Officials fend off criticism that Disneyland deal was too costly

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The Independent Online

The price for bringing Disneyland to Hong Kong is too high, opposition lawmakers charged Wednesday, even as the government insisted the economy will reap enormous benefits in coming decades.

The price for bringing Disneyland to Hong Kong is too high, opposition lawmakers charged Wednesday, even as the government insisted the economy will reap enormous benefits in coming decades.

Financial Secretary Donald Tsang acknowledged the territory's return on the park itself probably will be "not so brilliant," but he reiterated Hong Kong is looking to gain in many more areas.

Critics have pointed to the fact that Hong Kong will invest about 10 times as much as Disney, while holding just 57 percent of the Hong Kong Disneyland set to open in 2005.

But Tsang said Hong Kong's returns will be far greater than whatever the park brings in, with benefits to the construction industry, and more jobs and more tourists expected to pour in, helping hotels, transportation companies, restaurants and stores.

"Disney's profit will come solely from the park; that's the extent of their return. Our return would go beyond the park's boundaries. It would come from the entire Hong Kong economy," Tsang told reporters via satellite from London, where he was attending a conference.

Disney, based in Burbank, California, announced Tuesday it will build the park in a project financed mostly by Hong Kong taxpayers.

Disney will invest 2.45 billion Hong Kong dollars ($314 million) for a 43 percent stake, while the Hong Kong government is paying $HK22.45 billion ($2.88 billion).

"This wasn't a fair exchange. We have signed an unfair treaty," Cheung Man-kwong, a lawmaker from the opposition Democratic Party, told a special legislative briefing.

Much of the criticism has focused on the government's agreement to provide HK$4 billion ($513 million) worth of land so the park can be built at a remote site on outlying Lantau Island.

Disney is paying nothing for the land but Hong Kong insists it was no giveaway.

The deal will give the government more shares in Hong Kong Disneyland in the future - assuming the park does well enough - in exchange for the property. That could see Hong Kong's stake rise as high as 75 percent over the next 25 years.

Government economist K.Y. Tang said Wednesday the park will add 0.4 percent to Hong Kong's gross domestic product each year for the next 50 years.

Despite concerns about the price tag, many Hong Kong people took it all in stride, figuring the project can help Hong Kong start growing again.

"It's a lot of money, but we'll make the money back," said Graham Yeung, a merchandising clerk.

Local commentators applauded the deal.

"In an economy still hamstrung by recession, the long-awaited announcement is the most positive sign that better days are coming," the English-language South China Morning Post editorialized.

The Disney deal comes at a time when Hong Kong is trying to rebuild itself as a vital Asian economic powerhouse, after losing much of its manufacturing industries to cheaper mainland Chinese cities and seeing other industries savaged by Asia's financial crisis.

While neighboring economies like Singapore, South Korea and Malaysia have already registered impressive economic gains, Hong Kong is projected to grow by just 0.5 percent this year. Unemployment is still hovering at its highest levels in years.

Commentators say Disneyland will boost foreign investors' confidence in the territory, whose future has been clouded by the financial crisis and its return to Chinese rule a little more than two years ago.

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