[ Disney Vacation Planner
Updated 12:39 AM ET November 1, 1999 By Stephen Weeks
HONG KONG (Reuters) - Hong Kong looks set to land its
dream deal with The Walt Disney Company to build a multi- billion-dollar
theme park and tourist complex in this special administrative
region of China.
Analysts said the Disney park, which will take five
years to complete, would give Hong Kong a psychological boost
rather than provide a quick fix for its struggling economy.
"It may be good for hotels and tourism and it may have
some spillover effect," said ABN Amro economist Eddie Wong. It
would also give a "feel-good" sentiment to the Hong Kong stock
market. Hong Kong government spokesman Stephen Lam said Monday
that talks with Disney had been completed and an announcement
would be made later in the day.
He gave no details on the outcome of the negotiations,
begun in March, but he said a series of briefings would be held
this week, indicating a deal had been done. It would be the second
Disney theme park in Asia, with the other in Tokyo.
"We have completed our negotiations...Tomorrow there
will be a series of briefings at Government House," he told reporters.
At the Tuesday meetings, negotiators are expected to brief Chief
Executive Tung Chee-hwa and the media on the Disney deal, which
is likely to include two theme parks at Penny's Bay on Lantau
The site, minutes from Hong Kong's new international
airport, is expected to boast several hotels and restaurants,
and a nightlife entertainment area similar to "Downtown Disney"
at the flagship Florida resort complex.
HONG KONG NEEDS DISNEY MAGIC
Unconfirmed newspaper reports said Disney would invest
US$200 million to US$250 million in the theme park-resort and
the Hong Kong government would invest about US$2.5 billion in
Hong Kong, struggling to emerge from two years of economic
hardship, could use some Disney magic. Its economy has been battered
by the Asian financial crisis, contracting 5.1 percent in 1998
and expected to growth only a modest 0.5 percent in 1999.
Unemployment, at 6.1 percent, is near record levels.
"It will boost Hong Kong's GDP but I think the question
is whether it's a good investment," Wong said. "It really depends
on what the costs are. How much the Hong Kong government will
pay," he added.
Newspaper reports have said the project will cost about
HK$22 billion (US$2.83 billion), or about 1.7 percent of GDP in
1998. Spread over four years, the Disney project's contribution
to GDP will be 0.4 percent a year, analysts estimated.
FIRMS LIKELY TO BENEFIT
Looking for local winners if the deal is done, analysts
have often mentioned construction firms Cheung Kong and sister
company Hutchison Whampoa .
Kwoong Chung Bus Holdings Ltd, a bus operator on Lantau,
and HKR International Ltd, the major property developer of Discovery
Bay on Lantau were likely to benefit, said Adrian Ngan, head of
Hong Kong research at BNP-Prime Peregrine Securities.
"HKR International has a land bank in Discovery Bay
which could supply accommodation to Disney staff and it could
also build hotel facilities to supplement the theme park," Ngan
But he cautioned that those companies which participate
in the project would take a long time to see a real contribution.
"A Disney theme park will take several years to build
and it will not see any profit in the first few years," he added.
(US$1 - HK$7.77)