Infrastructure Development

The spending performance of the Capital Works Programme in 2011-12 is satisfactory, reaching a record high figure of around $58 billion. This is a substantial improvement from the actual expenditure of $20.5 billion in 2007-08 and a considerable increase from the spending of $49.8 billion in 2010-11.

We are pressing ahead with various infrastructure projects under our portfolio. For Kai Tak Development (Kp), construction of the first-stage development, comprising the public rental housing, the cruise terminal and the supporting infrastructure is progressing on schedule for completion in mid-2013. Following the funding approval in June 2011, construction of infrastructure works to serve the residential sites at the north apron and the bio-remediation works at Kai Tak Approach Channel commenced in July 2011.

In regard to the Liantang/Heung Yuen Wai Boundary Control Point (BCP) project, construction of a resite area for Chuk Yuen Village affected by the project is in full swing and is scheduled for completion in early 2012. Detailed design of the site formation works and the connecting road leading to the BCP have commenced in March 2011. Works are expected to commence in early 2013, subject to funding approval. The Hong Kong and Shenzhen Governments have jointly announced the winning entries of the International Design Ideas Competition for the passenger terminal building at the prize award ceremony held in early September 2011. We will continue to liaise with the Shenzhen authority to take forward the design of the passenger terminal building. Additional facilities in the BCP including a public carpark, pick-up and drop-off points for private cars and a pedestrian subway will be provided to facilitate direct access to the BCP by passengers and vehicles.

We have also made good progress on other major projects which will help improve our living environment, including the three drainage tunnel projects on Hong Kong Island, Tsuen Wan and Lai Chi Kok; the replacement and rehabilitation of watermains; and slope improvement works under the Landslip Prevention and Mitigation Programme.

The joint Hong Kong-Shenzhen Planning & Engineering Study on the Lok Ma Chau Loop (the Loop) has commenced since 2009 to explore the feasibility of developing the Loop with higher education as the leading land use, to be complemented with high-tech research and development facilities as well as cultural and creative industries. With the completion of the Stage 1 Public Engagement that took place simultaneously in Hong Kong and Shenzhen in late 2010/early 2011, the Study has made good progress. We aim to complete the Study in 2013.

We have commenced the Planning & Engineering Study for the North East New Territories (NENT) New Development Areas (NDA) covering Kwu Tung North, Fanling North and Ping Che/Ta Kwu Ling.  The NENT NDA will provide land to meet the long term housing need and other future land use requirements.  It is expected that the Study will be completed in 2013.

The Planning & Engineering Study on the Hung Shui Kiu (HSK) NDA has also commenced since August 2011.  We aim to complete the Study in 2014.

Apart from the major capital works projects, we have also been pressing ahead with the minor works in order to create more jobs for the construction industry.  Together with building maintenance works under the “Operation Building Bright” (OBB), the unemployment rate of the construction sector fell from a peak of 12.8% in the period from February to April 2009 to 4.2% in the third quarter of 2011.  This represents the lowest unemployment rate in the past 13 years and at the same time reflects the increasingly tight labour situation.

We expect that based on the planned infrastructure programme, the capital works expenditure will exceed $60 billion for each of the next few years, creating more jobs for the construction industry and hence further stretching the construction labour market.

To ensure the timely and effective delivery of the massive infrastructure programme, we need to maintain and nurture an adequate, multi-skilled construction workforce.  To this end, we have obtained approval of the Finance Committee of the Legislative Council (LegCo) for a one-off allocation of $100 million. Following that, we have, in collaboration with the Construction Industry Council (CIC) and other key industry stakeholders, enhanced training and trade testing initiatives for prospective fresh blood and in-service construction personnel, and promotion and publicity activities to attract more people to join the industry.

Since the phased implementation of the initiatives starting in September 2010, the investment in construction manpower has produced some encouraging results at this initial stage.  More people have joined the industry under the enhanced training programme.  In particular, from the roll-out of the Enhanced Construction Manpower Training Scheme in September 2010 up to the end of September 2011, about 600 trainees have joined the scheme and more than half of them have completed the training.  Nearly all of them are new entrants and more than 60% of the trainees aged below 35, which reflect that more young people are willing to join the construction industry.

CIC will continue to strengthen its role in training and trade-testing to ensure that the industry will be served by an adequately skilled and multi-skilled labour force.  In view of the rising demand for construction labour and the lead time for workers to accumulate experience to become skilled workers, we are working closely with CIC to build up its training capacity by exploring different modes of training.  In addition to traditional classroom training, CIC is also making good progress in pursuing the Contractor Cooperative Training Scheme, whereby on-site training is provided to construction workers by the participating contractors.

