Speech to the Hong Kong Canada Business Association in Vancouver on 7 April 2000 by Mr Nicholas Ng, Secretary for Transport of the Hong Kong Special Administrative Region Government

An Update on Hong Kong and Its Transport Infrastructure

Minister Lali, Ms Mao, ladies and gentlemen,

Thank you very much for those warm words of welcome and for the kind introduction. I am most grateful to the Hong Kong Canada Business Association for hosting today's luncheon, which gives me an opportunity to renew the many acquaintances.

2. I last spoke to the Association five years ago in 1995, when I came in the capacity of Hong Kong's Secretary for Constitutional Affairs. My main themes then were "One Country Two Systems" and "Hong Kong people ruling Hong Kong". My audience gave me a warm and friendly response. But I detected traces of scepticism amid the good wishes for a smooth transition. And now, nearly three years into our new status, the Special Administrative Region is thriving. Our political system is stable. The rule of law is still the cornerstone of our society. The Central People's Government has been honouring its commitments faithfully. Continuity and stability have always been important to Hong Kong. That is precisely what we continue to enjoy.

3. We did however encounter some turmoil that we had not anticipated. No sooner had we started our political transition than we were hit by the Asian financial crisis. The past two years were very difficult for us. The economic adjustment was drastic and the pain severe. However, the severe shock which we went through in this economic crises also gave us the opportunity to restructure and reform our economy. Costs are coming down. New opportunities are emerging, including all those dot-coms. Our survival of the recession has been most succinctly summed up by the European Commission. It says in its first annual report on HKSAR that, " The financial crisis has deprived the SAR, at a delicate stage in its development, of the high growth and business confidence that has characterised Hong Kong's economy in the past. Its strict adherence to transparency, prudent budgetary control and a stable currency is therefore all the more admirable in the face of such adversity. This will ultimately encourage the return of business confidence once the financial crisis subsides." The report concluded that Hong Kong remains one of the most open economies in the world. The Heritage Foundation and the Fraser Institute of Canada also came to the same conclusion to rank Hong Kong the freest economy in the world.

4. So, not a bad report card at all. In fact, the strength of our faith in the free market is only mirrored by the resilience of our economy. More specifically, our economy is embarking on a V-shape recovery. It recorded an 8.7% growth in the fourth quarter of 1999. No wonder the stock markets are at its heights. Our foreign reserve stands at C$137 billion. The unemployment rate came down to 5.7% in the quarter ending February 2000. Not a level that we were used to see in Hong Kong but this is the necessary pain from the restructuring of the economy. More importantly, our projected fiscal deficit for the year 1999-2000 is down to C$300 million from C$7 billion forecast a year ago. Our prudent financial management has championed once again. No wonder foreign investors are casting their vote of confidence. As at June 1999, there were 840 regional headquarters in Hong Kong. Tourism has picked up significantly. In 1999, nearly 11 million visitors came to Hong Kong, a 12% growth over 1998. By the time we complete the new home for Mickey Mouse and Donald Duck in Hong Kong in 2005, we shall become the unrivalled premium choice of tourist destination in Asia.

5. The economic outlook for year 2000 is even more robust. We forecast GDP to grow by 5% in real terms. The continuous growth of our economy in the medium term is underpinned by sustained growth and further economic reform and liberalisation in the Mainland, a clear trend which we are sure will strengthen following China's imminent accession to the WTO. The International Monetary Fund last month also confirmed that Hong Kong was on the way to a solid economic recovery.

Infrastructure development

6. What keeps Hong Kong moving? The rule of law, an independent judiciary, a level playing field for all who do business, low taxes, press freedom and a commitment to free and open markets remain the bedrock of our society. The Government, the community and our Legislature are all vigilantly guarding these values. On top of these, we are setting our sight on a clear and powerful vision - a vision to establish Hong Kong as Asia's World City.

