Hong Kong’s cash-strapped Ocean Park could go bankrupt next month unless it receives an urgent bailout of HK$5.4 billion (US$700,000) the government warned on Monday, even as lawmakers questioning the use of taxpayers’ money looked set to make funding approval a rough ride.
The proposal, which the Legislative Council’s Finance Committee will review on Friday before a possible vote, could buy the tourist attraction enough time to stay afloat for another 12 months, Secretary for Commerce and Economic Development Edward Yau Tang-wah said.
The emergency funding could provide a window for management to come up with a better plan for the park’s survival and allow payment of HK$3 billion in commercial debt, he said, describing the operational and financial challenges the park faced as “unprecedented”. Another HK$5 billion is owed to the government.
“Without the help, there will only be one outcome: that Ocean Park will cease operation,” Yau said. “That means Hong Kong will lose a recreational and educational park that has benefited so many Hong Kong people in the past few decades, and an important tourism infrastructure.”
A cross-departmental committee would be created to consider the way forward for the attraction, including its sources of financing, mix of customers and structure, Yau said.
The park was forced to shut its gates on January 26 due to the pandemic and Leo Kung Lin-cheng, chairman of the park’s board, said it would run out of cash by June, given it was spending more than HK$140 million every month. “Over the past few months, the cash flow was a net loss of about HK$700 million,” Kung said.
The park, established in 1977, underwent a major redevelopment between 2005 and 2012 that took the number of attractions from 35 to more than 80, which along with the more than 7,000 animals, helped boost attendance to a peak of 7.7 million in 2012-13.
But the park recorded deficits of more than HK$200 million in successive years since the 2015-16 financial year, which more than doubled to HK$557 million in the most recent one. Given the impact of the social unrest brought on by anti-government protests that began in June, the park earlier projected its shortfall would exceed HK$600 million for the 2019-20 financial year.
Just 1.9 million people visited the park between July and December, a 30 per cent decline over the same period the previous year. Attendance for this financial year is forecast to drop to 3.3 million, down from 5.7 million the year before.
Wu Chi-wai, chairman of the Democratic Party, which has seven seats in the legislature, accused the government of changing the nature of the Ocean Park, by turning what was a “Hong Kong people’s park” into an attraction for mainland tourists.
While Wu said he appreciated cash was needed quickly, he would not make up his mind on the funding proposal until he had a chance to hear the government’s plan in full in Legco.
Felix Chung Kwok-pan, of the pro-business Liberal Party, said they had not been consulted before the rescue plan was announced. “So, the government is trying to lay the blame on us if we do not approve the funding request and the park has to close,” Chung said. “The issue now is whether we should keep pumping money to support a money-losing company. I don’t think it is a big deal if Ocean Park has to shut down.”
But tourism sector legislator Yiu Si-wing argued the attraction “has made a huge contribution” to the local economy over the past decades and was part of Hong Kong’s collective memory.
Holden Chow Ho-ding of the leading pro-government party Democratic Alliance for the Betterment and Progress of Hong Kong, which has 13 seats in the Legco, called the latest proposal welcome. “The funding was halved and the government also said it would have a rethink of the development strategy of the park. I believe the public would appreciate it.”
The funding request can pass the Finance Committee with a simple majority vote by members present.
Former Ocean Park chairman Allan Zeman said the bailout “makes a lot of sense” as it would help the business shed its debts and interest on loans while buying time to decide the way forward.
The park should then look for clever upgrades at minimal costs while searching for a new CEO and chairman, he said. Locals usually accounted for just 35 per cent of the overall visitors, so he expected the government to slowly reopen its border in a phased approach.
Senior hospitality lecturer Dennis Wong Ka-wing, from Hong Kong Institute of Vocational Education (Haking Wong), said the bailout was a step the government had to take and the substantial sum was needed to pay salaries and debts.
Jason Wong Chun-tat, the chairman of the Travel Industry Council and a board member, said the tourism industry was drastically different from months ago when the previous expansion scheme was being contemplated. The funding should cover daily expenditures for a year but it was too early to say what would happen next.
Former chief executive Leung Chun-ying said the crux of the issue was whether Hong Kong still welcomed mainland tourists. “There is no market that can make up the loss [of mainland visitors],” he wrote on a Facebook post on Sunday, referring to the anti-mainland sentiment stirred up by the anti-government protests. Leung said the park could not survive with only local or overseas visitors.
No comments:
Post a Comment