In view of the volume of public works projects and building works projects from the private sector in the pipeline, we will closely monitor the manpower situation and the effectiveness of the initiatives with other key stakeholders including CIC, contractors and labour unions to address the manpower needs in a suitable manner.

Land Supply

  1. 2011-12 Land Sale Programme and ongoing land use planning work

    We continue to adopt the two-pronged approach to increase land supply through the Application List system and government-initiated land sale.  In the three quarters from April to December 2011, the 21 residential sites sold and to be sold through government-initiated auction or tender, and the residential site sold by auction after successful triggering, will provide about 7 400 flats.  Further to the sale of the ex-Yuen Long Estate site with “flat size restrictions” early this year, we have included five such sites for government-initiated tender in this year’s Land Sale Programme.  We have sold three of them, and together with the ex-Yuen Long Estate, these four sites with “flat size restrictions” will provide not less than 3 220 small and medium-sized flats.  In order to better safeguard the quantity of the flat supplied, we have specified the minimum number of flats the developers have to provide in three bigger sites already sold, which will generate not less than 2 100 flats, and would do the same for two other sites to be tendered in December.

    Apart from the sale of government sites, railway property development projects have all along been an important source of housing land, especially for providing small and medium-sized flats.  The four West Rail projects at Nam Cheong, Tsuen Wan 5 (Bayside), Tsuen Wan 5 (Cityside) and Long Ping (North) will provide a total of 7 471 flats, including 4 932 (66%) small and medium-sized flats.  The tendering of the Nam Cheong project is under way, while the two Tsuen Wan 5 projects are currently targeted for tendering in this quarter.  Separately, we are also making good progress in the statutory processes concerning the Long Ping (North) project.

    To sum up, in the first three quarters of the 2011-12 financial year, the land supplied through government-initiated sale, the three West Rail projects mentioned above, urban redevelopment projects, housing developments subject to lease modification/land exchange and those private redevelopment projects not requiring lease modification/land exchange will provide about 20 000 flats.

    The development of the NDA, being one of the ten major infrastructure projects, will provide land to meet the long term housing and other land use needs of Hong Kong.  Planning of the NDA is in progress.  It is estimated that land in the NENT NDA and HSK NDA will be available for development from 2018 and 2021 respectively at the earliest.  We have obtained funding approval from the LegCo in July 2011 to commence a planning and engineering study on the remaining development in Tung Chung, with a view to taking forward the development of the remaining area of the planned Tung Chung new town and addressing the long-term housing needs of the territory.  We have commenced a planning study on the quarry site at Anderson Road and are conducting a three-month public consultation on the residential development options.

  2. Initiatives to increase housing land supply
    1. Industrial Area Assessment

      Last year, Planning Department (PlanD) completed the latest Area Assessments of Industrial Land in the Territory.  The purpose was to review the industrial land that has not yet been developed in the “Industrial” and “Other Specified Use” annotated “Business”zones and find out how the floor space of the existing private industrial buildings in these two zones was being used, so as to explore how the precious land resources could be better utilised.  The Assessments proposed approximately 30 hectares of industrial land for rezoning to residential use.  This will help increase the housing land supply.

      The sites proposed to be rezoned for residential use are located in Tsuen Wan, Yuen Long, Fo Tan, Siu Lek Yuen, Tuen Mun, Tai Kok Tsui and Fanling.  Among them, the five sites (about 6.7 hectares) on government land are being taken forward for land sale or public housing development, and will provide a total of about 6 470 flats (including about 2 270 and 4 200 flats for private and public rental housing respectively).  The remaining 11 sites (about 22.7 hectares) on private land can roughly provide 14 260 flats, but the timing for redevelopment will largely depend on the initiatives of the private sector.

    2. Review of Green Belt Zones

      With the passage of time, the characteristics of some sites in “Green Belt” (“GB”) zones may have changed.  Some are devegetated, deserted or formed, thus no longer performing their original functions.  As a measure to increase housing land supply, PlanD is carrying out a comprehensive review of the “GB” zones in the Outline Zoning Plans.  The objective is to rationalise the “GB” zoning boundary and identify potential land suitable for housing development or other uses.  At present, 15 plots of land with a total area of about 50 hectares, mostly under Government’s ownership, have been identified for further technical assessments for assessing their potential for residential development.

