HONG KONG - A judder of concern rippled through Hong Kong's small band of
conservationists this week when developer Wharf Holdings handed over 50% of its
interest in the city's ancient electric tram system to French conglomerate
Veolia Environnement along with the prospect of the entire operation changing
hands at some future date.
The new partnership between Wharf and Veolia Transport sought to allay worry
that their deal would derail the iconic 105-year-old transport link that
joggles passengers along the 13-kilometer-plus strip between Kennedy Town and
Shau Kei Wan on Hong Kong Island's harbor-framing northern coast. Its cheapness
and convenience apart, Hong Kong trams offer with (Wharf-owned) Star ferries
and the 120-year-old funicular Peak Tram a rare visible
link with Hong Kong's fast disappearing colonial past.
Veolia's Bruno Charrade, the designated managing director for Hong Kong
Tramways, said the French outfit was fully aware that the tramway was part of
Hong Kong's cultural heritage. "We are committed to protecting and preserving
it," he said.
Frankie Yick, director of Wharf Transport Investments, a subsidiary of the
Wharf Holdings, also made it clear that Veolia was far from a random or hurried
choice as partner. A number of parties had approached Wharf over recent years
interested in the tram operations, he said.
Veolia Transport "has shown great sincerity and commitment through more than
two years of discussions and study before coming to the arrangement", Yick
said. "It's not because the business is unprofitable that we want to sell it,
nor that we can't manage it. We just wanted to bring in Veolia Transport's
operational know-how, particularly in areas of customer service, safety,
maintenance and training.'' Two senior management level staff from Veolia are
to join the present workforce of 700.
Both parties said there will be no changes to the current daily services of
Hong Kong Tramways or the tram fares - at a fixed HK$2 (US$0.26) full fare and
half that for elderly and young passengers, the service offers the cheapest, if
slowest, transport on the island.
That pledge should please the near quarter-million people who each day jump on
and off the one or other of 161 double-deck tramcars. More than 82 million
passengers were carried last year, while numerous party-goers use two antique
trams set aside for mobile carousing. According to Wharf, the system last year
generated annual revenue of HK$150 million from passenger rides and another
HK$50 million from advertising.
Secretary for Transport and Housing Eva Cheng said the government has stressed
to Wharf and Veolia that it will be vital to preserve the trams' tradition,
including the system's look and design as they have become a unique piece of
Hong Kong's cultural heritage.
"Tramways play a significant role in our public transport system and form part
of Hong Kong's history and culture," she said. "The new and existing
shareholders have assured [us that they] recognize its importance."
Given that stance, and the limited opportunity for expansion, Wharf's claim
that it could benefit from Veolia know-how has a strange ring. The Hong Kong
company has, after all, run the service, which includes a loop around the
famous Happy Valley racecourse, for the past 34 years.
One project that might benefit from Veolia's world-wide experience in more
modern transport developments is a possible spur line from Hong Kong's top-end
business district, Central, towards the city's main exhibition and convention
center.
"One further idea we are... developing is the creation of a tram loop
along the new harbor waterfront between Central and Wanchai to showcase Hong
Kong Tramways' unique heritage to Hong Kong residents and tourists," Charrade
said.
That is small fry for Veolia, which runs 17 tram systems in cities across 10
countries including Berlin and St Etienne in France - both of which are systems
of cultural value that have been in operation for over a century. In January,
it announced a joint venture with French railway-operator RATP Developpement to
expand in Asia, with China, South Korea and India the main targets, just after
Veolia secured its first China contract in a deal to operate bus networks in
six cities in Jiangsu and Anhui provinces.
"Operating the light rail system in Hong Kong will give us knowledge and
expertise in mainland China. That's strategically why we chose to start in Hong
Kong," said Charrade. There was a trend back towards tram systems - a more
environmentally friendly mode of transport - and the mainland would need trams
in the future, he said.
The "less than 100 million euros" (US$133 million) Veolia is paying Wharf for
the Hong Kong Tramways stake is pocket change for the French company, whose
networks carry more than 2.7 billion passengers per year, earning 6 billion
euros in revenue in 2008.
