Charter Cities Podcast Episode 8: Building a New Hong Kong with Ivan Ko
As the political landscape in Hong Kong shifts, many residents are looking to migrate to Western countries. This creates immigration problems, especially as some Hong Kongers won’t meet the requirements needed to move to cities with established Hong Kong expat communities. Today’s guest, Ivan Ko, is the founder and CEO of the Victoria Harbour Group, an organization with the bold idea to create international charter cities in Western countries for Hong Kong immigrants to move to.
Our conversation begins as Ivan explains the benefits his proposed charter cities will have for their host countries. Built in areas with low local populations to minimize disruption, each city will aim to fit an economic niche. We discuss why this might be an attractive proposition because of the economic downturn resulting from the COVID-19 pandemic. Ivan discusses the challenges of building charter cities and reveals that, despite immigration being a hot-button political issue, the perception of Hong Kong residents as industrious and highly educated has added political support to the idea of migration. We speak about how the people of Hong Kong have a unique identity that allows them to easily assimilate into Western systems.
After sharing the inspiration for his idea, Ivan draws historical comparisons between the Puritans arriving in America on the Mayflower and how many Hong Kongers will migrate to pursue democracy and freedom. Throughout the discussion, Ivan highlights how charter cities will benefit locals. At the end of the episode, Ivan shares his thoughts on what makes a livable city, Victoria Harbour Group’s role in developing charter cities, and how their model is influenced by Silicon Valley. Reflecting Hong Kong’s meteoric rise, Ivan wants each charter city to be a "miracle city." Listen to this episode to learn what that might look like. Links mentioned in today's episode can be found below the transcript.
Transcript (edited for clarity):
Mark: Hello and welcome to the Charter Cities Podcast. I’m your host, Mark Lutter, the founder and executive director of the Charter Cities Institute. On the Charter Cities podcast, we illuminate the various aspects of building a charter city from governance to urban planning, politics to finance. We hope listeners to the Charter Cities Podcast will come away with a deep understanding of Charter Cities as well as the steps necessary to build them. You can subscribe and learn more about Charter Cities at chartercitiesinstitute.org. Follow us on social media, @CCIdotCity on Twitter and Charter Cities Institute on Facebook.
Thank you for listening.
Our guest today is Ivan Ko. He is the cofounder and CEO of the Victoria Harbour Group, a firm that is building a new city for Hong Kong migrants. Full disclosure; I’m on the founding team and the Chief Strategy Officer of the Victoria Harbour Group.
Welcome to the show, Ivan.
Ivan: Thanks for the invitation, Mark.
Mark: To start, tell me what you are building.
Ivan: We are trying to develop international charter cities in developed countries which are democratic and free so that Hong Kong people can migrate to them and then live together and develop another strong economy for the host country. That’s what we call the international city for Hong Kong people.
Mark: Tell me more about this. You’re from Hong Kong, where is the impetus to build this? There are a lot of free and democratic countries. What are you thinking of in terms of countries being considered? Why is this necessary? What is the demand for these cities? Let’s go into a little bit more detail.
Ivan: First of all, as you might have noticed, Hong Kong has undergone a very unusual period over the last year. Many Hong Kong people, due to the change in the governance of Hong Kong, are trying to leave Hong Kong and migrate to other countries so that we can carry on with our lifestyle, which has been free and democratic in the past. And especially now with the application of the National Security Law on to Hong Kong, I think a higher percentage of Hong Kong people are trying to leave.
But note that migrating to another country is quite difficult for individuals or for a family. What we are trying to do is to build a new city. We will build a city from the ground-up with a master plan, and do economic planning for the city so that Hong Kong peoples’ strengths, skills, and ability can be utilized to build another economy together with the local people and local businesses to come into the charter city. And then we can live together and help each other, in the hope of building another economic miracle in the future. For the countries that we choose, they will be democratic and free and we would expect that the government is law-abiding so that we can have our own international charter city. We’ll have our own charter, which has principles and values which Hong Kong people would treasure, like being family-friendly, environmentally sustainable, pluralistic, and international, in addition to being democratic and free.
Mark: Thanks. To summarize then, the way this can be thought of is that there is likely to be a mass migration of Hong Kong people over the next 10, 15 years or so because of the changing conditions on the ground in Hong Kong. So, the Victoria Harbour Group is looking to build a city that can attract some of these people who might be migrating out of Hong Kong.
