To enhance Hong Kong's stature as a tourism hub, the SAR government has decided to set up a mega cruise terminal that can handle vessels up to a displacement tonnage of 100,000 by 2012.

The spectacular terminal will be built in South East Kowloon. With a capacity of three berths, the new cruise terminal will attract more visitors to Hong Kong.

The Executive Council yesterday approved construction of a cruise terminal on the 7.6 hectare site on the southern tip of the runway of the former Kai Tak Airport.

Travel-related facilities such as hotels, shopping centres and convention centres will also be built on the lands adjacent to the cruise terminal.

"The selected site is the only place within the Victoria Harbour capable of providing two or more alongside berths without reclamation," Secretary for Economic Development & Labour Stephen Ip said later yesterday.

The government will invite and open tender to develop the cruise terminal project, he added.

Apart from bearing the cost for site formation, reconstruction of the seawall, construction of the berths, the successful bidder will be required to design, build and operate the related facilities for a period of 50 years, Ip said. The successful bidder will also be granted the right to develop the commercial, office and retail facilities up to a gross floor area of 50,000 square metres in the terminal building.

It is estimated that the development cost for the berthing and supporting facilities will be around HK$2.4 billion.

"We aim at mega cruise vessels up to a displacement tonnage of 100,000 to meet the growing cruise industry trend of building larger cruise vessels," he told a press conference.

"Depending on the implementation programme of the successful bidder, the first berth is expected to be completed in 2012.

"He will also be required to build and operate the second berth, while space has been set aside in the revised outline zoning plan for a third berth," he said. Since it is the wish of the public to build the cruise terminal as soon as possible, the project is expected to go on ahead of the entire South East Kowloon Development project.

Tourism Commissioner Au King-chi added that as the global cruise industry is growing fast, the Asia-Pacific market will benefit from the growth of worldwide industry and increase in mainland markets.

Hong Kong is well-placed to become a regional cruise hub and a new cruise terminal is therefore necessary, he said.

Quoting a 2004 survey by the Hong Kong Tourism Board, she said 52 per cent mainland visitors expressed interest in joining cruise vacations, of whom more than 80 per cent would like to join conventional cruises from Hong Kong.

Although the government is not seeking any profit sharing from the cruise terminal operator, it is estimated that economic benefits will top HK$1.4-HK$2.2 billion by 2020 together with 6,900-10,900 job opportunities per annum.

The government's plan received warm welcome from across the board.

Hong Kong Tourism Board chairman Selina Chow said the cruise terminal would benefit tourism development in Hong Kong.

As to the operational pattern, she felt the Build-Operate-Transfer (BOT) model was the best option, because the private sector is more efficient to operate the cruise terminal than the government.

Democratic Party chairman Lee Wing-tat also supported construction of the cruise terminal at the Kai Tak site and said BOT would be the best business model, he said.

This will eliminate the building and investment risks on the part of the government and transfer the risks to the operator.

He, however, added there should be adequate transport facilities for the tourists to shop and dine in the city centre.

Michael Li, executive director of The Federation of Hong Kong Hotel Owners, welcomed the plan, saying it would enhance Hong Kong's position as a cruise hub and attract more visitors from the mainland.

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