Transcript of the media session by the Secretary for Housing, Planning and Lands, Mr Michael Suen, on the Hunghom Peninsula

Following is a transcript of the media session by the Secretary for Housing, Planning and Lands, Mr Michael Suen, on the Hunghom Peninsula today (February 10):

Reporter: Mr Suen, ... when you are trying to get money back wherever you can, and trying to save money wherever you can, how can you walk away ... with public money being lost?

Mr Suen: You've got to look at it this way. According to the contract that we have signed with the developer, the Housing Authority (HA) is obliged to within a period of 20 months to nominate buyers for those flats. According to the conditions of the deed, if the HA is not able to fulfil this particular requirement, the HA has got to pay the developer $1.9 billion. Against that background, the HA, in accordance with the deal, will save an outlay of $1.9 billion. On top of that, we will be getting a premium of around $.0.9 billion from the developer. So the total cost to the developer for that piece of land amounts to about $3 billion.

Reporter: But the whole question really is being unable to find buyers, because there is a change of policy and you are not looking for buyers.

Mr Suen: Yes, you can put it this way. Because we have decided to cease production of and also not to sell all home ownership flats. We've made a policy decision back in November 2002.

Reporter: Why not put this out to tender?

Mr Suen: Because there are restrictions. That particular development only obliges the HA to nominate buyers for the domestic portion. But that particular development consists of both domestic and non-domestic portions which include carparks and commercial facilities. Those other facilities which are owned by the developer formed an integral part of the development. You can't separate these parts. In any case, if we are to try to buy back that non-domestic portion, we still have got to negotiate with the owner and to negotiate a price for it. Having regard to these factors and the fact that there are complexities involved, having regard to the fact that we are not just talking about the domestic portion, we feel that the arrangement that we have now come to, represents the best way for us.

Reporter: Was it a badly constructed deal to begin with, now that you are suffered in this situation with the developer, essentially, had you overvalued?

Mr Suen: I don't think so, because that was a conscious decision at the time which was accepted by the community as a whole that we stopped the production of the HOS flats.

Reporter: Isn't this really another piece of bad news ... of the housing policy?

Mr Suen: I don't agree with that assessment. I think we have taken a very comprehensive view of the need to clarify our housing policy back in November 2002. As I said, that was a conscious decision. We know that in reaching that decision, we have got to face some additional problems. There are remnants of the whole policy that we've got to deal with. eg, we know very well that there are vacant home ownership flats that are waiting for disposal. We are then prepared to face the consequence of that particular decision and we believe that through patient negotiation, we will be able to find a satisfactory solution to the problem. And I believe that what we've got now is a satisfactory solution. Please do remember that it is the result of negotiation. We have negotiated for over a year with the developer, and now we have reached agreement over how we settled them.

Reporter: Secretary, could this potentially destabilise the market? Especially with another case coming up in Ngau Chi Wan?

Mr Suen: I don't think so. I think you've got to look at it in context to see how many units are involved. We are not talking about a continuing phenomenon whereby you expect a few more cases coming up every year. In which case, there will be a big impact on the market. What we are talking here are 2,000 units in Ngau Chi Wan that will be the last of this particular kind of home ownership flats. There will be no more because we are producing no more.

Reporter: How much do you expect to lose on the flats in Ngau Chi Wan?

Mr Suen: I'm afraid it's not a question of losing. We are getting premium, getting additional money from the developer. It's all about how well we manage to negotiate a settlement.

Reporter: What's that loss ...?

Mr Suen: I don't think we should speculate as to the result. We will try our best to get the best deal.

Reporter: (inaudible)

Mr Suen: As I said, you don't talk about $860 million for those flats. Remember, if the deal fell through, the HA was obliged to pay $1.9 billion to the developer. So you've got to take that into account. In terms of the outlay for the developer for this particular site, the total sums involved would be $0.9 billion plus $1.9 billion, almost $3 billion. So we are not talking about small sums of money.

(Please also refer to the Chinese portion of the transcript)

Ends/Tuesday, February 10, 2004