But giving Veolia responsibility for the operation and management of the system
will free up some resources for Wharf to focus on its main concern, property
development, which has taken a hit in the economic downturn - the company last
month reported a 52% plunge in profit to HK$6.25 billion.
Two office and retail developments, the fashionable Times Square on Hong Kong
Island and Harbour City across the water in Kowloon, make up 46% of Wharf's
assets. The company also owns Times Square complexes in mainland cities
including Beijing, Shanghai, Dalian and Wuhan, and possibly shares growing
anxiety of the risks posed by an excess of investment in office construction
and overbuilding in the mainland (see today's Asia Times Online story, China's
unreal estate, by Chan Akya).
Analysts greeted Wharf's result with little enthusiasm. "They don’t have a
bright spot they can count on for future growth," said Francis Lun, general
manager at Fulbright Securities Ltd. in Hong Kong, according to a Bloomberg
report. "It's basically an unexciting property play."
Wharf does have other parts of its business it could sell off, such as its 74%
owned pay-television outfit, I-Cable Communications Ltd, which posted a net
loss of HK$111 million for last year.
Of more concern to preservationists and Hong Kong residents is Wharf's
ownership of the city's other iconic transport system, the Star Ferry Company,
whose 12 boats shuttle passengers across the ever-diminishing harbor between
the Island and Kowloon (and once carried author Richard Mason's star-crossed
fictional lovers Suzie Wong and Robert Lomax).
Wharf Transport director Frankie Yick said the company has no plans to sell the
Star Ferry at the moment. Even so, billionaire Peter K C Woo, chairman of Wharf
and its ultimate parent, Wheelock & Co, did not become the city's
seventh-richest man on the base of sentimentality.
While Wharf's existence predates Hong Kong Tramways (construction started in
1904) by 18 years, its website gives little away about its near-century-long
success story under British colonial rule. The company's most recent financial
report skips immediately from its date of founding in 1886 to 2007 activity
without a second glance backwards.
Veolia Environnement's chairman and chief executive Henri Proglio heads a
company with an even longer past, in this case airbrushed by its neologistic
name concocted amid a restructuring in 1999 to replace "Vivendi Water", which
only a year earlier replaced the original company name, Compagnie Generale des
Eaux, used since it was founded in 1853.
Alan Cheung, vice-chairman of the Hong Kong Collectors' Society, said he hoped
Veolia will improve the tram system while preserving the local culture. The
trams are a "Hong Kong treasure. If the new shareholder could operate the tram
business as in the past, we tram-lovers will feel fine." One possible
improvement for the often overwhelmingly humid 90-minute trip along the
island's length would be the more extensive introduction of airconditioning -
but that could end an 11-year moratorium on fare increases.
Veolia Environnement is no stranger to Hong Kong, the parent company having had
a presence there for 15 years, dealing in waste treatment, landfill design and
construction services, and now employing more than 660 people. That should give
it some insight into local sentiment.
Yet this is a city whose concern for progress far outweighs concern for
historic incongruities. Queen Victoria, who died shortly before the British
government gave the final go-ahead for a Hong Kong tram network, would
understand. Her statue, now shunted from its place at the city's bureaucratic
and business nexus in Central to an obscure spot in the aptly named Victoria
Park several tram stops away, is still close enough on a quiet evening to just
hear the passing trams' warning "ding-ding" bell. Yet she might turn in her
grave if she knew this week's deal could allow a French company to sound
the system's death knell.
Olivia Chung is a senior Asia Times Online reporter.
(Copyright 2009 Asia Times Online (Holdings) Ltd. All rights reserved. Please
contact us about
sales, syndication and
republishing.)
Head
Office: Unit B, 16/F, Li Dong Building, No. 9 Li Yuen Street East,
Central, Hong Kong Thailand Bureau:
11/13 Petchkasem Road, Hua Hin, Prachuab Kirikhan, Thailand 77110
