In
the comments section of my recent article in The Atlantic, a Hong Konger had some personal
gripes about the MTR, and wound up making some interesting points in
the process. I responded to her there, but I figure I'd share my
response here too. In this response I discuss some of the caveats of the Hong Kong transit system that I couldn't
explore in that piece
Hi Lina,
Thanks so much for these excellent comments! I wrote this upon returning from a research trip to China and Hong Kong and heard a lot of stories like yours first-hand as well. I absolutely agree that there have been many caveats to MTR's approach, which I unfortunately wasn't able to detail in this piece. So thank you for raising some of them here!
One of those is unquestionably the affect of Value Capture on real estate prices. Though I couldn't go into specifics, I wrote that "value charges are often displaced onto consumers, causing real estate prices to go up a little faster than they otherwise might." This is one of the effects you're seeing and rightly decrying in your neighborhood. That said, MTR has been practicing VC since its inception in 1979, but this real estate hyperinflation in Hong Kong has been more recent. So it's not owed exclusively to transit value capture, but to the huge influx of Chinese money into the Hong Kong economy, particularly the real estate sector, since the 1997 handover. You can probably tell us more about the broader inflationary effects of that, Lina, and I think the colorlessness of retail (especially in the malls) you mention is correlated with that bigger economic change rather than the MTR's specific malfeasance. I'm not sure which neighborhood you're referring to regarding new stations that are "not necessary", but given the time for construction, those kinds of capital investments are usually made in anticipation of future demand, not what's needed today. When the station is completed, people probably will be using it, maybe even inducing more demand. And with VC, those beneficiaries will be paying for those assets; riders won't. (Of course, it would be ridiculous for me to deny that decisions for transit planning are influenced by politics and power! Just look at this great Atlantic piece: http://bit.ly/18PPEoQ)
Second, you rightly flag the linkages between MTR and the government. An important detail I wasn't able to mention here, particularly to contrast private property-loving America, is that the government is the sole proprietor of land in Hong Kong and only leases it (and air rights) for extended periods. But more often than just giving land to MTR, it SELLS /leases that land and air rights to the MTR at "pre-rail" prices (say $1 billion). The MTR then "sub-leases" that property to other developers or renters at "post-rail" prices (the value of the land plus the monetary contribution of new transit that makes that land accessible, say $1.8 billion total), and then gets to keep the difference ($800m), which it invests in actually building the new transit infrastructure.
Despite this "market" orientation of the MTR, you're right about government involvement---before 2000, MTR was a public company; since then, the Government's been a 74% shareholder of the MTR Corporation. I'm admittedly not as personally familiar with Abraham Razack. But his presence on the Hong Kong Legislative Council, and as non-executive director of MTRC, is explicitly to represent real estate interests. But the composition of the LC as a democratic-corporatist hybrid representing different interest groups is a broader issue related to Hong Kong's model of democratic governance---not to the MTR and transit management specifically. (See this great FP piece by Adam Rose on how that democracy is managed and its relationship with Beijing, post-handover: http://atfp.co/18c6GRV).
And frankly, because mass transit is a PUBLIC good, I think that, though one can take issue with the make-up of any government, public sector influence in transport is vital; it not only helps steer economic development in ways that the market might neglect (such as the Fare Adjustment Mechanism), but ensures that its contributions remain fundamentally public and integrate land-use planning with access, even if its management is profit-driven. The fact that PUBLIC transit provides a tangible benefit to private interests---which should thus re-invest in the public good---lies at the heart of this model.
I wrote this primarily for those unfamiliar with Hong Kong, and specifically those interested in new models of transit financing. And on that measure, despite the challenges you highlight (and again, thank you for doing so!), the MTR deserves acknowledgement for those innovations.
Best,
Neil
Hi Lina,
Thanks so much for these excellent comments! I wrote this upon returning from a research trip to China and Hong Kong and heard a lot of stories like yours first-hand as well. I absolutely agree that there have been many caveats to MTR's approach, which I unfortunately wasn't able to detail in this piece. So thank you for raising some of them here!
One of those is unquestionably the affect of Value Capture on real estate prices. Though I couldn't go into specifics, I wrote that "value charges are often displaced onto consumers, causing real estate prices to go up a little faster than they otherwise might." This is one of the effects you're seeing and rightly decrying in your neighborhood. That said, MTR has been practicing VC since its inception in 1979, but this real estate hyperinflation in Hong Kong has been more recent. So it's not owed exclusively to transit value capture, but to the huge influx of Chinese money into the Hong Kong economy, particularly the real estate sector, since the 1997 handover. You can probably tell us more about the broader inflationary effects of that, Lina, and I think the colorlessness of retail (especially in the malls) you mention is correlated with that bigger economic change rather than the MTR's specific malfeasance. I'm not sure which neighborhood you're referring to regarding new stations that are "not necessary", but given the time for construction, those kinds of capital investments are usually made in anticipation of future demand, not what's needed today. When the station is completed, people probably will be using it, maybe even inducing more demand. And with VC, those beneficiaries will be paying for those assets; riders won't. (Of course, it would be ridiculous for me to deny that decisions for transit planning are influenced by politics and power! Just look at this great Atlantic piece: http://bit.ly/18PPEoQ)
Second, you rightly flag the linkages between MTR and the government. An important detail I wasn't able to mention here, particularly to contrast private property-loving America, is that the government is the sole proprietor of land in Hong Kong and only leases it (and air rights) for extended periods. But more often than just giving land to MTR, it SELLS /leases that land and air rights to the MTR at "pre-rail" prices (say $1 billion). The MTR then "sub-leases" that property to other developers or renters at "post-rail" prices (the value of the land plus the monetary contribution of new transit that makes that land accessible, say $1.8 billion total), and then gets to keep the difference ($800m), which it invests in actually building the new transit infrastructure.
Despite this "market" orientation of the MTR, you're right about government involvement---before 2000, MTR was a public company; since then, the Government's been a 74% shareholder of the MTR Corporation. I'm admittedly not as personally familiar with Abraham Razack. But his presence on the Hong Kong Legislative Council, and as non-executive director of MTRC, is explicitly to represent real estate interests. But the composition of the LC as a democratic-corporatist hybrid representing different interest groups is a broader issue related to Hong Kong's model of democratic governance---not to the MTR and transit management specifically. (See this great FP piece by Adam Rose on how that democracy is managed and its relationship with Beijing, post-handover: http://atfp.co/18c6GRV).
And frankly, because mass transit is a PUBLIC good, I think that, though one can take issue with the make-up of any government, public sector influence in transport is vital; it not only helps steer economic development in ways that the market might neglect (such as the Fare Adjustment Mechanism), but ensures that its contributions remain fundamentally public and integrate land-use planning with access, even if its management is profit-driven. The fact that PUBLIC transit provides a tangible benefit to private interests---which should thus re-invest in the public good---lies at the heart of this model.
I wrote this primarily for those unfamiliar with Hong Kong, and specifically those interested in new models of transit financing. And on that measure, despite the challenges you highlight (and again, thank you for doing so!), the MTR deserves acknowledgement for those innovations.
Best,
Neil
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