The Hong Kong Special Administrative Region Government announced July 9 it will re-tender for the development of a new cruise terminal at Kai Tak, with the government funding the site formation works and facilities required for the provision of necessary government services.
The government issued an open land tender for the new cruise terminal project in November 2007. Two submissions were received before the tender closed in March, neither of which fully conformed to requirements. One of the submissions requested that hotel rooms be individually sold off, while the other requested to develop a larger commercial area.
“To ensure open and fair competition, and after careful consideration, the government decided to re-tender the project,” Secretary for Commerce and Economic Development Frederick Ma, said. “Subject to funding approval by the Legislative Council, the government aims to re-tender by the end of this year. The target is to begin operation of the first berth of the cruise terminal in the second quarter of 2013.”
Unlike a conventional commercial development, the cruise terminal project requires extensive site formation works and the provision of such government facilities as customs, immigration, health quarantine and police, as well as a landscaped deck.
“Through the last tender, the market was tested, and the response demonstrated that the project with the current terms and conditions lacked attractiveness to the market, and that the market was not willing to take up the project,” Mr. Ma said.
For Hong Kong to capitalize on growth opportunities in the cruise market and in view of the substantial economic benefits the development would bring to Hong Kong, Mr. Ma said the government decided to seek the approval of the Legislative Council to fund the site formation works for, and the construction costs for government facilities in, the cruise terminal project.
“In taking forward comprehensive development area projects, it is not uncommon for the government to require in the land lease the successful tenderer to design and construct specified government or public facilities,” Mr. Ma said.
“This approach has the advantages of making more efficient use of the land resources, minimizing interface issues and ensuring an integral design. There are also precedents of government paying the successful tenderer the capital cost of basic infrastructure or government facilities,” he said. “In the case of the cruise terminal, such funding support would help enhance the attractiveness of the project to the market.”
The Finance Committee of the Legislative Council will be asked in the fourth quarter of 2008 to fund the site formation works for and the provision of government facilities. Subject to the committee’s approval, the government will re-tender the site with the aim of awarding the tender by the third quarter of 2009. The first berth of the new cruise terminal is expected to begin operations by the second quarter of 2013.
“With experience from the last tender, the government will take the opportunity to update and elaborate relevant requirements to enhance commercial flexibility, add clarity to our requirements and track the latest market trends,” Mr. Ma said.
He said Hong Kong is committed to developing into a leading regional cruise hub. The world’s top three cruise operators are expanding their presence in the region, and have redeployed three new vessels with Hong Kong as their homeports. The number of international cruise vessels visiting Hong Kong as a port-of-call is on the rise, increasing from 44 calls in 2006 to 49 calls in 2007. It is expected to increase 20% in 2008, to 59. The total cruise passenger throughput (excluding Hong Kong residents) increased 52% from 412,000 in 2006 to 626,200 in 2007.
“We appreciate the urgent need to develop a new cruise terminal and will endeavor to complete the funding application and tendering process as early as possible,” said Mr. Ma. “The new cruise terminal will become an important tourism infrastructure for Hong Kong. It will help diversify our tourism products and enhance our attractiveness to tourists from different market segments, in particular the high-end market.”
Cruise market studies indicate that with the availability of new cruise terminal facilities and appropriate marketing strategies, the economic benefits are estimated to be between US$179.48 million and US$282.05 million annually by 2020. The facilities are expected to provide 6,900 to 10,900 jobs.
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