15th May 2013
<Land Donation Part 1: Government and Tycoon “Closed Door Negotiation” Seals Land Donation Plan>
The news about Lee Shau-kee (Cantonese nickname: Uncle Four), the chairman of Henderson Land Development, donating land became a hot topic in Hong Kong. After his plan was announced, the younger generation talks about the HK$1 million cheap flats that may be available, property speculators talk about investment opportunities, financial experts write analyses, netizens study Lee’s hidden agenda for such a donation. The Hong Kong SAR government will announce the details of the plan within May 2013.
This article will discuss the “land donation” issue from three key aspects: (a) the likelihood of the government accepting Lee’s land donation; (b) what potential interests in the North-Eastern New Territories development scheme the land donation would bring to Lee and the government; and (c) the profound impact this land donation could cause.
First, let’s look at what happened before Lee’s land donation. In May 2012, shortly after CY Leung took office, Lee proposed the idea of “Land Premium Exemption for Cheap Housing” after he went to Peking for a charity event. He said that if the government exempts the land premiums of farmlands his company (Henderson Land) owns, his company would be able to build flats that are 300 square feet in size and costs only HK$1 million. The public, however, did not pay much attention to the proposal.
In the same month when Lee proposed this idea, the North-Eastern New Territories Development (NENT) Plan, which always promoted a “government and developers partnership development strategy”, suddenly changed its stand and began to promote “traditional New Territories’ development strategy”, i.e. acquiring lands from property developers. Which means, in June 2012, before the current government took office, Carrie Lam Cheng Yuet-ngor, the then Secretary for Development and current Chief Secretary for Administration, suddenly claimed that to prevent suspicious transfer of interests, instead of partnering with private developers, the government would acquires land from the developers. This means that the property developers will no longer enjoy the advantages of building luxurious residential units on the farmlands they have been accumulating in North-Eastern New Territories at extremely low prices. All property developers expressed their disagreement over this new strategy, and became an opposition force at the last consultation of the NENT Development Plan.
Not until the end of 2012 when Lee Shau-kee announced his detailed plan of “land premium exemption for cheap housing” did this proposal become a topic of public discussion. The new government (led by CY Leung) has shown keen interest in this proposal, and the proposal is being handled jointly by CY Leung and Carrie Lam. The plan, later on, was revised from “land premium exemption” to “land donation”. According to sources, land donation was a counter offer given by the government, which means the government will be responsible for building cheap housing on the plots of land being donated. On 19th April, the Hong Kong Economic Times reported that Lee Shau-kee “has accepted the land donation proposal”, and has entered the final stage of negotiations with the government. The news report also said that Lee intended to build housing units that are 300 square feet (unit gross floor area) and below HK$1 million per unit, and wished to waive the initial down payment for younger buyers. There are seven plots of farmland Lee agreed to donate which are all located in North-Eastern New Territories, a hot topic in recent months, including Ma Shi Po in Fanling, Ping Che in Ta Kwu Ling and Kwu Tung North in Sheung Shui. All these areas have been key competition grounds for property developers to acquire and accumulate their land reserves.
The government originally expected to be able to build 5,000 new units in the plots of land Lee donates. Recently, it said that due to the surrounding environment, only two out of the seven plots of land can be developed, around 1,000 units can be built on these two sites, and their prices would be around 30-40% cheaper than the market price. Target buyers have also changed from younger buyers, to the general public. The target sales price leapt from HK$1 million per unit to HK$1.5 million, with a substantially reduced scale of development as well. These all make the original proposal sound like a lie. As for the other details, including the down payment wavier, the government is still negotiating with Lee.
Closed Door Negotiation Damages Town Planning System
First of all, land donation by developers is not appropriate, as it damages the equality and democracy of the necessary town planning procedures, and worse damages the legal foundations of Hong Kong’s town planning.
– The Emergence of Oligarchy
During the process of land donation for “housing for the younger generation”, if the planning procedures are lifted and existing planning directions are ignored the town planning system will be destroyed and be replaced by a rule-of-man system, as opposed to the rule of law, or in other words: an oligarchy. Chu Hoi-dick from The Land Justice League said previously that the use of each plot of land, whether it be public housing, public facilities or others, is decided based on the needs of the social development and town planning, and private developers can participate in moderation. Whether or not the government should subsidise the younger generation or the “grass roots” population to purchase their own properties is determined by the housing policies, a major policy of a government. This involves distribution of resources and existing procedures, and is monitored by the public views. The decision should not be made by the land owner, not even big property developers.
