Disney, Hong Kong Partner to Build New Theme Park

Walt Disney Co. and the Hong Kong government announced a long-awaited deal today to build a theme park in this bustling financial hub, an agreement that would give Asia its second Magic Kingdom and grant Disney access to millions of Chinese customers.

Negotiators went down to the wire Monday to hammer out a $2.9-billion deal that would make Disney and Hong Kong joint partners in developing a 311.2-acre entertainment complex on Lantau Island, a lush, sparsely populated area west of Hong Kong proper.

Plans call for the Hong Kong government to provide about $2.6 billion in government loans, land and infrastructure improvements in exchange for a 57% stake in the project. Disney would invest $318 million to build the complex, which would include a Disneyland, two or three resort hotels, shops and restaurants. About $300 million in commercial loans would make up the difference.

The complex would be the biggest development project undertaken by Hong Kong since the former British colony returned to Chinese control two years ago. Battered by a lingering recession and the Asian financial crisis, many Hong Kong residents view the proposed Magic Kingdom as a magic bullet to get the economy going again.

The Hong Kong park would be larger than Tokyo’s nearly 200 acres, but much smaller than the 1,500-acre Disneyland Paris.

“This world-class development will mark the beginning of a new era for Hong Kong,” said Hong Kong’s chief executive, Tung Chee-hwa.

Weary from months of haggling, Disney executives spent this morning briefing Hong Kong’s executive council and legislature, both of which must approve the deal. Although some activists and analysts have expressed reservations about the financial and environmental impact, observers expect the project to easily win official blessing.

Public support for locating Disney’s third overseas park here, after Tokyo and Paris, has run high since Tung raised the possibility.

But analysts caution that the park, to be opened in 2005, will take years to recoup its initial outlay. And a few opponents criticized the government for rushing to import Mickey Mouse rather than cultivating a home-grown product that better reflects Hong Kong’s culture and heritage.

“It would be a pirated copy of the Magic Kingdom,” lamented Mei Ng, director of Friends of the Earth, an environmental group. “Why do we have to be like everybody else?”

Disney’s representatives have striven to show themselves to be sensitive to local concerns. They are mindful of the buzz saw of problems they ran into selling Disneyland Paris to the French, who saw the park’s no-alcohol policy and other supposedly wholesome traits as examples of cultural imperialism.

The Burbank-based entertainment giant has contemplated locating a theme park in China for the last seven years. But the company has run afoul of the Beijing regime with movies about Tibet and other points of controversy.

By locating a park in Hong Kong, Disney will benefit from the city’s status as a part of China that retains a mostly separate administration according to the “one country, two systems” policy governing Hong Kong’s reversion to Chinese sovereignty. Also, there is room for the park to expand in the future.

Construction of the proposed park will require reclamation of most of the land underlying Penny’s Bay, a quiet harbor tucked in Lantau’s northeastern corner, bordered by pristine woodland. This alone is projected to cost the government more than $500 million. Infrastructure improvements--roads, rail lines, ferry piers and other facilities--will cost about $460 million more.

Proponents say the deal will help bring down Hong Kong’s stubborn unemployment rate, now about 6%. But labor groups are skeptical, noting that most of the jobs will be low-skilled positions for which the government may ship in migrant workers to keep costs down.