Hong Kong Chief Executive John Lee has said the addition of a national security provision to land leases, which allows the government to disqualify bids on security grounds, “has no relevance at all” on developers’ bidding decisions.
Lee’s comment came after the Hong Kong Economic Times reported on Monday that the Lands Department had included a new national security provision to its terms and conditions for land sale and short term tenancy from November.
Hong Kong’s major property stocks all saw a decline on Monday following the report, with New World Development leading the plunge with a loss of 6.68 per cent from its stock price.
According to the department website, the new term allows the government to disqualify a bidder if it, its parent firm or the company it acts as an agent for “has engaged, is engaging, or is reasonably believed to have engaged or be engaging in any acts or activities that are likely to cause or constitute the occurrence of offences endangering national security.”
The government can also reject bids “in the interest of national security” or for the protection of “the public interest of Hong Kong, public morals, public order or public safety.”
When asked during his weekly press briefing on Tuesday morning whether the drop in property stocks reflected a decrease in investor confidence, the chief executive said the provision “has been in place for quite a while,” and successful land transactions had been made since its introduction.
“So this factor… I think has no relevance at all to any decision by any businesses who are interested in bidding for sales of land,” Lee said.
“And I must emphasise that protecting national security is the responsibility of the whole region, the whole Hong Kong Special Administrative Region,” he said, adding that representatives from the property sector have indicated that they are in support of discharging such responsibility.
Hong Kong has yet to see a successful land sale this year. Three land development projects have been called off since the beginning of January after the tenders received did not meet the government’s minimum expectations.
The three cancelled projects were the sale of a site at Cape Road, Stanley, the first phase of the development plan at Siu Ho Wan, Lantau, and an urban renewal project at the town centre of Kwun Tong.
In June 2020, Beijing inserted national security legislation directly into Hong Kong’s mini-constitution – bypassing the local legislature – following a year of pro-democracy protests and unrest. It criminalised subversion, secession, collusion with foreign forces and terrorist acts, which were broadly defined to include disruption to transport and other infrastructure. The move gave police sweeping new powers, alarming democrats, civil society groups and trade partners, as such laws have been used broadly to silence and punish dissidents in China. However, the authorities say it has restored stability and peace to the city.
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