Traditional Chinese Simplified Chinese Email this article Government Homepage
LCQ18: Financial arrangements for Hong Kong Disneyland
******************************************************

    Following is a question by the Hon Emily Lau Wai-hing and a written reply by the Secretary for Financial Services and the Treasury, Mr Frederick Ma, in the Legislative Council today (November 2):

Question:

     In December 1999, the Government and The Walt Disney Company set up a joint venture company to establish Hong Kong Disneyland ("HKD"), with a shareholding ratio of 57:43.  Regarding the financial arrangements for HKD, will the Executive Authorities inform this Council:

(a)  apart from spending $13.7 billion on the reclamation and infrastructure works, as well as injecting $3,250 million into the joint venture company and providing it with a loan of $6.1 billion, of the amount of each item of expenditure incurred so far by the Government in building HKD and associated facilities (including cleaning up the contaminated soil at Penny's Bay, compensating the fishermen affected and injecting funds into the MTR Corporation Limited for the construction of the Disneyland Resort Line);

(b)  whether they will brief this Council on the detailed accounts in respect of the construction and operation of HKD and other relevant information, including the operating cost, daily attendance, income generated from the sale of merchandise and other incomes; if not, the reasons for that; and

(c)  whether they have assessed if there is any conflict in the Government's roles as the rule-setting authority for the market on the one hand, and as a market participant for being the majority shareholder of a private company on the other; if there is conflict, how the authorities intend to address it and whether they will sell the Government's shares in the joint venture company through listing; if there is no conflict, the rationale for that?

Reply:

Madam President,

(a)  The major capital spending that the Government has committed so far in connection with the construction of the Hong Kong Disneyland includes the following -

                            Estimated Total Spending
                                        $ Billion
Capital Works Reserve Fund
--------------------------          ----------------

(1)  Reclamation and other infrastructure    13.6
     works (including, for example,
     connecting road works, costs of
     construction of Inspiration Lake
     Recreation Centre, expenses for cleaning
     up of the dioxin contaminated soil, and
     the compensation payable to affected fishermen)


(2)  Land acquisition and                   1.6
     clearance compensation


Capital Investment Fund
-----------------------

(3)  Equity injection of $3,250 million     3.3
     into Hong Kong International
     Theme Park Limited (HKITP)


(4)  Loan to HKITP (including               6.1
     the capitalised interest)

     Apart from the above, the Government has also waived its claim of some $931 million in dividend that would otherwise be payable to the Government by the MTR Corporation Limited, as financial support to the Penny's Bay Rail Link (now known as "Disneyland Resort Line") under the Project Agreement entered into with the MTR Corporation Limited on 24 July 2002.

(b)  The Walt Disney Company (TWDC) is a commercial enterprise.  Although it invests jointly with the Government in the HKITP, the Government has to respect the company's interests as an investor and its operation under commercial principles will not be compromised due to the disclosure of commercially sensitive information.  As the park attendance figures are commercially sensitive information, it has been the practice of TWDC not to disclose such information for its theme park.  As a listed company, TWDC will disclose the performance of its theme parks in its annual report.  

(c)  The Government's policy has been that it will not invest in a business venture, unless it is for important policy reasons and there is no other alternative investor available from the private sector.  All the investments made by the Capital Investment Fund are required to be approved by the Finance Committee of the Legislative Council.  

     The Government's decision to invest in the Hong Kong Disneyland project has been based on the assessment of the likely long-term economic benefits to Hong Kong.  It is also in line with our vision to develop Hong Kong into a premier destination for family tourists in the region.  Recognising the substantial economic contribution that a Disney theme park could bring to Hong Kong, Government started the formal negotiations with TWDC in 1999.  The agreement between Hong Kong Special Administrative Region Government and TWDC has been drawn up based on the principle that the Government's ability to exercise its statutory powers, discretions and duties shall not be fettered in any way.

     In the long run, the Government may consider in the light of the "Big Market, Small Government" principle to divest its shareholdings in the company at an appropriate time when it is in the overall economic interests of Hong Kong to do so.

Ends/Wednesday, November 2, 2005
Issued at HKT 12:34

NNNN

Print this page