    3. Review of Government, Institution or Community Sites

      As for sites zoned “Government, Institution or Community”, PlanD from time to time reviews with the relevant bureaux/departments the need to retain those sites reserved for their use.  If a site is no longer needed due to a change in policy or implementation plan, PlanD will consider whether it is suitable for other uses, including residential development, and will follow up as appropriate.  If need be, PlanD will, in accordance with the Town Planning Ordinance, seek to amend the zoning of the site.  We will also give consideration to sites currently occupied by privately-owned public utilities where there is potential for housing development.

    4. Further Studies for Potential Housing Sites

      We are also working on enhancing the development potential of degraded rural industrial areas and spoiled agricultural land for implementation as priority development area for public housing development through land resumption, and for provision of infrastructure required to support private housing development.  We have identified four potential sites in Kwu Tung South, Yuen Long South, Fanling/Sheung Shui Area 30 and Kong Nga Po, with a total area of about 150 hectares for such purpose.  PlanD and Civil Engineering and Development Department (CEDD) will commence the relevant planning/engineering studies for the above sites towards end 2012.

    5. Reclamation outside the Victoria Harbour and rock cavern development

      Following the announcement by the Financial Secretary in his 2011-12 Budget Speech that about $300 million would be allocated for conducting relevant studies and public engagement exercises for increasing land supply by reclamation outside Victoria Harbour and rock cavern development in the next few years, we briefed the Panel on Development in May 2011 about the planned studies and the public engagement exercise.

      We completed a study on the enhanced use of underground space in Hong Kong in March 2011 and reported the key findings of the study to the Panel on Development in May 2011. The recommended key initiatives include undertaking detailed feasibility studies on relocation of government facilities, notably relocation of the existing Sha Tin sewage treatment works, and the Mount Davis fresh water primary service reservoir and the Kennedy Town fresh water service reservoir to rock caverns, thereby releasing land for other beneficial and compatible uses, as well as a study on long-term strategy of cavern development. We will consult the Panel on Development to seek funding support for taking forward the aforesaid studies.

      We have commenced a consultancy study in July 2011 to provide technical backup for informed discussions during the public engagement exercise. We also briefed the Town Planning Board, and the Land and Development Advisory Committee (LDAC) and its Planning Sub-committee on our public engagement plan, and issued information papers to all District Councils in July 2011. To solicit initial views on the initiative and the key areas of concern, we convened focus group meetings for relevant think tanks, business associations and green groups, and conducted individual discussions with concerned academics and professionals in August and September 2011. We are now proceeding with preliminary technical study including the comprehensive site search of potential reclamation sites and rock cavern developments. We plan to kick-start the public engagement exercise and consult the Panel on Development in end 2011.

Transformation of Kowloon East

Hong Kong is firmly established as the leading financial and business centre in the Asia-Pacific region and is experiencing a fiercest competition for quality commercial accommodation, especially office space.  The National 12th Five-Year Plan has given support to Hong Kong's position as an international financial, trade and shipping centre, and support for Hong Kong's development as an international asset management centre and an offshore Renminbi business centre, increasing her impact on a global scale.

Over the last decade, we have witnessed a strong and an increasing presence of regional headquarters (RHQ) and regional offices (RO) for multi-national companies and this trend is set to continue.  The number of RHQ and RO increased from 2 514 to 3 638 from 1997 to 2010, representing 45% increase.  Despite the strong demands, the gross floor area (GFA) of all the office space in Hong Kong grew modestly from 12.14 million sq. metres to 14.29 million sq. metres from 2000 to 2010, representing 18% increase only.  To capitalise on the fast-growing opportunities of the Mainland and sustain Hong Kong’s position as a leading financial and business centre, a steady and adequate supply of quality office space is pivotal.

We have included a total of 14 commercial/business sites in the 2011-12 Land Sale Programme, which will yield around 600 000 m2 of GFA subject to survey.  By end 2011, we would have sold six commercial/business sites that will provide about 300 000 m2 of GFA.  We will continue to identify more suitable sites for commercial development.

The “Hong Kong 2030: Planning Vision and Strategy Study” has recommended appropriate planning measures to support economic growth in the long run.  As recommended in the Study, we will continue to consolidate and enhance the existing Central Business District (CBD), while exploring new quality office nodes outside the CBD.  Concrete recommendations include freeing up government accommodation not requiring a prime location and developing new office clusters at strategic locations in the metro areas such as Kai Tak and West Kowloon.  The demand for other general business use including non-prime offices and traditional industry/warehouse uses will be tackled through revitalisation of old industrial areas and development of other office clusters outside prime locations.

