Dubious Bailout for Ailing Hong Kong Park
Park’s troubles have been festering for decades
|May 20, 2020|
Hong Kong has a plethora of quasi-government bodies mostly run by former civil servants and with large boards of approved political and professional persons who mostly wear a dozen or more other hats. Results include commitment to spending public money which appear to pass without much, if any, oversight.
One such is Ocean Park Corporation, an ocean-oriented theme park on Hong Kong island. The government is now trying to get legislative agreement to inject HK$5.4 billion into the park with the threat that otherwise it will be forced to close permanently. The demand is a reduction from an earlier request for HK$10.6 billion which would have enabled the expansion of the park’s features as well as repay debt.
But the official demands for government handout are accompanied by a bodyguard of misinformation and lack of transparency which seem designed to cover up the incompetence and secrecy of the board.
In the first place, the need for a huge infusion has been blamed initially on the civil unrest which devastated inbound tourism in the second half of 2019, and then on the forced closure of the park in January because of Covid-19. In fact, the park’s troubles long pre-date these events which merely made a bad situation much worse.
Even before these difficulties, the park was losing heavily – HK$557 million in the year to June 30, 2019 following a HK$236 million loss the previous year despite the opening of a Marriot Hotel at the park aimed mostly at mainland visitors. Those were both years of growth for attendance and gross income but far from sufficient. Now it claims it needs to repay loans and interest which at end-June totaled HK$6.4 billion. Of this, about HK$3 billion is owed to commercial banks and the rest to the government as subordinated debt and interest.
Even as of June 2019 the finances were in such a rocky state that many assume that it was no longer a going concern unless there was an indication in the accounts – which there was not – that additional finance was forthcoming should the loans not be rolled-over. In fact, there is no indication in the accounts that most of the loans are due with the coming year.
The park is 43 years old, was innovative and is much appreciated by Hong Kong people. However, its attraction to mainland visitors has been severely undercut by newer, bigger parks in Zhuhai and elsewhere in the Pearl River delta region and it remains unclear how it can return to break-even on operations even once Covid-19 restrictions are behind it.
Meanwhile, taxpayers of Hong Kong wonder why at a time when finances are so stretched that so much money is supposedly needed to repay the government itself and commercial banks. Clearly an indolent board of 19 members has been happy to nod through borrowings and now expects the public to pay. The arrogance is all too typical of the QUANGOS (Quasi Non- Governmental Organizations) which proliferate to support off-balance sheet activities and non-official jobs for the well-connected.
A similar arrogance and refusal to accept public accountability were recently evident in a lesser way with a government announcement that it would distribute one washable mask valued at HK$42 to every permanent resident who applied. In practice, not many have applied, being unconvinced of the utility of a mask with six layers of cloth and some copper element which is claimed, without any evidence, to have anti-viral properties. Worse still, the contract for supply of these masks was made without any competitive tendering process, the alleged need for speed – three months after the Covid-19 outbreak – an excuse for an insider contract which in theory would be worth HK$300 million.
The mask has been another public relations fiasco for a government which has yet to distribute the HK$10,000 payment to all adult residents promised in February, or finalized a scheme to firms to support workers furloughed by the virus lockdown. Covid-19 may have taken the wind out of the sails of street demonstrations, but public distrust of officialdom shows little sign of abating.