In October 2009, HKSAR Chief Executive Donald Tsang announced, in his Policy Address 2009-2010, the “Factory Building Wholesale Conversion Policy” (the Policy) (also dubbed “Liberation Policy” as a direct reference to the Chinese name of the Policy 活化工廈政策). Mr Tsang described that the Government was “(to) introduce policy measures to expedite the wholesale conversion or redevelopment of private industrial buildings, especially those situated in non-industrial areas, to provide premises and land to meet Hong Kong’s changing economic and social needs.”
Immediately following the announcement of the Policy, the community raised serious concerns about whether there was any hidden agenda, that the Policy was lop-sided, and no consultation with the art and culture industry had taken place before the Policy was crafted. One of the key criticisms is on the Government’s positioning of the Policy as one that “supports the growth of HK’s culture industry.” Judging from the execution details of the Policy, it is blatantly clear that before the “support”, if any, can be experienced by the culture industry, practitioners now based in industrial buildings will have no choice but to leave because of the sudden increase in rent. This will be a devastating blow to HK’s culture industry because the damage is not just with individual practitioner’s operation base, but the entire creative ecology which has already been formed in a few of the districts throughout HK.
As a note on definition, the Government has been using the term “culture industry” to mainly describe non-material cultural products that invite immediate consumption and economic input, such as movie, graphic design, computer animation and games, performance art. In this document, however, I am expanding the term “culture industry” to include more traditional fine arts and other art forms that aim to represent HK’s culture.
The Policy in details
The rules that abide the conversion of the purpose of buildings have been in place for a long time. Instead of being a brand new Policy, the 2009 “Wholesale Conversion Policy” is actually a series of relaxed requirements to encourage landlords to apply for conversion. Some of these relaxed requirements are:
1. The Government has lowered the application threshold for compulsory sale to be made to the Lands Tribunal from ownership of not less than 90% to not less than 80% of the undivided shares in respect of three classes of lot. The three classes of lot are:
i. a lot with units each of which accounts for more than 10% of the undivided shares in the lot;
ii. a lot with all buildings aged 50 years or above; and
iii. a lot with all industrial buildings aged 30 years or above not located within an industrial zone.
2. The land premium payable will be assessed according to the optimal use and proposed intensity of the redevelopment (i.e. pay for what you build), instead of the maximum development intensity permitted under the relevant statutory town plan or the Buildings Ordinance (BO), if there is no such limit under the statutory town plan; and
3. Allowing applicants for lease modification in (ii) above to opt for payment of 80% of the premium by annual instalments for up to five years at a fixed rate of interest of 2% per annum above the average best lending rate.
4. A nil waiver fee for the change of use of these industrial buildings for the lifetime of the existing buildings or until expiry or determination of the current lease, whichever is earlier. 
In order to centralize and expedite the application for building conversion, the Lands Department announced in January 2010 that it would set up a special committee by 1 April 2010 to handle such applications.
How the community interprets the Policy
Even though it has been stressed in the Policy Address that the Policy is introduced to provide support to the six incumbent industries of HK, of which culture industry is one, through the liberation of land use, the community has been reacting more with worry than with encouragement. The culture industry is one showing serious concern because many practitioners have already been stationed in factory buildings as tenants: running studios, offices, or rehearsal venue. Hundreds of these practitioners have established small but specialized clusters in different districts:
- Fo Tan: visual art cluster.
- Kwun Tong: music and film cluster.
- San Po Kong: performing art cluster.
The majority of these practitioners do not own the properties they are now occupying. From a survey of San Po Kong performing artists, out of 17 interviewees, only 1 is the owner of his office.
Practitioners are in general worried about whether they could continue to operate in factory buildings with the introduction of the Policy. Their apprehension soon became a reality in January 2010 when some Kwun Tong landlords increased the rent (one case reported was over 10% increase in October 2009 right after the Policy was announced), or held up rental discussions with the intention of selling the entire building to large-scale developers. The speculation sentiment soon got heated up.