Kowloon East is an area comprising the Kp, Kwun Tong and Kowloon Bay.  The massive relocation of our manufacturing base to the Mainland in the 1980’s and the relocation of the Airport to Chek Lap Kok in the 1990’s have left a huge stock of industrial buildings not being fully utilised.  Whilst the demand for quality office can no longer be met by our traditional CBD, some private developers, with good market sense, took the first-mover initiatives to develop high grade office buildings and retail centres in Kowloon East.  About 1.4 million m2 of office space has been completed.

In his 2011-12 Policy Address, the CE announced that we will adopt a visionary, co-ordinated and integrated approach to expedite the transformation of Kowloon East into an attractive, alternative CBD to support Hong Kong’s economic development.  Specifically, this will involve land use review, urban design, improved connectivity and the associated infrastructure.

  1. Conceptual Master Plan of Kowloon East

    To facilitate the transformation of the former industrial areas into another key CBD of Hong Kong, it is important that these infrastructural works and facilities should be well-designed and relate well to the context, planning and urban design intentions for Kowloon East.  PlanD therefore has mapped out a conceptual master plan for the Kowloon East Business District by adopting the following broad strategies, namely Connectivity, Branding, Design and Diversity (CBD2) –

    1. Enhancing Connectivity – we envisage an Environmentally Friendly Linkage System (EFLS) linking Kp, Kwun Tong and Kowloon Bay.  Pedestrian facilities such as footbridge networks and wider pavements will be created.  We will consult the public on a proposed elevated monorail and other EFLS options.  More details on public consultation on the initial findings of EFLS are set out in paragraph 39 below.

    2. Branding the place with Quality Urban Design – improvements in streetscape, greening, and public open space, will be implemented while opportunities of branding and innovation will be fully capitalised at the extensive and continuous waterfront promenade.

    3. Promoting Diversity – while Kp will provide tourism, sports and leisure facilities to a predominantly office and commercial use in Kowloon Bay and Kwun Tong, other uses such as street level shops, cafes by the waterfront, restaurants and entertainment uses at piers, marinas and water sports facilities will be developed at appropriate locations to enhance vibrancy, particularly after office hours.

    In summary, the Planning Master Plan will help transform Kowlon East into CBD2.  The proposition in transforming Kowloon East into a vibrant business district is Government’s proactive response to the opportunities unfolded in the process of economic restructuring.  Our effort would make Kowloon East a better place to attract and accommodate the businesses that would benefit people of Hong Kong and sustain Hong Kong’s position as a global financial and commercial centre.

  2. Setting up of a Kowloon East Development Office (KEDO)

    To undertake this important initiative, a new, multi-disciplinary KEDO will be set up in DEVB to steer, supervise, oversee and monitor the transformation of Kowloon East.  The Office will champion for the goals we have set for Kowloon East and engage stakeholders and the general public in the process.  KEDO will provide a focal point for considering private sector initiatives in the area and spearhead this highly strategic and significant development for Hong Kong.

    The KEDO will be responsible for advocating the conceptual master plan of Kowloon East and providing one-stop advisory and co-ordinating support to land development proposals from private sector proponents that are conducive to the development or transformation of the area into a modern and premier business district.  Furthermore, it will also assume the role of providing direction to infrastructural development within the area, specifically performing the project management function of some projects while co-ordinating other projects, as well as taking the lead in resolving interface problems and conflicting requirements and monitor closely the progress of the relevant projects.

    Government will engage the public, including the relevant District Councils and various stakeholders on the formulation of the overall master plan to facilitate timely implementation of the enhancement proposals.  For this purpose, the KEDO will formulate a comprehensive and coherent public relation and public engagement strategy for new initiatives and projects, and coordinate responses to demands and aspirations from the public.  We are examining the preferred organisational structure of the KEDO, its position vis-à-vis the Kai Tak Office under the Kowloon Development Office of CEDD and the level of staffing.  We will consult the Panel on Development once these details are available, thus paving the way for a submission to the Establishment Subcommittee of the Finance Committee of LegCo.

  3. Public consultation on the initial findings of EFLS

    To facilitate the transformation of Kowloon East, it is necessary to enhance and improve intra-district connectivity.  We have commissioned a Feasibility Study on Kai Tak EFLS in December 2009 to fulfil Kp’s green vision and to improve linkages to adjacent districts.  The study reveals that an elevated rail-based link in the form of monorail serving the Kp as well as Kowloon East will be unique to Hong Kong with high tourism appeal and generate synergy for adjacent developments.  Since this initiative would have some wide-ranging implications, we consider it necessary to engage the public before making a decision on the mode of transport including the adoption of road-based green transport mode which will be required anyhow to serve the early stages of population intake in the Kp before the rail-based EFLS is available.  In tandem with the public engagement exercise, we plan to present the findings to the Panel on Development in due course and consult the Panel again, tentatively in the latter half of 2012, in light of the public views collated.

