CY Leung to change nothing?

A sudden outbreak of Death, Hong Kong-style. A woman committing suicide leaps from a tall building, landing on – and of course killing – an innocent bystander. I recall the first time I heard of such a thing happening many, many years ago. I mentioned it to a colleague, imagining the tragedy was unprecedented and thus fascinating. Instead, she turned very angry, banged the desk with her hand and said, “I hate it when people do that – it’s so selfish!” The Standard’s angle is that we should make sure our maids are adequately insured.

And then (ignoring the guy found hanged in a Macau-bound airplane’s toilet) we have this month’s body in a suitcase. This is eerie as it comes amid a two-day period when 75% of the people I see in Central have been dragging huge wheeled suitcases around with them. I assumed the confluence of yesterday’s Ching Ming holiday and the forthcoming four-day Easter weekend had motivated the herd-like ones to take a Spring break on some Southeast Asian beach. Maybe they were up to something else. The cases did seem heavy.

This bring us rather neatly to the inevitable revisionist treatment of Hong Kong’s recent quasi-election. Calculating the wonderfully low number of working hours I have to endure in early April, I wondered whether we would not have been better off after all with Henry Tang as Chief Executive. The (only) reason being that he did promise us an extra seven, or 39, or something extra holidays a year, and I find this one-day-on-four-days-off routine to my liking.

And now GK Research’s Cathy Holcombe writes in the Wall Street Journal that when it comes to CY Leung reforming the land/property regime, “all the talk of change will come to naught. The system is unwindable.” She quotes a leading local property agent as saying of the land system, “we have always done it this way. How can we do it differently?” Of course, he would say that. A Neolithic cave-trader would have said it 10,000 years ago when someone first suggested building and living in houses.

One person who did propose unwinding the system was economist William Overholt in a report called Hong Kong: Between Third World and First. He estimated the process would take 20 years, and if the government had picked up on the idea we would be well over two-thirds of the way through it by now. It doesn’t seem to be on-line but the HK Democratic Federation helpfully offers a transcription of his presentation to them.

Since then, Hong Kong as a community has undergone a noticeable raising of awareness – a sort of popular enlightenment that was probably triggered by Tung Chee-hwa. People think differently, not least about property tycoons (the Chinese version of Alice Poon’s Land and the Ruling Class probably played a part here.) People once just took the land system for granted or saw it as positive; now they see it as corrupt.

Alongside the Holcombe WSJ article is an editorial pointing out that the potential for corruption in our lands system largely comes down to the significant discretionary powers granted to bureaucrats who negotiate the cost of development rights with the developers. The way to fix this is to move to a rules-based system, and the ideal way to do that is to move from large up-front payments for land and development rights to annual taxes on land and property. On paper, it is simple. The assumption is that bureaucrats would fiercely resist any such thing. So the question is whether CY Leung will bow to them like his predecessors, or whether he has some ancient Transylvanian remedy to correct them – possibly inspired by Vlad the Impaler.

I have just bought one board lot of Sun Hung Kai Properties: the Kwok brothers go to prison – I lose HK$95,000. I call that a bargain.

…and an even greater pleasure than declaring this double-size weekend open.

Click to hear the Who’s ‘Bargain’!


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16 Responses to CY Leung to change nothing?

  1. Jonathan Stanley says:

    Surely the correct play for SHKP would be to short the stock? Profiting from the Kwoks going into the slammer… own medicine, revenge, cold?

  2. Bela Lugosi says:

    You see, the strange events have already begun…

    And yes, you are almost there. It’s all about land.


    PART 3

    RULE: A vampire can only rest on his native soil.

    EVIDENCE: According to Eastern European folklore, the Undead must rest in their native soil, which should also be their “final resting place”. When Dracula moves to England, he must take with him large troughs of his native soil; it allows him to travel and establish himself in a foreign land. During the story, the earth boxes diminish in number, thus threatening Dracula with final extinction.

    COMMENTARY: Will CY reside at Government House? It would appear to be unlikely without special preparation. Yet its grand, quasi-Gothic tower and gloomy atmosphere must be lures to any Transylvanian. Further attractions are the wide ceremonial gates, the spikes on the walls, the expansive grounds which may occasionally trap morning mists. Its position facing Victoria Peak to the South also makes the building favourable to those yearning in some way for a scent of the Carpathians. Government House is known to have derelict air raid shelters and other catacombs for periods of seclusion. The Tsang koi fishpond will have to be filled in, naturally. Most attractive of all for CY perhaps is the hideous blood-red carpet of the Dining Room, which seems to cry out for excesses of carnage:

    This Governor will not make many journeys overseas.

