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Transcript of speech by Mr Jack So on HK$5 Billion Revolving Credit Facility Signing Ceremony


7 December 2015

Bankers, friends, ladies and gentlemen,

It is my great honour today to be here at the signing ceremony for this HK$5 billion revolving credit facility. I understand that we have the participation of 21 banks, and the issue is 3.4 times oversubscribed. This shows great support from the banking community, not only for the Airport Authority, but also for Hong Kong. I also understand that the interest rate is capped at a very low level, so I can afford to treat you all to lunch today.

Looking back at my personal career – throughout my time with various public utilities, from MTR to PCCW and now the Airport Authority – I have been very lucky to have a close relationship with the banking community all these years. You have seen me move from underground to above ground, and now into the air. Unless I go into the outer space and I have no intention, so this is probably my last job.

Speaking of the money raised, we have said that it will be for general operational purposes. But we can also tell you, as far as the law allows, some of the resources will be used to prepare for the Three-runway System – for its design, preparation, preliminary work, etc. We want to have as much preparation done as possible, because we are anxious for the project to get off the ground as soon as possible, hopefully by the middle of next year.

I do not want to go into long detail of why the project is necessary. I just want to say that we are near a saturation point. From 1998, when HKIA moved to Chek Lap Kok, both passengers and cargo have more than doubled. HKIA is now the world’s third-largest international airport and the largest cargo airport, something that Hong Kong should be very proud of. But unfortunately, it is near capacity, and unless we expand, travellers and passengers are going to experience delays, inconvenience, congestion and even potential safety issues.   More importantly, if we do not expand, future flights may be diverted to other destinations. Hong Kong would be at risk of losing its position as the aviation hub of Asia. This would also have a negative impact on our tourism, financial and logistics sectors, because all the other airports in the region are expanding, including Shanghai, Incheon, Singapore and Guangzhou. To maintain our position and competitiveness, we must do this as quickly as possible.

Now, taking the opportunity of this occasion, there are two issues I would like to clarify. One is that some media have quoted the recent revision of the budgetary figures using the wrong term that Airport Authority has again cost overrun. It is not a cost overrun. We have not started the project. How can we have a cost overrun? This is nothing more than a revision of the budgetary figure from a previous figure, one that was determined many years ago according to money-of-the-day prices. This is why we have revised the figure from HK$84.5 billion to HK$141.5 billion. We have revised the budgetary figure according to the Government’s cost and living index.

But having said that, I think we should remind ourselves of two things. First, the true cost will be revealed when the tenders come in through an open tender system. In the meantime, what we have are just estimates. Second, we have to clarify that we are building more than a runway. We are building an almost 4,000-metre runway, plus an apron, a terminal with 50 more gates, a driver-less train underground and another baggage handling system. It’s like building an entirely new airport. That’s what it is. And as far as financing is concerned, the HK$141.5 billion is being financed partly by internal resources and partly by loans. So bankers, you have more business to look forward to.

We have every confidence that these loans will be fully repaid by our future revenue streams. So that’s how it is being financed. We have no intention of going to LegCo to seek public funds.

The second issue I would like to clarify relates to comments in the media that because certain mega projects have recently been delayed or cost overrun, they are calling a halt for all infrastructure projects. I feel this is totally unreasonable. First of all, of course I would not like to comment on other mega projects because they have different circumstances and reasons. But all I’m saying is that just because certain projects have experienced problems, this is not a reason for us to veto all infrastructure projects.   Hong Kong has to progress and maintain its competitiveness. So the Three-runway System is urgently needed. Even if we can start work next year, it will not be until 2023 when we can use the new facility. So we still have to make do with what we have to cater for the increase in demand. In the meantime, passenger numbers keeps increasing – last year, 6%, and this year, 8% so far. So it’s something that really can’t wait.

Cost overruns and delays are not the new norm. I can say that I have personal experience with many mega projects that have had no delays or overruns. And you know what I am referring to. The TDC had some projects; MTR had some projects in the past.

So what do we do? First of all, we have to work on a lot of the preparatory work as much as possible, particularly in terms of site investigation, so we know what exactly is underground where we are doing the reclamation. So far we have done 600 site investigation drills, so I think we are quite confident in our knowledge of what is underground. Second, the design of the Three-runway System is practical and not fanciful. I think this will prevent too many changes, which are very frequently the cause of claims and therefore cost overruns. And third, there’s nothing that can replace very diligent, close project monitoring. In this regard, I can only promise you that my colleagues and I will do our best. Not only we will do our best, but LegCo, the Government and the committees that are overseeing this particular project will too. So you can rest assured that it will be very closely monitored.

Finally, I would like to say thank you again for supporting this project. Hong Kong International Airport is for the people of Hong Kong. It is a source of pride. Whenever we come back to Hong Kong, we feel like we are home. Hong Kong International Airport, whether in Kai Tak or Chek Lap Kok, has grown with us and supported Hong Kong’s economic progress all these years. And the legend should not stop here. It should go on, and Hong Kong should continue to fly high. Thank you very much.

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