No happy endings in movie investmentsLocal | Winnie Chong 15 Nov 2012
Investments in local film projects - including the award-winning Echoes of the Rainbow - have not had a happy ending for the government.
The HK$320 million Film Development Fund spent HK$38 million per year, financing 22 movie productions and 79 film-related projects since 2007, but the fund could be depleted by mid-2015, a report by the Director of Audit said.
Echoes of the Rainbow won the Crystal Bear award at the 2010 Berlin Film Festival. It also won five local awards and five other international awards. The movie received government funding of HK$3.59 million, but it got just HK$2.95 million, or 80percent, of the cash back.
The director said that so far the government has recovered only 44.2percent of what it has given to producers.
The government said it could not recover part or all of its contributions to 10 films released before 2012. Among them were Strawberry Cliff, released in December 2011, and Coweb, from May 2009. Each received about HK$3 million in government funding. However, the government got back only HK$1,769 from Strawberry Cliff and nothing from Coweb.
The Director of Audit recognized that the government may face a high investment risk for financing film production. However, because public funds are involved, it needs to evaluate the acceptability of the low overall recovery rate, and assess the effectiveness of safeguards in ensuring their commercial viability.
To substantiate the commercial viability of a proposed film, an applicant has to secure financing from a third party. However, an assessment of 15 applications revealed that in six of them, the applicant was the third-party financier and in five, a related company was.
The report said the government should review the existing practice of using the applicant's ability to secure third-party financing as a measure of the film's commercial viability.
Veteran filmmaker John Shum Kin-fun, a member of the Hong Kong Film Development Council, said if a person wants him to invest in a movie, he will ask if the person is going to invest a similar amount. If he is, that means he is responsible enough, Shum said.