Ivan: That’s exactly what we want to do. We want to provide an option so that Hong Kong people, when they migrate to these countries, then they can live together, help each other, and solve problems for each other. We can build another good neighborhood with the locals.
Mark: Great. Why would people want to move to the international charter city instead of moving to New York, or Vancouver, or London, all of which have a number of Hong Kong residents?
Ivan: Well, there are several reasons. The first is that not many people have the ability to be investment immigrants, and some of them, while they might be professional, might not be able to qualify for the immigration requirements. The second issue is that when you move to a new city or a new country, you worry about your job opportunities or investment opportunities. But by creating a new city, we are going to create a lot of jobs in different industry sectors. Like we might be building residential, offices, shopping centers, hospitals, private schools, you name it. We will be creating a lot of jobs and investment opportunities for the migrating Hong Kong people and also for the local people.
In that case, you don’t have to worry about not finding a job in that country. The second thing is if we can live together, then we can help each other, because the problems that we are facing in a host country where we migrate to would be very similar among the immigrating Hong Kong people. Third, if we can have a good master plan, then the city would be brand new, but at the same time, with very good planning. Because we are planning to build this city with more advanced concepts and with state of— I will not say that it is the state of the art, but with cutting-edge urbanism so as to make the environment attractive for other people to move in apart from Hong Kong people.
Mark: Thanks. I’d definitely like to get into what it means to build a new city and the state of the art urbanism and aspects like that. But I think before we get there, you want to build an international charter city. What does this actually mean? How many people? What are the timelines? How much of the end do you want? What does it actually mean to build an international charter city?
Ivan: We have a very urgent timeline, because we noticed that a lot of our friends and friends of friends, they really want to migrate to other countries as soon as they can. Primarily, those with young children, they want to move to those countries where their children can carry on with a good education. On our timeline, we would like to secure the land for the first international charter city within the next six months, within this year. Then we would start the planning and construction next year, and the first movers would be able to come into that international charter city to do their liaison work, planning work, and the groundwork next year. We would like to have very good support from the national government or the federal government, and to include the local community, so that we can move things fast enough to meet the demands of the Hong Kong people. If possible, we would like to develop one or two international charter cities in the next two, three years.
Mark: What are the target populations for these cities?
Ivan: Well, it all depends on which country we are talking about. If it is a large country with a lot of people and a lot of land available, then we would like to have a big one where we can have 200 square kilometers of land that could accommodate 750,000 to a million people, half of which will be from Hong Kong, half from local. If it is a smaller country, a younger one like Ireland, which we have always been talking to since last October, we are targeting 50 square kilometers, which can accommodate a population of 100,000.
Mark: Walk me through how this project got started. When did the impetus occur? What was the process to where you are now, and then what are the next steps that our listeners should be looking forward to?
Ivan: We have a group of people— they are volunteers. We have 90 volunteers working together with the core team of the Victoria Harbour Group, and we have been talking to several countries. At the same time, we are scouting sites in different countries. Trying to compare which one would be the best option for us to start the first international charter city with good conditions provided by the government and by the local community.
Certainly, a site location is primary. Meaning that it has to be a good location where it is within two-hours’ drive to the nearby airport and with good infrastructure. Nearby a major city so that we can save our costs of building the major infrastructure. And at the same time, the site condition, the quality support to be provided by the local government and the national government. Those are the things that we would like to seek the best fruition. Also, we have also looked at the cost of the land. Ideally if we can have some land granted to us by the government and then in the future, the government can share their revenue, that would be perfect. Otherwise, we might go into a joint venture with local government on a PPP model or with private landowners. Those are a couple of things that we are planning to do and depending on the situation. Building a city is site-specific. That means you can only determine what to do and what to negotiate with the government and the landowner once the site is identified.
Mark: Sure. How do you go about building political support for a project like this? One of the main challenges of charter cities is, and we saw this with Paul Romer in Madagascar and in Honduras, is getting political buy-in. Because, especially if you’re thinking about legal autonomy for the city, but even if you’re not thinking about substantially legal autonomy, just having a mass migration of people move to a country is challenging enough. Immigration is an issue these days. But then allowing them to build a new city that is largely populated by them can be challenging to get political buy-in. How are you approaching that idea of getting the political support necessary to build a charter city?
