HONG KONG BRIEFING February 2005

News this month

I'm sorry

Tung Chee-hwa, Hong Kong's chief executive, used his annual policy address on January 12th to express remorse. He said his government's “inadequacies have undermined the credibility of our policy making capability and our ability to govern”. After seven years of financial uncertainty and outbreaks of SARS and bird flu, Hong Kong's economy is finally riding high. But instead of enjoying the recovery, Mr Tung has had to respond to both growing public distrust and a sharply worded warning from the Chinese government.

Twice in the past two years, up to 500,000 people have marched against Hong Kong's leaders, protesting anti-sedition laws and calling for universal suffrage. Mr Tung is getting it from both sides: on December 20th, Hu Jintao, China's president, urged Hong Kong's government to “examine its inadequacies, and continue to raise its competence”.

No culture?
Plans for one of the world's most lucrative public-land developments, a cultural centre on Hong Kong's harbour, are mired in controversy. At issue is Norman Foster's $6.8 billion proposal for the West Kowloon Cultural District, a 40-hectare complex comprising at least four theatres, an opera house, a sport stadium and seven museums, some of which will be overseen by the Guggenheim Foundation and France's Pompidou Centre. Hong Kong's government had hoped this complex would combat the city's reputation as a cultural desert.

The government had planned for the project to be given to one developer, which would manage the centre for 30 years. The shortlist of bidders comprises three consortia of Hong Kong's biggest developers. But on December 25th, thousands of people protested against the government's preference for a single developer, accusing lawmakers of colluding with Hong Kong's wealthiest tycoons. On January 6th, every faction of the legislature helped pass a motion calling for the single-developer idea to be scrapped, and for the formation of a statutory body to plan, develop and manage the district. Two days after the motion, smaller developers, including Stanley Ho, Macau's leading casino owner, met to discuss ways of allowing more than one developer to build the district.

Link WRONG?

Hong Kong's Housing Authority had planned to create the world's largest real-estate investment trust, Link REIT, by selling 151 retail properties and 79,000 parking spaces to a holding company. The initial public offering of $3 billion was due to go forward on December 20th, but was delayed when Lo Siu-lan, an elderly resident of public housing and an unlikely David, mounted a legal challenge against the project. She claimed it violated an ordinance that mandates that the Housing Authority provide parking spaces and commercial amenities for public-housing tenants.

On January 14th, Goliath struck back: after an appellate court rejected her challenge, the government refused Ms Lo's application for legal aid to take her case to the Court of Final Appeal. Still, her application triggered a stay of proceedings until February 25th, leaving the fate of Link REIT in limbo. Sources say Ms Lo offered to file an early final appeal only if the Housing Authority bears all legal costs. The authority has not yet accepted her offer, but with 500,000 Hong Kongers already invested in the IPO, markets around the world are hoping for a quick and final legal decision.

Tough times ahead

One of the most closely followed business stories in the city is Hutchison Whampoa's $22 billion bet on 3G mobile-phone services, which enable data downloads and video conferencing. Though many have criticised the venture as a quixotic gamble, Canning Fok, Hutchison's boyish managing director, insists that 3G is primed for explosive growth, having signed up 6.8m users by Christmas—well past his goal. Nonetheless, the conglomerate cut 20% of its Hong Kong telecom workforce (750 jobs) on January 5th, and followed up with a further cut of 400 jobs in Thailand and Israel.

The firm says these cuts, and other business improvements, will yield savings of up to HK$300m ($39m) per year. It also blamed the Hong Kong government for the job losses, claiming it has created too tough a market by flooding it with 3G licenses. The market certainly isn't ideal: in Hong Kong, the six mobile-phone operators have a market penetration of 117%, a figure that must surely give pause to even a gambler like Mr Fok.

Death of an icon

Kam Shui-fai, who founded Hong Kong's renowned Yung Kee restaurant, died on December 27th at the age of 92. Yung Kee was one of Hong Kong's first restaurants to become known internationally, and it draws crowds to this day. Kam became a symbol of rags-to-riches success in Hong Kong.

He started selling food from a dai pai dong, or mobile food-stand, on Kwong Yuen Street in 1936. In 1942, when occupying Japanese forces, worried about hygiene, threatened to close all food stands, Kam upgraded to a restaurant. It was destroyed two years later in a bombing, which killed some staff. Yung Kee has been in its location on Wellington Street, in the Central District, since 1964, and Kam, known as “Roast Goose Fai” after Yung Kee's specialty dish, continued to visit the restaurant every morning until just before his death. He was buried in Macau on January 13th.

Catch if you can

February 2005

Chinese New Year

February 9th-11th, 2005

Like most of the Sinophone world, Hong Kong will celebrate the beginning of the Year of the Rooster in early February. Though the actual first day of the year is February 9th, Hong Kong will celebrate the following night, with a huge fireworks display over the harbour. The fireworks are not only in celebration, but also to scare away lingering demons and to ensure good luck. The display begins at 8pm; expect crowds of up to 500,000.

For the rest of the holiday, enjoy the remarkable spectacle of a tranquil Hong Kong. Chinese New Year is the only time most shops close and the city's famously raucous streets are empty: locals either stay at home with family or leave for the mainland.