Extension centre: The Trade Development Council's proposal to extend the atrium link between Phases I and II of the Convention & Exhibition Centre will provide more space for income-generating functions. (Pic: HKCEC)

A proposal to extend the atrium link between Phases I and II of the Convention & Exhibition Centre to provide more space has received policy support from the Government.

The support has been endorsed by the Executive Council, the Commerce, Industry & Technology Bureau said.

The Trade Development Council proposed last September to rebuild and expand the atrium link to create an additional 19,400 square metres of exhibition space, boosting total dedicated exhibition space by 42% and total rentable space by 30%.

The council intends to fund the capital costs, estimated at $1.3 billion, from bank loans and a contribution from the centre's commercial operator.

It intends to start work next year for completion in 2009. Nevertheless, it is a prerequisite for the council to seek approval from the Town Planning Board.

The Government commissioned a consultancy study to assess whether there would be unmet demand for exhibition facilities in Hong Kong. The consultant reported that in 2004 bookings for a number of exhibitions and conventions could not be entertained due to the lack of space at the required time-slots.

Also, for some "mega" trade exhibitions, organisers still could not meet all demand for exhibition space even when all rentable space had been used.

The consultant explored other options, including relocating the existing "mega" trade exhibitions to another venue and rescheduling them to other time-slots, but found alternatives were not feasible.

Hong Kong needs to recognise and respond to evolving trends in the exhibition industry, if it is to maximise the opportunities presented by the rapid economic growth of the Mainland, and in face of competition from the Mainland and Macau exhibition industries.

The consultant forecast the proposal would bring substantial economic benefits. The quantifiable benefits derive primarily from the additional external exhibitors and visitors participating in existing expanded and new exhibitions and convention events.

There would also be non-quantifiable benefits, mainly related to increased trade and business opportunities for local companies as a result of larger and more conventions and exhibitions to be held in Hong Kong.

It is estimated the annual quantifiable economic benefits, in terms of value added, would rise from about $176 million in the first year following the opening of the atrium link extension to about $778 million in the fifth year. The number of jobs created is expected to rise from about 483 in the first year to about 2,131 in the fifth year.

The report said that in an increasingly competitive market, Hong Kong risks losing the large established exhibitions to other venues in the region. The economic impact on Hong Kong of losing one large annual trade exhibition (using 65,000 square metres of space) is estimated at around $407 million per year.

In terms of employment, this would mean a loss of around 883 full-time equivalent jobs, made up of 128 job losses in the exhibition servicing industries and 755 losses in visitor-related industries.