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Disney-Hong Kong Deal Doesn't Look Quite So Rosy Now

Venture: Environmentalists try to fight the $3.5-billion project, as questions of pollutants surround site.


HONG KONG — Exactly one year after Walt Disney Co. and Hong Kong's regional government reached their $3.5-billion deal to bring a Disneyland theme park to China's front door, a small but determined group of opponents is fighting a rear-guard action against the project.

Although they appear to stand little chance of derailing the plan, which enjoys strong public backing, some observers question whether the lack of any real debate prior to last year's announcement could provide fertile ground for these opponents if anything goes wrong with the ambitious scheme.

Local taxpayers will foot more than 80% of the total bill for Hong Kong Disneyland, which is likely to change the city's character once it opens in 2005.

Environmentalists, including Friends of the Earth, argue the government not only got a bad financial deal in its eagerness to attract such a prestigious project, but has exposed the city to unacceptable liability risks by failing to assure the Penny's Bay site on Lantau Island was free of toxic pollutants before it signed the Disney agreement.

The owner of a small, privately owned shipyard that has operated in the bay for much of the post-World War II era has consistently refused access to government environmental specialists, forcing them instead to work from samples taken on the yard's periphery.

"We believe the whole area could be badly contaminated," stated Plato K.T. Yip, assistant director of Friends of the Earth in Hong Kong.

Hong Kong government officials supervising the construction work say they are confident the bay is free of toxic pollutants.

"We've conducted a detailed investigation just outside the shipyard and in the seabed that butts up against it and our conclusion is that contamination levels are very low," stated William Chow, the official responsible for Disney-related construction in the city's Works Bureau. "We're confident no remedial action will be necessary."

Yip contends that the shipyard incident is just one of a series of incidents in which the Hong Kong government has violated the spirit, if not the letter, of existing environmental regulations to favor the project. Such action, he says, stems from a fundamental conflict of interest in which the government is supposed to be the regulatory watchdog over a project in which it holds a majority interest.

"The government shouldn't get involved in joint ventures," he said.

Under terms of the agreement, the Hong Kong government has committed to spending $1.74 billion preparing the Penny's Bay site and transportation access to it, plus another $1.5 billion in loans and cash for construction of the park itself and its support facilities. Disney is putting up $314 million of its own money.

Hong Kong has a 57% holding in the joint venture company, Hong International Theme Parks Ltd., with Disney owning 43%.

Environmental concerns have been heightened after a series of sea-life kills were reported in a nearby fishing community shortly after land reclamation work began at Penny's Bay last spring.

"One week after they started, we began getting affected by contamination," said Lai Tak-Tsuen, chairman of the fishermen's association in the village of Ma Wan, a few miles northeast of the construction work. "It's a big problem for us."

In the months since, Lai estimates his village has lost more than $2.5 million in income. Although there are now only around 12,000 fishermen in the increasingly urbanized Hong Kong region, they wield political clout disproportionate to their numbers, much as farmers in the United States.

The fishermen's representative in Hong Kong's Legislative Council, Wong Yung Kan, charged in an interview that the government badly underestimated the project's impact on the local fishing industry and demanded it protect their interests.

"Government officials must go to these people and find out from them what's going on," Wong said.

Chow said the government is investigating the fish kills but that preliminary evidence indicates they are unrelated to the Penny's Bay construction works.

"There are many possible reasons for what's happened, but the cause doesn't seem to come from Penny's Bay," he said. He noted adverse weather conditions as one possible cause, while other government officials note that other construction projects are also underway in the area.

Despite all this, the level of underlying support for the Disney project remains very strong in Hong Kong. Even Wong praises Disneyland as "good for our economic future," albeit only if the fish problem can be resolved.

The reason for such strong backing is not hard to understand: For the majority of Hong Kong's 6.9 million residents, Disney spells good news in capital letters.

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