Besides the pressure on rent increase, practitioners are also worried about the legality of their operation in factory buildings. Depending on the requirements of industry zoning and of the Building Ordinance, some of these studios and performing venues are located in buildings approved only for “industrial” usage. Before the introduction of the Policy, HKSAR has adopted a “laissez-faire” approach, considering the rent income these tenants bring in to the otherwise idle buildings. Yet when landlords apply for wholesale conversion, multiple usage of the same building will be not allowed because of the difference in the safety and construction requirements abide by law. The uncertainty is the quantity of landlords who would apply for wholesale conversion catering for the culture industry. Influenced by Hong Kong’s mainstream value system, this is not very likely to happen.
The Development Bureau stresses that in 2009, there are 1026 factory buildings in HK and the total vacant floor area is 1.13 million square meters. Hence it is unconvincing that the affected industry practitioners are unable to find substitute studios, albeit not necessarily in the same district. The Development Bureau also believes that it is unlikely for every single landlord of these 1026 factory buildings to submit a conversion application. The invisible hand of the market will reveal where we are going after 1 April 2010. Yet, the Development Bureau also admitted that there would be impact on the current tenants and they estimated that it would take two to three years for the market force to complete its job.
While there is truth in the perspective of the Development Bureau, the Policy has ignored the immediate livelihood problem of current tenants, the disruption to the ecosystem in each cluster, and most important of all, it has again revealed the HKSAR’s lack of dedication to the nurturing of the culture industry, which is described as the reason for introducing the Policy by the Chief Executive – this I will discuss in greater details in the next section. On 20 February 2010, a group of 300 artists rallied to voice out their concerns. Since then, more and more media attention was drawn to the fairness of the Policy and increasing pressure from the community called for a halt of the Policy implementation so that more consultation work with industry practitioners could be carried out.
Mismatch of objective and implementation
While the HKSAR Government stresses that the Policy sets out to support HK’s culture industry, it is dubious to me how such an objective could be achieved. The Policy is designed by the Development Bureau, the responsibility of which is to release Hong Kong’s land potential but not involved in any cultural/art policy design and/or enforcement. The mandate of HK’s art development does not fall into its responsibility. Putting aside the uncertainty of the initial driving factor for the design of the Policy, its implementation details do not support a constructive relationship between wholesale conversion and the development of the culture industry. The followings are reasons for this mismatch:
- First and foremost, the lack of a “Culture Bureau” in HK means that there is not a Government body to understand the need of the practitioners, make long-term development plans so that the industry and its economic value will grow, consolidate resources and design appropriate measure to allocate and review resources consumption. Such needs are not properly communicated to, and therefore not considered by, to Policy makers with responsibilities outside of culture development.
- The civic society is driving the culture industry development because of the missing Culture Bureau. Yet the effort is dispersed, the direction is not necessarily coordinated with that of the Government, and the culture industry does not have the political capital or expertise to bargain with the Policy makers.
- The Policy is not designed with thorough consultation with industry experts and the existing practitioners in factory buildings. The policy is designed with “the artists” as a concept but its impact is on the real lives of these existing tenants.
When we take one step back from the immediate pressure of the artists to be uprooted from their established ecosystem, I can see a few areas of larger concern that is related to where the culture industry sits in the minds of HK’s policy makers:
1. A commercial mindset where industry values are defined by its potential to bring in short-term, quantifiable monetary return: When former Chief Executive Tung Chee Hwa specified the 11 categories of the “creative industry” in his Policy Address in 2005, artists and the culture industry expressed the concern that those 11 categories focused on immediately consumable “culture products” with a mass appeal to support its monetary value, while there was not measures to support the development of fine arts creation and appreciation. Yet without such measures, HK’s fine arts will never reach an internationally recognized level. We are 5 years already from that Policy Address yet we have not seen major measures implemented to nurture the culture industry.
2. Chief Executive Donald Tsang said in 2009 Policy Address that “(the Government) will Continuing to work closely with the arts sector to strengthen our cultural software and human resources in preparation for the West Kowloon Cultural District (WKCD).”While it is a bigger debate of what the HK cultural policy should be focused on, it is clearly understood from Mr Patrick Ho’s , former Secretary for Home Affair Patrick 2006, that the Government would focus on the support for fine arts out of the wider definition of what constitutes “culture industry.” Yet, the focus on readily-consumable cultural products and the expectation that artists will be able to deliver economic values that supports their survival under commercial speculation is obviously a deviation from such a focus statement.