7. To achieve this vision, we need to build for the future. The vigour and energy of our people and the sophistication of our infrastructure system need to be maintained. Education remains our top agenda to develop our human resources. On infrastructure, with the completion of the Airport Core Programme which cost over C$29 billion, we are moving ahead with another ambitious transport infrastructure development programme costing some C$44 billion over the next five years. A significant expansion of our railway and strategic road networks will not only facilitate urban development, but improve access into Southern China and beyond. This, I believe, will further prove the fact that, as the springboard to China, Hong Kong shall have no equal.

Current Transport Scene

8. Limited space, particularly flat land, remains our biggest limitation and population pressure is ever growing. Internal movements are facilitated by 1,900 kilometres of road network and about 150 kilometres of railway system. Average peak hour travel speed is 25 km in urban areas and 44 km in sub-urban areas. We have about half a million vehicles of which over 60% are private cars. This private car ownership rate is the lowest in developed economies. Our public transport service network is pervasive, capturing 90% of daily passengers trips on a range of modes including heavy and light rail, franchised buses, public light buses, taxis, ferries and trams.

9. The challenge to us, and no doubt to all transport authorities in the 21st century, is how to provide a sustainable transport system which strikes a fine balance between economic, social and environmental considerations. In reading your documents on "The Livable Region Strategy" and "Transport 2021", I have to say that we are in it for the same cause.

Hong Kong's Transport Strategy

10. In Hong Kong, our transport strategy is guided by our vision to be Asia's World City and underpinned by sustainable development principles. We have set ourselves the target of providing the world's best transport system which is safe, reliable, efficient, environmentally friendly and satisfying to both users and operators. Our strategy encapsulates three elements. First, we will continue to expand the transport infrastructure. Second, we give priority to public transportation. Third, we practise effective traffic management. Let me explain in more detail how we do it.

Rail and Road Development Programme

11. Railway has nearly a hundred years' history in Hong Kong. They have been and will continue to be the backbone of our transport system. Railways will be built to link up the residential new towns in the outskirts with the business districts, serving major corridors with the heaviest traffic flow. We have an ambitious programme of completing in the next five years six new railways with a total length of 64 kilometres costing some C$19 billion. We don't just stop here. Indeed, we are planning the next batch of priority railways. They are expected to further increase the rail length from 200 km in 2005 to 250 km in 2016, and rail passenger from 38% to 45% of the public transport market. By then over 80% of the population will be living in rail catchment areas. The additional investment on this new batch will be around C$15 billion.

12. We plan high density residential premises near rail stations so as to minimise trip generation. Transport interchanges and park-and-ride facilities also feed into the railway network.

13. Whilst giving priority to railways, we still need to build roads to serve freight transport, to provide emergency access, and to serve areas inaccessible by railways. However, all new road projects undergo stringent environmental assessment procedures in order to ensure that they do not create unacceptable environmental impact.

14. Hong Kong in recent years become famous for its bridges. The Tsing Ma Bridge is the prestigious landmark of Hong Kong and the most outstanding feature in the access to the New Airport. It has the world's longest bridge span carrying both road and rail traffic. On the other hand, Ting Kau Bridge features a unique design of three towers from which the bridge slaps are stabilised traversely by stay cables. At a maximum of 465 metres in length, these stay cables are the longest ever installed in the world. Kap Shui Mun Bridge, at 820 metres in length, is the world's longest cable-stayed bridge carrying both road and rail traffic.

15. This triology of bridges is going to be joined by two new members in 2007. They are the Tsing Lung Bridge and the Stonecutters Bridge. The Tsing Lung Bridge will be the world's third longest suspension bridge, after the Aykashi Kaikyo Bridge in Japan and the Storebaelt Bridge in Denmark. It will form part of a strategic road link from Hong Kong to Mainland. As for the Stonecutters Bridge, it will link Tsing Yi and Stonecutters Island and will provide an arterial access for container traffic.