    Existentially speaking, and also by extension, the loss of the Mainland base in CY, an alienation from the Mainland, will cause him great problems. We should expect a loyalty to the Mainland as much as a profound loyalty to Hong Kong. The native soil in question is however that of Hong Kong, which may lead to questions regarding his ultimate loyalties from certain quarters. The fact that his roots can ultimately be traced back to Weihai in Shandong, tainted by being a former British port colony, is a source of concern in this respect.

  3. Old Timer says:

    Saw CY yesterday being chauffered out of his (I assume) home at Number 4 Peel Rise, whereupon my dog, right on cue, took a huge dump on the grassy area just outside the gates. For once, I didn’t feel the need to clean it up.

  4. PropertyDeveloper says:

    Winky will no doubt start by arguing that the present land and property system is only barely workable, the result of repeated compromises between colonial and neocolonial philosophies, between enlightened international theory and horny-handed bumiputra practice. (Cf. Austin Coates.)

    As such, the coexistence of three systems — the old, the new, and the obligatory transition period, of arbitrary duration — is guaranteed to muddy the waters and hence allow the fish to be poached. In other words, any change would be “difficult”.

    Transferring the tax burden, she will buxomly continue, from one-off acquisition costs to ongoing taxes, will cause a collapse in property prices. In the ideal world, perhaps a good idea, but people will blame the government, and then where will we be?

  5. Probably says:


    A collapse in property prices? Surely what disaster would befall HK from such a turn of events? Maybe a substantial part of the population could finally afford to buy their own property and afford a mortgage? Perish the thought.

    Who complains when the price of every other essential commodity in life, such as beer for example, falls? It actually stimulates the market – otherwise “Happy Hours” would fail to exist.

    The idea of moving from a one-off payment to an ongoing land tax will also open up the market to smaller developers who don’t have the deep pockets of the big 4 to initially fund one-off lump sums. Certainly this idea should be a top priority for CY to follow up on and why not look at selling off public housing as well whilst he’s at it (a la Thatcher in the 80s) to create a property owning democracy…oh..

  6. R lloyd says:

    If i still owned all the beer i had ever bought and was counting on selling it on i would be extremely concerned about the fall in beer prices – its a false analogy.

    lower property prices mauls HK’s middle class like nothing else remember the early 2000s!

    and who thinks that article 23 would really have been that big an issue if property had still been booming. that was a lightening rod for a pissed off population.

    If property wasnt controlled by the tycoons there wouldn’t be such discontent over rising prices, its the feeling we are being gamed and farmed that is the problem

  7. Real Tax Payer says:

    I would love to see the Kwok Bros go to prison, especially if they put them both in one cell with Rafael next door with a cell to himself.

    If I also pay $95K will it help ?

    How much to see Lee Shau Kee in balls and chain ?

    There is a house in New Orleans………….

    PS: Sometimes , idiotic and old- fashioned though it sounds, it feels good to have earned one’s dough cleanly and paid all one’s taxes . It certainly makes sleeping at night a lot easier.

  8. David Webb says:

    Not quite “annual taxes on land and property”, but what we need is higher ground rents in new land leases and lease conversions, thereby lowering the up-front premiums. Currently ground rent on new leases is only 3% of rateable value. I proposed 30% in the article at the link above. We can’t touch existing leases until they expire (as many will in 35 years time and thereafter). We could raise the general Rates (currently 5%) but only for reasonable expenditure requirements – they were originally intended to pay for the police and street lighting.

  9. PropertyDeveloper says:

    > Jonathan,

    I think Hemlock may have been self-deprecatingly ironic, as he’s in a win-win situation. Because the Kwoks may follow the example of Stephen Chan, Sally Au and others, blindly buying on dips is the only rational strategy, knowing how cyclical and short-sighted the stock market is (cf. his prophetic comments in July 2005).

  10. Pete says:

    I’d also like to see the Kwok brothers sent to prison, if only because Sun Hung Kai owns KMB which inflicts RoadShow on tens of thousands of innocent bus passengers every day.

    If it’s so great, maybe a RoadShow screen could be fitted in their cell, to subject them to the same brainless adverts 24/7?

  11. So, So Thirsty says:

    If Thomas Kwok is sent to prison, would he have to have a haircut?

  12. Walter De Havilland says:

    Stop wigging Thomas KWOK, he has a fair head of hair and is clearly a Harvard graduate.

  13. Real Tax Payer says:

    @ Pete

    Not just non-stop road show ads at max volume 24/7 , but also air-con turned t0 10 deg and KMB diesel fumes blown continuously into the cell

  14. stanley gibbons says:

    Thomas has a gimpy ear which is why he chooses to sport the daft ‘do.

  15. Hendrick says:

    All that dosh and he can’t have a new one fixed ? How does he wear sunglasses ?

  16. Probably says:

    All of you KMB Roadshow fans should be grateful. Otherwise without it bus fares would have to double to make the service viable.

    And when is the highly intelligent David Webb going to stand for CE?

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