Belt-tightening Hong Kong needs to learn to avoid white elephant projects

With a large budget deficit, the city should re-evaluate projects such as the Kau Yi Chau artificial islands to avoid costly but underused infrastructure like the Kai Tak Cruise Terminal and Hong Kong-Zhuhai-Macau Bridge

Dennis Lee

Published: 9:30am, 18 Jan 2024

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The story goes that the king of Siam would punish those who displeased him by giving them a white elephant, dooming them to the expensive upkeep of the sacred animal. Nowadays, the white elephant is a metaphor for a big, money-draining project, often an eyesore and a reminder of the time and resources wasted.

White elephants happen when projects are poorly conceived without much cost-benefit analysis or poorly designed without satisfying basic functional needs, or both. It is not uncommon for such projects to continue operating, at a loss, long after being proven useless. There are at least two reasons for this.

First, because the decision-makers suffer from the sunk cost fallacy – with so much invested, they are reluctant to abandon the project, cut their losses and move on. Second, because they refuse to admit failure and still long for a miracle that will turn the bad decision into a good one.

This is no different from the desperate gambler mentality that as long as one stays in the game, there is a chance to recover the loss, and even win.

We do not seem to have learned our lessons despite a string of uneconomical projects that have underperformed, including the Science Park, Cyberport and Disneyland; albeit that back then, Hong Kong had healthier fiscal reserves and could afford to make some bad bets.

One of the city’s biggest white elephants is the Kai Tak Cruise Terminal in Victoria Harbour. Opened 10 years ago, the 850m-long terminal is an iconic building. Unfortunately, despite its HK$8.2 billion (US$1 billion) price tag, there is a lot of building but not much substance.

The iconic design of Hong Kong’s Kai Tak Cruise Terminal is seen on August 8 2023. Photo: May Tse

My family and I went on a cruise in 2019, before the pandemic. One could hardly make this up: we were checked in over plastic folding tables on the ground floor before going up to the waiting area. How can this have been the architect’s vision?

The programme area and circulation were either poorly designed or poorly managed – thus the operator was not using the facility as originally planned. Browsing the terminal’s limited shops and restaurants, one wonders where the 60,000 sq ft of commercial space went. Things may have improved since, but for me, after that dreadful first impression, I never had reason to revisit.

Lawmakers have criticised the terminal’s lack of public transport, after reports of tourists getting stuck in long taxi queues hit the headlines in August last year. Located at the end of the decommissioned runway, the isolated terminal needs to be a destination in itself rather than a transitional space.

Poor connectivity need not be an issue if there are good programmes and activities to keep guests engaged and attract the locals. For inspiration, look no further than the Ocean Terminal and Harbour City. These have been around since the 1960s and continue to draw visitors and locals alike.

A Harbour City Christmas Eve special event with pyrotechnics and snow effects was held at the Ocean Terminal last year. Photo: Jonathan Wong

But the prize for the top white elephant must go to the Hong Kong-Zhuhai-Macau Bridge. As much as we appreciate being able to use the world’s longest sea crossing for marathons and charity walks, the authorities surely did not spend about HK$120 billion (US$15.3 billion) to only serve such purposes.

I was working on a residential project in Macau when the 55km bridge was completed in late 2018 – I could not wait to apply for the Closed Road Permit to travel on the bridge. To say the application process was painful would be an understatement, and non-commercial private cars can only go as far as the East car park of the Hong Kong-Zhuhai-Macau Bridge frontier post in Macau. The location is not popular and it was difficult to find a taxi.

During the hour-long drive, there were hardly any vehicles sharing the bridge with my car, just a few buses. It was my first time driving on it and I was already starting to question the rationale for the bridge. With the shuttle buses, logistics vehicles and a private car quota of 2,800, the authorities will never recover the cost of building the bridge.

02:19

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We understand the importance of having local permits, insurance coverage in different jurisdictions, and concerns over traffic congestion and right- and left-hand driving. Indeed, these factors are exactly what the governments and authorities needed to deliberate on in the early conception phase. They should have thoroughly answered one simple question first: would it be worth it, considering all the factors?

Yet not every project criticised as a potential white elephant will turn out as such. When Hong Kong’s MTR was proposed in the 1970s, critics said it would be a colossal waste of public resources and a white elephant. But the city is now unimaginable without the subway, which has proven to be one of the best in the world. Same for the airport which, when proposed in the 1980s to be built on reclaimed land, was heavily criticised for its immense cost.

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The key to successful infrastructure projects is always to attract usage, which drives foot or car traffic, and thus the revenues that cover maintenance and the initial investment. These projects require rigorous feasibility studies, evaluation, simulations and models, and detailed projections to justify their need.

Given that Finance Secretary Paul Chan Mo-po has warned we may need to tighten our belts after a challenging year with a bigger than expected deficit, perhaps we should re-evaluate the development projects in the pipeline – such as the Kau Yi Chau artificial islands – that are raising red flags. It’s surely easier to avoid having a white elephant in the first place than to figure out what to do with one.

Dennis Lee is a Hong Kong-born, America-licensed architect with years of design experience in the US and China