Economist suggests estimate of indirect benefits of express rail to HK

Local | 31 Jul 2017 1:55 pm

An economist has urged the government to provide more data on the indirect economic benefits offered by the Express Rail Link to Guangzhou, to give the public more reasons to support the project.

There have been doubts over the high-speed line's economic impact, since the government scaled back its estimated return on the project from six to four percent in 2015 – citing rising construction costs and slowing economic growth in the Pearl River Delta region.

Andy Kwan, director of ACE Centre for Business and Economic Research, says the four-percent projection is less than half what the figure should be for a project of this scope.

Usually when we look at the rate of return for mega infrastructure, we talk about double-digit, more than 10 percent. Four percent is really really low”, he said.

"It’s very similar to investing money in 30-year bonds. The rate is about 3 percent, but there’s no risk. But when we talk about the express railway, it involves a lot of uncertainties like the economic cycle and the population growth and all kinds of stuff. So we’re talking about risks,'' Kwan explained.

But he said the government’s projection model does not include the indirect benefits that the project will bring.

"It only looks at time-saving [element], so I think it’s worth doing to quantify the indirect benefit and also induced benefit to see whether the government can give more solid reasons to support this project,'' Kwan said.

He also suggested that the government can try to provide better services to passengers and to offer better connectivity along with better marketing for the rail link, to ensure that the project is profitable.-RTHK



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