However, land donation is the result of a closed door negotiation between land owners and the government. This means that the land owners determine the public development of the town, and the Town Planning Board cooperate with their decision and allow them to approve the procedures. This model of development is putting the lunatics in charge of the asylum.
The land which developers accumulate is restricted in its use by infrastructure, details of land leases and town planning. To change land usage, whether to build cheap housing to help the younger generation to owning properties or to build luxury properties, developers have to follow Town Planning Ordinance Section 12. The Town Planning Board is the gatekeeper, and responsible for managing the process to ensure that the change of land use is for the interest of the society at large. The Board needs to review each application from three perspectives: nature preservation, environmental impacts and public consensus, before the Lands Department calculates the land premium a developer needs to pay. Only after these procedures can the developer go to work. These procedures will need at least 3-4 years, some cases take 20-30 years. If the development might affect eco-regions, it could take decades. A classic example: it took the Nam Sang Wai luxury residential project in Yuen Long, also owned by Lee Shau-kee, 21 years to receive all approvals.
This proves that the Town Planning Board scrutinises each application, and that each decision is backed by public consensus. Should the government and property developers join hands, making the Board a mere figurehead, this effectively disregards all public opinions, allowing government officials and developers to manipulate Hong Kong’s land planning subject only to their own views. Although we can choose to believe that Lee Shau-kee’s intentions were good, we cannot help but wonder why a developer wanting to build cheap residential units worth HK$1.5 million each to help younger buyers onto the property ladder did not apply via the Town Planning Board. Why did it initiate a closed-door negotiation with the government and skip the process of applying through the Town Planning Board?
Whether the land donated by a developer is for luxury housing for the rich or cheaper housing for first-time-buyers, once the precedent of changing the land use from farmland to residential land is set, the policy-making function of Town Planning Board will be stripped and the Board will become a rubber stamp. This is not only harmful to the town planning system in Hong Kong, but also opens the flood gate for collusion between government and business owners. Change of land use and Hong Kong’s development will no longer be monitored and will eventually be out of control.
– Destroys Government’s Set Development Plan
According to sources, the plots of land Lee Shau-kee proposed to the government to develop “residential units for the younger generation” include land whose usage cannot be changed to residential. The government set out an Outline Zoning Plan for each of the 19 districts in Hong Kong which is reviewed every year, this legally binding Plan determines the land planning directions of the majority of land in Hong Kong. The Outline Zoning Plan for North-East New Territories began in the 80s and 90s, prior to the handover of Hong Kong’s sovereignty.
The majority of land in the North-East New Territories is planned for agriculture and green belt purposes, and not for residential use. The set plan should not be disregarded and the usage of these plots of land should not be changed without following the existing procedure and system. Should the government decide to change the Outline Zoning Plan to take advantage of Lee’s land donation, the planning principles would become meaningless or become tools that can be manipulated by the conglomerates and government officials. The existing system will be totally undermined.
Legitimise Land Accumulation
The plots of land Lee is proposing to donate are the land that he has been accumulating over the past decade. There have been reports about how Lee and his company acquire these plots of land – using middlemen who employ strong-arm tactics to purchase the land from original owners. Villagers who opposed the development plans at open consultations were the first to receive legal documents forcing them leave their homes: Suing villagers using the Landlord and Tenant Ordinance – which in most cases does not apply to them – in order to scare the elderly (who do not understand the law) into leaving. In some instances these thugs even threatened villagers that they would “dump yellow mud at the green belt during raining season” in order to “even the land surface”, etc. If the government accepts Lee’s donation, Lee would be rewarded with praise for his “donation”, at the same time legitimising the illegitimate means by which his company acquired the land in the first place.
Small Donation Ruins Hong Kong’s System
Even since CY Leung took office, he began to criticise the monitoring system of town planning in Hong Kong, saying that the Town Planning Ordinance and the monitoring system are verbose, and completely disregarding the importance of public opinion being considered in the procedure. Paul Chan Mo-po, Secretary for Development, even included the Lee Wai Lee site, which was undergoing town planning consultation, into the land sales list for next year. Lee’s donation will speed up the destruction of town planning procedures and the monitoring system.
Even though accepting the “land donation”, around 1000 young men would be lucky enough to have the right to purchase their flats at HK$1 million (or more) in North-East New Territories, what price do we have to pay? The price is the complete destruction of the existing town planning system, condemning us to live a world where town planning is manipulated by a small group of people: a Chinafied system.
* To convert a farmland to residential use, there is a change-of-use fee, this is termed a “land premium”