Ivan: This is a very good question. We have been thinking about that. But throughout the past few months of contacting the governments from different countries, we found out that Hong Kong people are being welcomed by most of these governments. Meaning that they think that Hong Kong people are hardworking, industrious, highly educated, and many of us are professionals. Some of us are SME owners, business owners. We can bring in capital. We understand the international standards and we have been doing globally recognized practices.
I think the Hong Kong people have already established a very strong brand name, if you may say, or a soft power, which is quite welcomed by the recipient or the host country. To our surprise the UK Prime Minister, Boris Johnson, has announced that the UK would like to extend the BNO to 2.9 million Hong Kong people so that Hong Kong people can just migrate to and start to work, study, and live there. This is something that I think is going to create a lot of demand for an international charter city. In that case, an international charter city is almost like a solution for a massive influx of immigrating Hong Kong people to a country like the United Kingdom
Mark: I think that’s interesting. Can you talk a little bit more about how an international charter city might be a potential solution for mass migration? What does that mean?
Ivan: First of all, many of us have seen Chinatown in different countries. Meaning that, previously, in the last century, many Chinese move to those countries and they start to live together in an existing community. But then most of the time, it makes the city quite messy in terms of the people disturbing the local neighborhood, and there is no master planning. So, they just come in and live in a local community, where already there were residents. The second thing is throughout the past two or three decades, people from China and from Hong Kong, will move to those countries and make the property prices quite high and sometimes unaffordable to the locals.
What we are trying to do is we try to create a new city where originally there were no local residents or very few local residents, but there is good infrastructure nearby. So, we can do a good master plan, do a modern city with good infrastructure and planning. Then we plan about what economic development to bring in that Hong Kong people are strong at, and that the host country would needs in terms of inputs or talents.
It is trying to create a new environment where Hong Kong people can live together. At the same time, we can build a strong economy out of this new city. In that case, we do not disturb the local neighborhood. We can build a new neighborhood with good relationships with the local people who move into the international charter city. At the same time, we would be able to plan the economy with different industries, like a manufacturing campus in the international charter city where the Hong Kong manufacturers can come in and establish their plant, factory, manufacturies, so as to complement the supply chain in the host country. Those are the end goals, why an international charter city is much better than just letting people of Hong Kong come in and then live in those existing community or cities.
Mark: You’ve brought the idea of this master plan up several times. When I think about new cities, there sometimes is a tension. A lot of new cities can be over-planned to a certain extent. I was doing some consulting work on a new city planning in Kazakhstan. I remember saying, “We can put the financial district here. We can put it here. We can have tall buildings. We can have medium size buildings.” But if you look at New York’s financial district, nobody planned that. What happened was, they laid out a grid in the New York Commission of 1811— basically just defined where the roads would be and where the buildings could be. They had relatively small lot sizes. Then people would just buy the lots, build, sell them, tear down the buildings, build new buildings. That is how New York emerged. It was more of an emergent phenomenon.
Well, if you look at some of the master planned cities today, Songdo in South Korea, it has a lot of green space, but it’s not really a pleasant place to live. When thinking about building a new city with a master plan, how do you think about this master plan and balancing the emergent nature of a city with the importance of having a degree of understanding of what’s going on and its development?
Ivan: Thanks for sharing. That is a very valid argument about building a new city with a master plan. First of all, we are not doing a planned economy. Meaning that when we are doing the master planning, we are also doing economic planning. But we don’t mean to be plan the economy. But at the same time, we are looking at what Hong Kong people are strong at, the would-be immigrants from Hong Kong, what the local community needs, and what the host country needs. We will plan different industry sectors to be developed in this international charter city.
But as you might also notice, that there are several things that we can do. First of all, Hong Kong people are very strong in real estate development and city development. I think we can bring in some knowhow or methodology or a system where we can carefully plan the city, phasing out the development, and also taking care of the market demand, instead of just trying to build a city and then put money in and then try to do whatever we want to do. We would always be looking at the market demand and the economic driving forces in the new city.
Second, for a city to be successful or to be very popular in the future, it has to have an evolution process. Rome was not built in one day, we totally understand that. We are not rushing to put all the money in and then build a city all in five years, and in five years, the city will be completely built. We are not saying that. In fact, the immigration process might take, as you said, 10, 15 to 20 years. For the city to be mature, it might take even longer. Some 30, 40 or 50 years later. What I have said about the population, the city size, those are the ultimate numbers that we are targeting. We would be very careful not to do a planned economy, but to plan the economic activities. And at the same time, we look at how the city can be made attractive not just to Hong Kong people, but to the local businesses and people in the host country. And to make it a step-by-step development of the city. That’s why we think that to accommodate or to satisfy the demand of all the people from Hong Kong who want to migrate to other countries, we might need more than one international charter city. We are targeting several international charter cities in different countries.
