Second chance: Secretary for Commerce & Economic Development Frederick Ma says the Kai Tak cruise development project will be re-tendered.

The Kai Tak cruise development project will be re-tendered as submissions received in the previous exercise did not conform with requirements, Secretary for Commerce & Economic Development Frederick Ma has announced.

The Government will seek lawmakers' approval to fund the site formation works and facilities required for the provision of government services in this year's fourth quarter. The estimated cost ranges from $1.8 billion to $2 billion, but the Government may revise the figure after considering other factors.

Subject to lawmakers' approval, the Government will re-tender the site by year's end, aiming to award the tender by the third quarter of 2009. The first berth of the new cruise terminal is expected to begin operation by the second quarter of 2013.

Condition attractiveness

Speaking to reporters this afternoon, Mr Ma said two submissions were received in the previous tendering exercise which closed in March. One submission called for hotel rooms to be individually sold off, while the other asked to develop more commercial area.

"Through the last tender the market was tested and the response demonstrated the project with the current terms and conditions lacked attractiveness to the market, and the market was not willing to take up the project," he said.

"To ensure open and fair competition, and after careful consideration, the Government decided to re-tender the project."

Unlike conventional commercial development, the cruise terminal project requires extensive site formation works and the provision of government facilities such as customs, immigration, health quarantine and police facilities for cruise terminal operation and a landscaped deck.

To ensure Hong Kong will capitalise on cruise market growth opportunities, the Government will seek Legislative Council approval to fund the site formation works for, and the construction costs for government facilities in, the cruise terminal project.

Commercial flexibility

"In taking forward comprehensive development area projects it is not uncommon for the Government to require in the land lease the successful tenderer to design and construct specified Government or public facilities," Mr Ma said.

"This approach has the advantages of making more efficient use of the land resources, minimising interface issues and ensuring an integral design. There are also precedents of Government paying the successful tenderer the capital cost of basic infrastructure or government facilities. In the case of the cruise terminal, such funding support would help enhance the attractiveness of the project to the market."

With experience from the last tender, the Government will update and elaborate requirements to enhance commercial flexibility, add clarity to its requirements and track the latest market trends.