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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) that the government warned on Monday, even when lawmakers questioned the use of taxpayer money seemed ready to make approving the funds difficult.
The proposal, which the Legislative Council Finance Committee will review on Friday before a possible vote, could buy the tourist attraction long enough to stay afloat for another 12 months, said Secretary of Commerce and Economic Development Edward Yau Tang -wah.
The government had considered returning HK $ 10.64 billion to the park in January for a long-term renovation, but given the collapse of the tourism industry caused by the Covid-19 pandemic it now only weighed half that amount, according to Yau.
Emergency funding could provide a window for the administration to come up with a better plan for the park’s survival and allow for the payment of HK $ 3 billion in commercial debt, he said, describing the operational and financial challenges the park faced as “without precedents “. Another HK $ 5 billion is owed to the government.
Commerce and Economic Development Secretary Edward Yau said plans had changed due to the Covid-19 pandemic. Photo: K. Y. Cheng
“Without the help, there will only be one result: that Ocean Park will stop working,” Yau said. “That means Hong Kong will lose an educational and recreational park that has benefited so many Hong Kong people in recent decades, and significant tourism infrastructure.”
An interdepartmental committee will be created to consider the way forward for the attraction, including its funding sources, customer mix and structure, Yau said.
The park was forced to close its doors on January 26 due to the pandemic, and Leo Kung Lin-cheng, chairman of the park board, said he would run out of cash in June as he spent more than HK $ 140 million each month. “In recent months, the cash flow was a net loss of approximately HK $ 700 million,” said Kung.
The financing would provide a lifeline for 2,000 full-time workers and the same number of staff employed part-time. To cut costs, senior managers’ salaries have been drastically cut and staff have been asked to take vacations without pay.
I don’t think it’s a big deal if Ocean Park has to close
Felix Chung, Liberal Party
The park, established in 1977, underwent a major remodel between 2005 and 2012 that brought the number of attractions from 35 to more than 80, which along with more than 7,000 animals, helped increase attendance to a maximum of 7.7 million in 2012-13.
But the park recorded deficits of more than HK $ 200 million in successive years from the 2015-16 financial year, which more than doubled to HK $ 557 million in the most recent. Given the impact of social unrest sparked by anti-government protests that started in June, the park previously projected that its deficit would exceed HK $ 600 million for the 2019-20 fiscal year.
Only 1.9 million people visited the park between July and December, a decrease of 30% in the same period of 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 Ocean Park by turning what was a “Hong Kong People’s Park” into an attraction for tourists from the continent.
Ocean Park closed in January due to the Covid-19 pandemic. Photo: Nora Tam
While Wu said he appreciated that cash was needed quickly, he would not make a decision on the funding proposal until he had a chance to hear the government’s full plan at 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 blame us if we don’t approve the funding request and the park has to close,” Chung said. “The problem now is whether we should continue to pump money to support a company that loses money. I don’t think it’s a big deal if Ocean Park has to close. “
But tourism sector lawmaker Yiu Si-wing argued that the attraction “has made a huge contribution” to the local economy in recent decades and was part of Hong Kong’s collective memory.
Holden Chow Ho-ding, of Hong Kong’s main pro-government Democratic Alliance for Improvement and Progress party, which has 13 seats in Legco, called the latest proposal welcome. Funding was cut in half and the government also said it would reconsider the park’s development strategy. I think the public would appreciate it. “
The funding request can be passed to the Finance Committee with a simple majority vote of the members present.
A trainer feeds a whale in Ocean Park in 1979. Tourism sector lawmaker Yiu Si-wing sees the park as part of Hong Kong’s collective memory. Photo: Chan Kiu
Former Ocean Park President Allan Zeman said the bailout “makes a lot of sense” as it would help the company get rid of its debt and interest on loans while saving time in deciding which way to go.
The park should be looking for smart updates at minimal cost while looking for a new CEO and president, he said. Locals generally accounted for just 35 percent of overall visitors, so he expected the government to slowly reopen his border in a phased approach.
Hospitality professor Dennis Wong Ka-wing of the Hong Kong Institute of Vocational Education (Haking Wong) said the rescue was a step the government had to take and that the substantial sum was necessary to pay wages and debts.
Jason Wong Chun-tat, chairman of the Travel Industry Council and board member, said the tourism industry was drastically different from months ago when contemplating the previous expansion plan. Funding should cover daily expenses for a year, but it was too early to say what would happen next.
Former CEO Leung Chun-ying said the fact of the matter was whether Hong Kong still welcomed tourists from the mainland. “There is no market that can compensate for the loss [of mainland visitors]”He wrote in a Facebook post on Sunday, referring to the anti-continental sentiment sparked by anti-government protests. Leung said the park could not survive on local or foreign visitors alone.
This article Coronavirus: Hong Kong’s Ocean Park needs a HK $ 5 billion lifeline, but is it taking taxpayers for a ride? first appeared on the South China Morning Post
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