Mid-term Review on Revitalisation of Industrial Buildings

The CE announced in his 2009-10 Policy Address a package of measures to facilitate redevelopment and wholesale conversion of older industrial buildings to provide suitable premises to meet Hong Kong’s changing social and economic needs.

These revitalisation measures formally came into effect on 1 April 2010 and the progress of implementation has been encouraging.  By the end of September 2011, Lands Department had received 63 applications and approved 35 of them; most of these were applications for wholesale conversion.  These approved applications will provide converted or new premises with a total GFA of 380 000 m².

We carried out a mid-term review on the package of revitalisation measures between late 2010 and September 2011, during which we engaged various stakeholders to collect their views and comments on possible improvements to the measures.  While most stakeholders were supportive of the revitalisation measures, they suggested some possible areas of refinement that might encourage more and better quality wholesale conversion projects.

We have carefully considered all views and comments received and have decided to introduce the following refinements to the measures –

  1. affirm that, for the purpose of fulfilling the eligibility criteria for application under the revitalisation measures, the placing of GFA-exempted utility installations (e.g. machine room for lifts) on the main roof level of a wholly converted industrial building will not be regarded as increase in building height and that addition of claddings or installation of curtain walls on the exterior of a wholly converted industrial building will not be regarded as increase in building bulk;
  2. allow minor changes to the existing building frame including variations to the internal and external building structures within the existing building envelope, on the conditions that demolition of external structures should involve no more than 10% of the total GFA of the existing building and that there is no net increase in the total GFA after conversion;
  3. encourage all new applicants for wholesale conversion under the revitalisation measures to obtain certification by the Building Environmental Assessment Method Plus Assessment (but applicants will not be required to obtain a mandatory rating); and
  4. extend the application period of the revitalisation measures for a further three years, i.e. extending the deadline for submission of applications from 31 March 2013 to 31 March 2016.

As part of the review, we also studied a proposal to allow recovery of GFA loss due to wholesale conversion works by allowing the construction of new GFA-accountable floor space outside the existing building envelope (subject to no net increase in total GFA).  However, we have decided against such a proposal because we need to maintain a clear distinction between wholesale conversion and redevelopment, but this proposal could be tantamount to allowing redevelopment indirectly without charging land premium.  We consider that the nil waiver fee arrangement (under the revitalisation measures, the owner does not have to pay the waiver fee for the change of use for the wholesale conversion of the industrial building for the lifetime of the building or the current lease period, whichever is earlier) already provides a substantial incentive to eligible wholesale conversion cases and any further incentive to allow the owner to recover GFA loss due to conversion works cannot be readily justified.

Details of the outcome of the mid-term review and refinements to the current revitalisation measures are set out in a separate LegCo Brief.

Supporting Hong Kong construction and related engineering professionals to do business in the Mainland

The steady growth of Mainland’s economy and expansion of the construction market in recent years have been providing ample business opportunities for Hong Kong’s construction and related engineering professionals.  We have been assisting stakeholders of the construction industry to gain access to the Mainland market through securing preferential treatment under the framework of the “Mainland and Hong Kong Closer Economic Partnership Arrangement” (CEPA).

Since signing of the CEPA in 2003, 29 market liberalisation measures have been secured for the construction sector and 1 225 nos. of Hong Kong construction and related engineering professionals (under six professions: architect, structural engineer, planner, estate surveyor, quantity surveyor and building surveyor) have obtained professional qualifications of their Mainland counterparts through the mechanism of mutual recognition of professional qualifications.  These professionals can either register and practise on a nation-wide basis (quantity surveyor) or in Guangdong Province (architect, structural engineer, planner and building surveyor) under the respective pilot schemes.

In August 2011, the Central Government announced a plan to open up the Mainland market to Hong Kong’s service providers.  Under the plan, Hong Kong construction and related engineering professionals who have obtained Mainland professional qualifications through the mutual recognition mechanism are allowed to register and practise in Guangdong and to enjoy the same treatment as their Mainland counterparts. These liberalisation measures will facilitate local construction professionals to practise and establish business on the Mainland.  We have been working closely with the Mainland authorities under the CEPA framework to ensure effective implementation of pilot schemes for Hong Kong construction and related engineering professionals to register and practise in Guangdong.