3. No preventive measures to protect the culture industry from withering under the ebb of commercial speculation. The Development Bureau truthfully follows the ideology of capitalism and naively assumes that once a policy is in place, the market will always finds its balance. However, culture industry needs to be protected from the free market force exactly because it will not be able to generate the kind of monetary capital with which it can counter the commercial market. The value of the non-mainstream art market is the balance it brings to the society and reveals possibility that lies beyond the mainstream system. It is the Government’s mandate to make sure that there is a space for these non-mainstream activities, so that our culture representation is democratic, genuine, and shielded from the consumerism make-over.
4. Lack of a true dedication to lead Hong Kong to compete on a higher intellectual pane: While Chief Executive Donald Tsang suggests that HK will compete with other Asian cities on a higher intellectual level, HK is lagging behind when compared to Seoul, Tokyo, Singapore, or Shenzhen where the Government has seriously invested in cultural city branding efforts. There may be truth in the Development Bureau’s defense of the Policy that “the market impact may last for 2-3 years and we must be prepared for small scale sacrifice for the larger benefit,” the gap between our and other Asian city’s arts development will again be enlarged by a development lapse of 2-3 years.
5. Misunderstand the value of an artists’ cluster: let me call this a “shopping mall mindset” – to many, both Government and citizens, an establishment’s success has to be measured by the consumerism standard of crowd flow and on-site sales. Applying this mindset to factory buildings, the Policy stresses its legality in making sure Fire Hazard standards will be met during wholesale conversion. Yet, an artists’ cluster is not developed for the purpose of public viewing or performance. It is for the upstream process of creative development, and more importantly it is the interacting point of artists for organic creativity exchange.
6. The priority of standardization and management over artists’ actual needs: the Development Bureau, in defense of the Policy’s negative impact on industry practitioners, claimed that the Government has been supporting the provision of space to the industry with buildings such as JCCAC, and the Old Police Quarters on Hollywood Road. Can the industry really use these buildings? Not always. For example their size is not large enough for visual artwork, their location does not allow for high noise-level production such as sculpture and music, and they are not equipped with facilities for move in and out of large items (for example a finished theatre set.) The sheer space in a factory building can also trigger imagination and expression of magnitude, which is so lacking in Hong Kong due to our small living and work space. Opposite to other forms of “production”, the creation of culture products requires the least amount of management and standardization. Requiring culture industry practitioners to establish in Government-appointed facilities is somewhat counter-intuitive.
7. Lack of sensitivity to the world’s trend of embracing post-modernism ideology: the high efficiency made possible by high standardization of the Modernist era of mid-20th century is yesterday’s world trend. In today’s globalized world, true leaders respect heterogeneity of culture, diversity and ambiguity. It is a mistake to believe that only mainstream commercial activities creates wealth. The truth is, diversity brings possibilities. Non-mainstream values lose their function once they become mainstream. Ambiguity is the status that exists between the dualistic opposition which is characteristic of capitalistic thinking, and is the attitude required to embrace risks that set the stage for positive changes. Allowing for the existence of an organic artists’ cluster is a manifestation of such an attitude.
Can we get down to the basics?
I have been involved in a series of discussions with the Development Bureau and industry practitioners between January to March 2010. We have made specific suggestions to help relief the threat to current tenants in factory buildings:
- Rent control: introducing a rent ceiling for registered culture practitioners who will stay/ move into factory buildings in the next 3 years
- Become the landlord: By referring to the relocation of domestic-style factories to Government-owned factory buildings in the 1950’s to 1960’s, we suggested that the Government can actively become the owner of some factory buildings so as to interfere market speculation by offering low rent to the culture industry
- Make space available after wholesale conversion: to ensure that there is a reasonable supply of space for culture industry (hence reasonable rent level) after factory buildings are converted to hotels or shopping malls, we suggested that the Policy stipulates that 20% of the converted floor area to be reserved for purposes of culture production and consumption.