Mark: You talked a little bit about this idea of economic planning, to a certain extent. How do you think about what industries to target? For example, Hong Kong is one of the top three financial centers in the world. It was a manufacturing center up until the mid-90s. I remember when I was a kid, I would open toys and it would say “Made in Hong Kong,” and now everything says “Made in China.” But Hong Kongers do own a lot of and invest in a lot of the factories in Guangdong, of which Shenzhen is a part. So, there is still a strong manufacturing tradition.
When evaluating potential sites, how do you think about how to think about sort of economic planning. What industries to focus there? How do the talents of the Hong Kong people complement the needs of the local economy?
Ivan: As I said, this ICC is site-specific. All the questions you raised were site-specific. Meaning that for an ICC in Ireland, for example, then we know that Ireland, after Brexit, they would be able to have a share of the international financial services market in Europe. Hong Kong is also very strong with financial services. That can be one industry we can help make Ireland stronger with.
The second industry that we might be able to put into Ireland would be manufacturing. And also medical and healthcare, as Hong Kong has been very strong in public health. Education is another sector. But if the ICC is in United States, then it might be different. New York is already a very strong number one international financial center. In that case, Hong Kong immigrants might not be able to contribute to the United States in that sense. The financial sector, might not be a sector or an industry which we would like to build in the international charter cities.
Mark: Well, hey, doesn’t the West Coast need a financial center? California, Oregon, Washington, if you’re listening, let’s compete with New York.
Ivan: I heard that. We heard that a lot of tech financial transactions were being made in Palo Alto. I think that it’s very interesting, because I heard discussions about having a second financial center on the West Coast, in Silicon Valley, where the transactions are often big amounts and can be quite attractive. But at the same time, they might not be served well by Wall Street. This is experimental. This can be explored, but in this case, the international charter city has to be on the West Coast. Whether we would be able to identify a site big enough for us to set up this international charter city to pioneer the establishment of a financial center for the tech industry on the West Coast, that is very dependent on the situation. We don’t know. It would be very interesting to do so.
Mark: From an American perspective, there are two things I think are fascinating about this project. One is the potential financial sector on the West Coast. San Francisco and Silicon Valley is already creating one to a certain extent. There’s something called the Long-term Stock Exchange. It’s backed by Andreessen Horowitz, one of the best-known venture capital firms. They’re basically trying to create a stock exchange where voting rights are dependent on how long you own the stock. Because there is a critique of some stock exchanges where it’s just a bunch of day traders who aren’t thinking long-term. But if voting rights are distributed to a certain extent based on length of ownership, then you might be able to align decisions better over the longer term. Maybe it works, maybe it doesn’t, but it’s at least, I think, an innovative way of approaching.
Obviously, Hong Kong has a lot of financial talent. If you really want to super charge a financial sector, I think creating an international charter city somewhere on the West Coast where it can interface with the Silicon Valley tech would be a very interesting I think approach. My feel is that one of the challenges is that West Coast, at least particularly San Francisco and the Bay Area, is very resistant to building new things. The politics are broken there.
Ivan: You mean anti-development?
Mark: Yeah, anti-development. They declared laundromats as historic buildings to prevent them from being redeveloped into apartments. That makes, I think, getting the political support there a little bit more challenging than other parts of the US or other parts of the world.
Ivan: Well, I think to be frank, the international charter city, is a very pioneering and new concept and a lot of people have never heard about it. To date, I don’t think there have been any successful international charter cities. So an international charter city itself is already very innovative. It would be very good if we can integrate into the international charter city some pioneering concept, as you just mentioned, of this Long-term Stock Exchange. I think that should fit perfectly into the international charter city that we would like to build.
But certainly, if we are invited by an interested party from the West Coast to consider and they have land available to develop an international charter city there, we would like to have these kind of new ideas, systems, and practices that we can implement, experiment, or explore in this international charter city. Because we are not trying to replicate Hong Kong. We are trying to build this city in a modern, advanced, city of the 21st century. Anything that is new, advanced, and good for the local people and good for the economy with new ideas, we welcome that, and that should be a perfect partnership with the international charter city.
