Hong Kong government to finance new cruise terminal

HONG KONG, Sept 30 (Reuters) - Hong Kong, one of the world’s iconic port cities, said on Tuesday it would finance a new HK$7 billion ($900 million) cruise terminal to avoid further delays after an earlier failure to find suitable investors.

Hong Kong has long been hampered by limited facilities to handle cruise ships while rivals Singapore and Shanghai have surged ahead with new luxury liner berthing facilities.

The major infrastructure project is expected to bring a wave of economic benefits and position Hong Kong as an Asian cruise-terminal hub but potential developers including Sun Hung Kai Properties 0016.HK and Cheung Kong (Holdings) 0001.HK failed to reach agreements with the government.

The government said it would now finance, design and build the project by 2013 to avoid the risk of further delays. The finished terminal will then be leased to a cruise terminal operator.

The Hong Kong government warned however that the project’s price tag might rise, with financing yet to be approved by the city’s legislature.

“The construction cost will see a very significant surge and it will be very difficult to predict the trend, nonetheless our colleagues have made a project estimate ... in the order of HK$7 billion dollars,” Rita Lau, Hong Kong’s Secretary for Commerce and Economic Development told reporters.

Hong Kong has been chasing a slice of the lucrative Asian cruise liner market, amid an expected industry boom as Asians become wealthier, and western tourists look beyond global hotspots like the Caribbean and the Mediterranean.

Authorities believe the new cruise liner terminal will bring economic benefits of up to $282 million per annum by 2020, and create between 6,900 and 10,900 new jobs.

“Tourism is a very important economic pillar of Hong Kong so it’ll be in the interests of Hong Kong to support infrastructure which supports the development of tourism,” Lau added.

Hong Kong had initially hoped to open the terminal in 2012, with rivals Singapore planning a bigger cruise terminal in 2010. (Reporting by James Pomfret; Editing by Valerie Lee)