- Direct subsidy to culture industry: we suggested setting up a direct funding mechanism, source of funding of which comes from a certain portion of the land premium collected through wholesale conversion. Culture practitioners who face an increase in rent after wholesale conversion can apply for subsidy. This funding mechanism is suggested to minimize the direct market interference by the Government.
Yet the Development Bureau has rejected all the above suggestions mainly because of the fact that its mandate is to maximize HK’s land potential instead of to protect or develop the culture industry.  This again brings us back to the difficult situation of a missing Culture Bureau that could officially counter-balance the Policy of other Bureaus to ensure that the interest of all stakeholders have been aptly considered and taken care of. As a follower of John Pick’s model of Descriptive Policies, and that the current responsibilities of anything related to “fine art development” are dispersed and fall into a number of Government departments, it is almost natural for the Development Bureau to have rejected these suggestions.
Hong Kong, as a city and nothing more than a city of the People’s Republic of China, should not, in my point of view, maintains a cultural policy that touches on ideological level. Yet, considering the fact that HK has reached a point when our competitiveness built on commerce and finance is gradually eroding, we have to look for some fundamental changes so we could establish again our attraction to local and overseas talents, and tourists. Short-term success, hit-and-run attitude do not apply to the nurturing of culture industry.
We do not always need to have the newest buildings and largest crowd flow to demonstrate that the value of a piece of land has been maximized. A point of view from Jane Jacob can be well borrowed here, “Well-subsidized opera and art museums often go into new buildings, But the unformalized feeders of the art - studios, galleries, stores for musical instruments and art supplies, backrooms where the low earning power of a seat and a table can absorb uneconomic discussion - these go into old buildings. perhaps more significantly, hundreds of ordinary enterprises, necessary to the safety and public life of streets and neighbourhood, and appreciated for their convenience and personal quality, can make out successfully in old buildings, but are inexorably slain by the high overhead of new constructions.
As for really new ideas of any kind - no matter how ultimately profitable or otherwise successful some of them might prove to be - there is no leeway for such chancy trial, error and experimentation in the high-overhead economy of new construction. Old ideas can sometimes use new buildings. New ideas must use old buildings.”
What we need now is not more flashy new shopping malls and hotels. We need some true clairvoyance from policy makers to visualize how HK will look like 20 years from now. We need some hard dedication from policy actors that the success of their efforts may not come through during their tenure. We need some courageous risk-taking attitude from all of HK as culture development involves taking risk and looking at the world from a different perspective. The fundamental question to ask is what makes HK a livable city beyond the hit-and-run gains. It would be a real shame if there is none, but it is never too late to start building that up.
- END -
 “Developing the Infrastructure for Economic Growth”, HKSAR policy address 2009-2010 policy agenda Chapter 1, P.5
 LEGISLATIVE COUNCIL BRIEF:” Optimising the Use of Industrial Buildings to Meet Hong Kong’s Changing Economic and Social Needs:, Development Bureau, 15 Oct 2009. http://www.devb-plb.gov.hk/eng/issues/pdf/LegCo_Brief_091015.pdf
 Survey conducted by 「新蒲崗創意文化產業關注組」in Feb-Mar 2010, results of which was announced in press conference on 21 March, 2010.
 Chief Executive’s Policy Address 2005, P. 83-89. In the Address, it was stated that “Creative industries in Hong Kong encompass 11 categories: design, architecture, advertising, publishing, music, film, computer software, digital entertainment, performing arts, broadcasting, and antiques and art dealing. Some fall under our core industries, such as tourism. Creative industries can be extended to cover areas such as community building and the creation of an urban image.”
 Chief Executive’s Policy Address 2009, Chapter 1.
 In his book “The Philosophy of Symbiosis共生思想, originally published in 1987, Kurozawa Kisho (黑川紀章) advocated the value of ambiguity and has provided numerous examples on how this new trend of thinking can be seen in architecture in many cities in the world.
 The Development Bureau rejected these suggestions in a written response, to新蒲崗創意文化產業關注組via The HK Federation of Industries, on 23 March 2010.
 Jane Jacobs, “The Death and Life of Great American Cities”, P. 188. Vantage Books, 1961