The Commission of Audit (CA) published an audit report on December 11 which criticizes Macau Investment and Development (MID) Limited, a public investment company, for pursuing “the most costly” development model for the Traditional Chinese Medicine Science and Technology Industrial Park (TCM Park) in Hengqin “without thorough consideration,” resulting in billions of additional public funds.
Since its establishment in 2011, MID has been held responsible for the development of the TCM park — the first joint project stipulated in the “Guangdong-Macao Cooperation Framework Agreement” inked by the two governments.
Ever since 2016, MID gauged the investment costs for the entire TCM park — which was predicated on the “self-funded construction” model, and follows a principle of “lease only and not for sale”.
In the report, the Commission criticized the company for “not appraising the pros and cons between different development models and not accounting for the estimated costs involved in respective possible models”, before deciding to use the “most expensive” self-funded construction model — a decision that could have otherwise saved the government a hefty sum of capital.
According to the report, apart from the aforementioned model, there are a series of land development models available, including land transfer, land lease, build-operate-transfer (BOT), joint construction, and other combinations of models.
In 2019, MID announced that the cost appraisal for the TCM park was estimated to be as high as RMB16.353 billion, RMB2.6 billion more than the previous estimate of RMB13.768 billion in 2014.
Regarding the huge jump in total estimated cost, the CA reprehended the firm for “falling short of clear analysis” by “not detailing how many gains the additional injection of investment can generate”.
Besides, the CA discovered that MID has been laying the groundwork for a land sale arrangement in the future, which contradicts its development proposition of “lease only and not for sale”.
In the wake of the release of the report, the Office of Secretary for Economy and Finance stressed that the authorities will inspect and reform MID’s management, assets, subsidiaries and investment plans.
“[The Office] has already provided instructions to the company to assess, in a thorough and effective way, the management and operation models now adopted, proposing global reform and adjustment plans, strengthening the inspection mechanism, [and] rationalizing the use of public resources to increase their efficiency,” the Office of the Secretary noted.
In addition, the city’s Chief Executive also pledged, in his Policy Address for 2021, to comprehensively reform and amend the positioning and development model of MID, to improve the efficiency of the project and promote the development of the TCM industry to the international market.
In response to the report, MID pledged to improve its management. However, it attributed the choice for self-funded construction partly to the difference in Macau and mainland China’s land ownership systems.
The CA also emphasized that the MID must expound to shareholders how to make profits and cover costs, which can help reassure “the public [that the] investment is worth the money.”
The Commission probed MID’s filed documents from March 2011 to June 2020 before publishing the report.
As of the end of 2019, MID had 21 subsidiaries, 17 companies of which were responsible for the TCM Park project and four others for the project of Guangdong-Macau General Cooperation Pilot Zone of Zhongshan City.
Between 2011 and 2019, six injections of capital were recorded at MID, which snowballed the firm’s capital to MOP9.285 billion. Of that money, MOP8.964 billion was earmarked for investment projects, including MOP8.074 billion designated for the TCM park project and MOP890 million for Zhongshan City. Staff Reporter
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