory operators a higher amount of compensation than the market value of their properties;

(b) as some of these operators are facing liquidity problems arising from the land resumption by the Government, of the reasons for not offering bridging loans to those factory operators concerned through the Trade and Industry Bureau or the Kowloon-Canton Railway Corporation; and

(c) in respect of those cases in which the property interests of the relevant owners have yet to be fully established, whether it will bear the risks by granting provisional payments immediately to the factory owners concerned to facilitate their speedy removal?

Reply:

Madam President,

I wish to provide some background information about the resumption of Wah Kai Industrial Centre before answering the question by the Hon Mr Cheung.

The Government has to resume some land, including the Wah Kai Industrial Centre lot in Tsuen Wan, for the Kowloon - Canton Railway Corporation (KCRC) to construct the West Rail. The Wah Kai Industrial Centre was built in 1981 with a total of 705 units.

The West Rail project was gazetted in October 1997. The Chief Executive in Council approved the West Rail project under the Railways Ordinance in September 1998. In exercise of the power under Section 19 of the Railways Ordinance, the Director of Lands issued written notices in July last year to all property owners and factory operators of the Centre informing them that the building would be resumed.

The compensation for owners affected by the resumption of Wah Kai Industrial Centre and those for land resumed under the urban renewal projects are based on the provisions in the Railways Ordinance and the Lands Resumption Ordinance respectively.

In the case of the resumption of domestic premises under the urban renewal projects, the owners affected are entitled to compensation for the value of the property resumed as provided under the Lands Resumption Ordinance and an ex-gratia Home Purchase Allowance approved by the Finance Committee of the Legislative Council to enable the affected owners to buy a 10-year old replacement flat in the same district.

As regards the resumption of Wah Kai Industrial Centre, owners are entitled to compensation for the open market value of their properties in the same district, as provided for in the Railways Ordinance. On top of the compensation for the property resumed, occupiers can also claim disturbance or business loss as provided for in the Railways Ordinance. If they do not wish to claim disturbance or business loss, occupiers can elect to receive an ex-gratia allowance approved by the Finance Committee. This ex-gratia allowance covers mainly costs of removal, decoration, rental for the decoration period. If the owners/occupiers do not accept the Government's offers, they can re-negotiate with the Government, and elect to receive provisional payment for these compensations up to 90 per cent for property compensation, and 100 per cent for the disturbance payment. If no agreement can be reached on compensation, either the Government or the owner/occupier can then bring the case to the Lands Tribunal for a decision under section 34 of the Railways Ordinance.

I now reply to the points raised by the Hon Mr Cheung as follows:

(a) The main difference between the compensation between urban renewal projects and the resumption of industrial land such as Wah Kai Industrial Centre is that the objective of urban renewal is to improve the living conditions of residents in old areas. The affected owners under an urban renewal project are therefore offered compensation to enable them to buy a newer replacement housing unit in the same district so that their living conditions could be improved. In the case of industrial properties, owners affected by land resumption are compensated for the open market value of his property in the same district. This will enable them to find a replacement unit of similar age in the same district to continue with their business operation.

(b) Regarding the proposed provision of bridging loans by the Trade and Industry Bureau or KCRC to the Wah Kai factory operators in need, the authorities concerned have given detailed consideration to the proposal including the feasibility of assisting the factory operators with financial difficulties in applying for bank loan under the Special Finance Scheme for Small and Medium Enterprises (SFSSME). The conclusion is that the loan arrangement is not feasible.

Firstly, in March this year the SFSSME reached the $5 billion loan guarantee ceiling as approved by FC. Taking into account the overall improvement in the economic conditions since the Asian financial crisis, Government has stopped receiving new applications under this Scheme since April this year. There are currently over 170 outstanding applications.

Secondly, the Government has requested KCRC to consider the possibility of offering loans to the affected owners and factory operators. According to KCRC, they are not allowed, under the Kowloon-Canton Railway Corporation Ordinance, to provide loans to people affected by the land resumption programme.

Thirdly, although the Government has no arrangement for granting loans to people affected by land resumption, if an owner or factory operator affected by land resumption has obtained a bank loan for removal purposes, he can apply to the Lands Department for compensation for the interests he has paid for the loan.

(c) Government can only make compensation payments to the affected clearees after property ownership is established. During its check on property ownership, the Lands Department will ask the owner to provide evidence. This is to ensure that the Lands Department is paying compensation to the proper person in respect of the property resumed. While the Administration is not in a position to make provisional payment to any owner before the ownership of a property is ascertained, nevertheless, the Lands Department does exercise flexibility during its check on ownership. For instance, they will accept declaration or oath as evidence, where possible, and will continue to handle cases with flexibility.

As a move to further expedite the processing of outstanding cases, the Lands Department has formed a new Special Case Group to deal with the difficult cases. A 24-hour hot line is also provided for the owners and factory operators concerned to make an appointment for an interview with the Group. From 13 to 22 June, the Group handled 100 cases. Of these cases, 17 were settled satisfactorily. The Group will continue to meet the owners concerned and to help them, under the statutory compensation mechanism of the Railways Ordinance, to obtain a higher compensation.

End/Monday, June 26, 2000

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