If Disneyland dies and Hong Kong's port shrivels, an alternative 'Lantau Tomorrow Vision' could emerge

Taking the ferry back and forth between Lantau and Central these days is pretty boring. But when I first moved out there seven years ago, the voyage wasn't quite so uneventful.

Slowing down for a container ship coming into port was a common occurrence, the ferry swerving astern of the larger vessel to bounce over its wake and slop my coffee. I have numerous pictures of the backs of container ships as a result, but these days it's a rare experience. Then there was the ride home, settled on a bollard on the lower deck with a beer, watching the Disneyland fireworks displays. That doesn't happen at all these days, as my friends in Discovery Bay will testify: a view of the fireworks is no longer a selling point.

The absence of these views - the backs of container ships and fireworks going off - are not directly linked, of course. But as the port and Disneyland are adjacent and both businesses are suffering, I wonder if we shouldn't be looking at what else they could offer.

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LET IT GO

Lantau's Disneyland has been a tough business to run. In fact, since opening in 2005 it has been profitable for just three years, and in the past five resumed spraying red ink. It is majority owned by the Hong Kong government, and with 20/20 hindsight we can conclude it was a poor investment. Our resort looks particularly pale compared with what's on offer at the far larger Disney parks in Shanghai and Tokyo.

With animosity towards mainlanders rising in recent years, and the troubled times in Hong Kong putting tourists off, the park has had to rely on local visitors to make ends meet. If it continues to drain taxpayer money - now expanding with a Frozen attraction almost eight years after the original film - the outlook must be pretty bleak. At some point even the government will turn away and slam the door.

As for the Port of Hong Kong, it has been in slow decline for the best part of two decades. And with the rising cost of shipping and a lack of incentives to trade through the city, it's perhaps now at a point from which it can't recover. So, I wonder if the events of the past few years - the protests, Hong Kong's changing trading status with the US, container rates skyrocketing and the relocation of supply chains after Covid-19 - will be the final nail in the coffin for both the port and Disneyland, with the two enormous sites being repurposed.

IT'S A SMALL PORT AFTER ALL

The writing is certainly on the wall for the port and its operators. I noticed that China Merchants Port Holdings a week ago reported its net profit for last year dropped by 38.4 per cent, even though its volumes are holding firm. Its overseas operations are doing better, which is probably why its shares did not collapse. I am no expert on port operations, but I suspect that persistent or growing volumes with low-cost operations are critical to a sustainable business, and Hong Kong isn't offering this now. So, what is happening?

China's economic activity soared after a year of lockdown, with January and February this year seeing industrial output rise by 35.1 per cent and retail sales expanding 33.8 per cent. But at the same time, unemployment started to tick up as labour demand fell after the Lunar New Year. This makes me wonder if the burst of activity is now falling off and unemployment will become a problem, as mainland jobless figures crossed the 6 per cent upper limit set by the government.

Additionally, China's foreign currency reserves are starting to shrink, by US$5.7 billion in February alone. They're still a colossal US$3.2 trillion, but perhaps the tide has turned on the flow of money, with the slow growth of foreign reserves last year prompting the government's push to digitise and internationalise the renminbi. This would also help explain China's new-found dislike of frivolous imports that need to be paid for in hard currency - lobsters, wine and pineapples, for example. It's preserving the piggy bank by pulling its business away. Who really needs to buy lobsters from Australia, anyway?

This potentially creates a scenario in which China imports less - with trade slowing through Hong Kong as costs are lower elsewhere in the Greater Bay Area - and exports shrink now that the rest of the world's industries are restarting in the wake of Covid-19. At the same time, high freight rates and delays such as those caused by the Suez Canal blockage further add to costs, continuously slowing business - though they may fall again.

What could this mean for the Port of Hong Kong? Unfortunately, nothing good.

SEE AN ELEPHANT FLY

The port is shrinking. In 2004 it was the busiest in the world with more than 150,000 vessels visiting. It slipped to second place from 2005 as Singapore took the top slot, which it too lost in 2011. Hong Kong fell to eighth place in 2019, prompting the main subcontractor for CK Hutchison Holdings to freeze all staff salaries amid a drop in profitability. Container volumes have fallen further since.

According to the Hong Kong Maritime Hub, container throughput this February declined 10.4 per cent compared with the same period in 2019, with the smaller operators seeing a sharp decline of 41.3 per cent. I wonder where in the global rankings Hong Kong stands today, and whether the decline in throughput is a global phenomenon or a local one.

If costs keep rising sharply and volumes keep collapsing, then in the very near future we may see port operators pull the plug on their subcontracts, and the ships will stop coming.

Economically, that is not good for Hong Kong, especially not the people that work in the maritime shipping industry and port operations - some 82,850 in 2018, or 2.1 per cent of the working population of the city, mostly subcontractors. However, as the port contributes just 1.1 per cent to Hong Kong's GDP, the loss - along with that of Disneyland, which employs around 7,900 people and actively loses money - would be unfortunate, but manageable.

This all sounds very bleak, I know. But if you believe, as I do, that Hong Kong's financial industry will be the sole survivor in the long run, then perhaps there can be a silver lining: homes, which the city needs to build more urgently than it needs to move containers around or feed Mickey Mouse.

TOMORROWLAND

I'm not sure I am best qualified to make such a suggestion, but given the government's proposal to spend half of Hong Kong's reserves filling in the islands around Lantau, complete with a motorway and MTR link no one really wants, perhaps there is a more cost-effective alternative?

By expanding the impressive urban complex of Tsing Yi to Kwai Tsing and Kwai Chung, and developing the well-connected Sunny Bay into a purposeful new town, we could turn a modern-day folly into something useful and convenient.

In short, the transition would need to be managed carefully, but compared with the 10 years it would take to fill in the coast off Lantau to make another Sha Tin, Hong Kong residents may appreciate the initiative. Certainly, the buffaloes, moo cows and hordes of tourists that came to relax on Lantau last weekend would.

This article originally appeared on the South China Morning Post (SCMP).

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