Business Park Consultancy: Examining Feasibility and Setting Priorities

A Discussion Paper by the Hong Kong Coalition of Service Industries

March 1998

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Background

In his policy address last October, the Chief Executive of the SAR Mr Tung Chee Hwa announced that the government would be commissioning a study into the need for and feasibility of a Business Park for Hong Kong.

Before investigating the detailed feasibility of the Business Park, it is important to first establish the need for such a provision. The first stage of the consultancy study should therefore be undertaken with the objective of consulting with interested parties both within Government and the private sector on the broad criteria that should be applied in order to measure needs and priorities for potential users of Business Park(s) in Hong Kong. The output of such an investigation should enable the Administration to then frame appropriate Terms of Reference for the substantive project. If this is not done, the Study will lack ¡§edge¡¨ and there is a danger that it may run off the rails.

Whilst not prejudging the outcome of any investigation, there would appear to us to be a prima facie case for a business park to meet the needs of the service industries. The number of parties interested in securing the privilege of premises on a Business Park is potentially huge. In particular, there is considerable interest from the group of service industries that can loosely be described as ¡§distribution-related¡¨. There are companies wanting to establish regional logistic and distribution centres; local distributors will demonstrate their needs on grounds of both economy and health; while freight forwarders may want a centralised facility to enhance their operations.

The new Business Park(s), if justified, will be an instrument of Government policy, as was the case for the Hong Kong Industrial Estates Corporation (HKIEC) when this was established. Thus the policy objective for the Business Park(s) need to be firmly defined in advance in order to guarantee the Study¡¦s success.

As a form of ¡§brainstorming¡¨ rather than giving fixed views, the following are some of the issues which in our view the preliminary study should cover.

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1. The HKIEC, one surmises, was established to help stem the flow of manufacturing from Hong Kong into China. Some would argue that more recent allocations of land have been misplaced. One could now set out a convincing case that businesses having needs that can more satisfactorily be met by relocating some or all of their business activities across the border should not have a high priority for benefiting from SAR investment subsidies in Business Park(s). More specifically, priorities could be more appropriately allocated to businesses having an inherent need based upon (for example) serving the SAR market, or needing to tap into the SAR¡¦s infrastructure in relation to import/export markets.
2. How much weight should be given to economic elements such as:

• employment generation
• employment preservation
• capital investment generation/preservation
• regional competitiveness
• international competitiveness
• local consumer advantage
• the promotion of cross-border trade in goods and services (in contrast to procuring these from elsewhere)?

1. How can a firm line be drawn between the objective of the Study and the objectives of existing public bodies such as:

- HKIEC

- Port Development Board

- Buildings Department & Lands Department

- Urban & Regional Councils

- Land Development Corporation

2. The Study should have definitive guidelines on such matters, since the above bodies (and potentially others) will have existing policy guidelines that should be taken either as fixed or subject to review. In the former case, the guidelines should be reflected in the Terms of Reference. If the latter were the case, the time-frame for the Study might perhaps be too short.
3. Should environmental elements, perhaps in their wider sense, be included in the assessment, and if so, according to what criteria?
4. Should specific types of business, as a matter of Government policy, be excluded from the Study?
5. Synergies will be available from co-location of businesses and much benefit can also be derived from various service-sector industries having unique facilities together in a Business Park environment. How should such benefits be measured and prioritised:

• Economic (and environmental) value added?
• Should land cost (lease or rental) be excluded, or included in this calculation?
• How should existing co-location be accounted for (e.g. light goods export industry, almost exclusively located in Tsim Sha Tsui)?
• The current availability of facilities at commercial rents?

1. Should the Study include or exclude the implications for land sales/usage conversion revenue for the SAR Government? This may be a significant factor.
2. To what extent should the Study address the implications for businesses which have more recently invested in new facilities under the current regime, and who would potentially be disadvantaged in comparison to later investors in the Business Park(s)?
3. Should the Study address the likely resultant impacts upon areas where existing facilities are vacated once businesses have relocated to Park(s)? This is not an issue to be taken lightly, since a partial elimination of business use (industrial or commercial) does not easily lead to full zoning conversion (c.f. Kwai Chung, with an uneasy mix of large-scale industry, light industry, commercial and residential property uses). This factor may have widespread implications, and the assessment of their impact needs to be defined at some stage.

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