The Chief Executive-in-Council has approved the financial arrangements for the Smart & Green Mass Transit System (SGMTS) in Kai Tak, with a number of innovative measures to be implemented to expedite project delivery, enhance cost effectiveness, and leverage the expertise and financial capability of the private sector.

The Government said that with a strong determination to break new ground, it has been working resolutely to introduce the SGMTSs through a “dual innovation” thinking on policy and technology.

Firstly, the entry of new local, Mainland and overseas investors and operators will be encouraged by selecting a franchisee to finance, design, construct, operate and maintain each new system via an open tender, which can enhance competition and bring in innovative thinking in the provision of public transport services.

The anticipated operating cost for the SGMTS is lower than that for heavy rail, hence a fiscal balance or even a profit can be achieved in its operation.

As the estimated profit from the operation of the SGMTS would normally not be able to cover the substantive capital investment, such as initial construction costs etc., the Government plans to provide funding support via a transit-oriented development (TOD) approach, where property development rights of TOD sites near the SGMTSs would be granted to the franchisees of the SGMTSs for holistic planning and development.

The Government noted that such an approach could unleash the development potential of the sites concerned, achieve synergy of the transit systems and property development, and enhance the business case.

The Government will also introduce a new technology-neutral, common and standardised regulatory framework via legislation to provide the statutory backing for granting and regulating franchises of these systems.

It is anticipated the new legislation could shorten the lead time and allow flexibility for the Government to swiftly grasp the opportunities brought about by technological breakthroughs. The target is to introduce the said bill into the Legislative Council within 2026.

Additionally, the Government will adopt a set of streamlined building control procedures and set up a dedicated interdepartmental one-stop platform, such that the franchisees and the relevant departments could deliberate on the design, construction and operation aspects at an early project stage, saving the franchisees' effort to seek comments and approvals from each authority individually, so as to expedite the entire approval process.

The Chief Executive-in-Council approved that property development rights of Sites 4B5, 4C4 and 4C5 in Kai Tak should be granted by way of private treaty grants at nominal premiums to the franchisee to be selected through open tender to provide funding support for the Kai Tak Project.

Tenders for the Kai Tak Project will be invited shortly, in which tenderers will be required to propose in their financial proposals a fixed sum payable to the Government for the grant of the SGMTS franchise and property development rights of the Sites.

The Government plans to award the tender for the Kai Tak Project in 2026 for commissioning in 2031.

It also plans to adopt an approach similar to that of the Kai Tak Project in taking forward the SGMTS projects in East Kowloon and Hung Shui Kiu/Ha Tsuen and Yuen Long South New Development Areas, with a target to invite tenders for the franchises within 2026.