No implications for government projects from Fung Cheung Kee, Kau Yi Chau Artificial Islands delayed, government committed to project

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Bernadette Linn

3rd March 2024 – (Hong Kong) In response to inquiries from the media, the Secretary for Development, Ms Bernadette Linn, provided updates on recent Fung Cheung Kee and the Kau Yi Chau Artificial Islands during a media session after attending a radio program on today.

Regarding Fung Cheung Kee, Secretary Linn clarified that the company is not currently involved in any ongoing public works projects. As a result, there are no implications for the government’s public works projects due to the winding up of Fung Cheung Kee.

On the topic of the Kau Yi Chau Artificial Islands, Secretary Linn stated that the government remains committed to the project. Although the reclamation was originally planned to begin in 2025, it will now be delayed by two to three years. However, the government aims to start the reclamation within the current term and is actively working on necessary preparatory works. Throughout this year, they will complete the environmental impact assessment report and initiate the statutory process. Detailed works design studies will also commence to gather technical and engineering information, allowing for a better evaluation of the project’s phasing and financing arrangement.

Earlier, Secretary for Housing Winnie Ho emphasised that the delay in the Kau Yi Chau project will not impact the supply of public housing in the next decade. The government remains determined to proceed with the reclamation plan, which is expected to provide land supply beyond the 10-year period.

When questioned about the removal of certain property market regulations, Secretary Ho assured the public that the government, in collaboration with the Hong Kong Monetary Authority, possesses the necessary tools to respond to various market scenarios. She emphasized the availability of measures to control and manage the situation effectively.

The Financial Secretary, Paul Chan, confirmed the delay in the Kau Yi Chau Artificial Islands project during a radio program recently. Chan highlighted the importance of completing the feasibility study and implementing relevant environmental relief measures before proceeding with the project. He mentioned that the government is considering outsourcing the project to the private market for investment and development, which could help reduce government expenditure. However, the government intends to maintain a certain level of control and is currently reviewing different proposals.

In relation to the Hong Kong Monetary Authority suspending the stress test requirement for homebuyers, Financial Secretary Chan stated that this move would facilitate property purchases for citizens. He explained that the expectation of a decrease in U.S. interest rates would likely lead to a drop in loan rates in Hong Kong, making the stress test unnecessary.

While the government plans to issue HK$95 billion to HK$135 billion in bonds over the next five fiscal years, Financial Secretary Chan assured that Hong Kong’s debt level remains safe and lower than that of other countries.

The sudden collapse of Fung Cheung Kee, a prominent Hong Kong firm, has resulted in approximately 120 construction workers being laid off. The Labour Department has established a helpline to assist affected employees, and salaries and severance payments will be covered by the Protection of Wages on Insolvency Fund.

The closure of Fung Cheung Kee has raised concerns about other subcontractors in distress. Efforts are underway to contact these subcontractors and determine the extent of their involvement and need for assistance.

The cash-flow problems faced by Fung Cheung Kee are attributed to high interest rates and a slowdown in the private construction market. Industry representatives express hope for a decrease in interest rates in the second quarter and urge the government to continue implementing public works projects in an orderly manner.

Despite Fung Cheung Kee’s collapse, the government has confirmed that its affiliates were not engaged in any unfinished government projects. The Urban Renewal Authority stated that a project in Kwun Tong, handled by Fung Cheung Kee, is near completion, and the remaining works will be managed based on contract terms.