Cross-border Transport Planning

16. One key element in our long term strategic transport planning is to look beyond the boundary of Hong Kong. We believe that Hong Kong can capitalise on the significant advantages provided by its position as a gateway to China. With our economy becoming increasingly integrated with the Mainland, daily cross boundary vehicle trips have reached 28,000 and grow at 6% per year. The average daily passenger flow stands at some 240,000 trips and grows at over 15% per year. I am quite sure that these figures top the table of any cross boundary road traffic in the world. Even for Mexico which shares a 2,000 mile border with the US, the average cross boundary traffic is about only 70,000 people per day.

17. We have at present one rail crossing and three road crossings to the Mainland and they are operating at capacity. We are therefore building a new railway link. This will be completed in 2004, by when the Shenzhen Metro, which is the rail connection on the other side of the boundary crossing, will also come into operation. We are also discussing with the Mainland authorities on the construction of a 5 km long bridge crossing called the Shenzhen Western Corridor which will be completed about 2005. This will connect the South China highway network to the airport and other parts of Hong Kong. The provision of these infrastructure will enable us to handle the cross boundary traffic beyond 2016.

Public Transport Services

18. The second element in our transport strategy is to encourage public transport services, so as to make the most efficient use of the road space. Hong Kong is probably unique in the world in terms of variety and choice of public transport modes. It is also one of those few places in which public transport services are viable without direct government subsidies. Public transport takes some 11 million passenger trips a day, or almost two trips for each person. Rail and buses dominate, each taking up about one third of the market share. We expect the rail market to grow gradually, but leaving enough market for the others. It is our policy to provide commuters with reasonable choices and this is achieved by providing a range of transport modes which differ in speed, comfort and fares. This can also encourage healthy competition among operators.

19. In the process of encouraging the public to use public transport, we also urge the public transport operators to have due regard for the environment. We are actively promoting LPG taxis in Hong Kong. As of today, over 500 LPG taxis ply the streets. We are embarking on a three year programme to encourage the bulk of diesel taxis to change over to LPG. We will pilot an exercise to use LPG and electric cell for light buses this year. We are also conducting a consultancy to examine the feasibility of introducing a trolley bus system in Hong Kong.

Privatisation of Mass Transit Railway Corporation

20. While on public transport, for the investing community, I am sure you are already aware of the partial privatisation of the Mass Transit Railway Corporation, a world class rail operator. We intend to fetch about C$5.7 billion from the sale of MTRC shares over the next two years. We will however retain majority shareholding for at least 20 years to signify Government's continued commitment to the Corporation. Privatisation will make the MTRC a new benchmark in our equity market. It will be a new and unique blue chip. Depending on progress of the preparatory work and market conditions, the IPO can be launched some-time this fall.

Traffic Management

21. The third leg of our strategy concerns traffic management. In a city with 267 vehicles on each kilometre of road space, the only way to maintain the mobility which we have enjoyed is to make the best use of the road network through good management. This is particularly important as traffic tends to increase with GDP growth and we have little hope to find enough land to expand the road network at the same speed. In this digital era, we clearly have to rely on technology to provide the solution.

22. Using modern technology such as telemetric equipment to manage strategic roads is not new. Nor is the linking up of traffic signals to synchronise phasing and balancing junction capacity and demand. These measures have enabled us to achieve the 25 kilometres per hour average speed in the urban areas at peak hours. What we need, and are looking at now, is a more integrated IT solution to enhance the efficiency of the whole transport system. ITS will provide transport information, real time, to drivers and commuters. People can know in advance which is the quickest and cheapest route to take. They will know how long to wait until the next bus arrives. We are of course not there yet, but technology promises an answer. We are looking for it.

Conclusion

23. I have described in some detail about our transport strategy and infrastructure development programme. With the New Airport's efficient operations and our proximate transport links with the Mainland, Hong Kong's accessibility as a transport and air hub is unrivalled in the region.

24. Hong Kong's skyline changes all the time. Before long our railway lines will be completed one by one. The minute you step out the aircraft, you will feel the vitality of our city. The investment opportunities in the years to come are plenty. Do join us on this ride!

25. Thank you.