Mark: If any of our listeners are in Silicon Valley and want to help out with super charging a new financial center, please feel free to get in contact. One of the things you mentioned— this hasn’t been done before. I do want to talk about the inspiration for this idea. But before going into that, there are interesting things from an American perspective. One, the financial center, Silicon Valley aspect. But the second strength of the Hong Kong people is in manufacturing, and there’s been an ongoing debate in the US revolving around manufacturing. There has been a critique of globalization that we’ve outsourced a lot of our manufacturing capabilities to China. Actually with the F35 jet, it’s the new fighter jet that they spent something like a trillion dollars developing it. There’s actually two or three parts that they’re buying from China because they couldn’t source them in the US, which is kind of silly, in my opinion, to buy parts for a defense weapon from a geopolitical rival.
But also, just thinking about machine tools, the tools that are used to build other tools. I believe there is a quote from Tim Cook, who runs Apple, where in the US, “It’s hard to fill in a meeting in a conference room with machine tool engineers. In China, you can fill a stadium with machine tool engineers.” In terms of thinking about how to revive American manufacturing, to me, one of the obvious short-term moves is you just import a bunch of Hong Kongers who have a lot of skills and talents in manufacturing. Then that saves you the 10-year requirement of training a new generation of workers, which is time-consuming and expensive, and why do that when you can just sort of import a bunch of Hong Kongers to do it for you?
Ivan: I think that is very good, because in the last century, in the 60s, 70s, and 80s, Hong Kong was very strong in manufacturing and we were almost number one in garment manufacturing. We were one of the four Asian Tigers. We have been very strong in manufacturing since then. Later on, we moved our factories to southern China. But up to today, we still have at least 35,000 factories owned by Hong Kong manufacturers, just in Dongguan, one of the counties in Guangdong province.
We do have a lot of manufacturing entrepreneurs based in Hong Kong, living in Hong Kong, but their factories are in southern China. The operating environment in China for factory manufacturers, is very, very difficult. If you are profitable, you are lucky. I think bringing the Hong Kong manufacturers’ knowhow, capital, systems, and equipment to United States, or to other countries where they have space for us to fill, is very good. Because we noticed that countries like United States, you have been very advanced in information technology and you have invested a lot in information technology in the past two, three decades. But in terms of this traditional manufacturing, manufacturing which requires physical machinery and production, I think the United States and other developed countries have not been kind of not putting a lot of resources towards this, except, for example, Germany. They are still very strong in this.
I think it is a perfect match if Hong Kong manufacturers can set up their plant production in ICC and then to supplement or to complement the missing link in the host country. That will make a perfect match. Hong Kong manufacturers are very, very good at organizing all the different resources and talents and engineers.
Mark: Putting on my hat as an American, I think I want the Hong Kongers to come here. I think I sometimes like to joke that the Hong Kongers have a thing or two to teach the Americans both about protesting as well as about policing. I think we all saw the “umbrella protests” and how they were very civil and very peaceful. It’s changed a little bit recently as the Hong Kong police forces have been taken over by mainland China, but historically, the Hong Kong police are generally much more peaceful compared to American police. What does it take to get an international charter city in the US?
Ivan: People from Hong Kong, if I may say, are soft powered. We are very strong in the sense that we can bring some Asian way of doing things and Asian values, which are not totally just Asian. But also, with a lot of Western favor in the sense of the system that we have in Hong Kong is quite Western. It’s based on common law, and a lot of the systems were left from the British colony period. So, we have these kinds of practices and systems which can easily fit into Western countries, developed countries. But at the same time, we do it in an Asian way.
For example, we work very hard even if it’s 9 to 5 working hours, we might work until 7 before we leave the office without overtime charge. Also, we get things done very efficiently, and Hong Kong people are very straightforward instead of wasting time. We do have something that matches well the way that you do things. Certainly, we also appreciate that you have very strong R&D and very creative thinking. You have a very good system. I think it would be a very good combination of the two if we are given the chance.
Mark: I think that sounds great, though one of my other questions is because American politics and a lot of Western politics are going through, I think, substantial changes. We’ve seen, for example, Donald Trump got elected. He’s the first American president who was not either a general during a war or a former politician. He was a real estate developer and better known as a reality TV host. And we’ve recently seen, for example, a lot of protests and the culture wars have intensified in the US and in other Western countries. It looks like there’s going to be — I don’t know, maybe 10 years of disruption, hopefully, before things calm down a little bit and get back on course.
The more pessimistic side of me worries that it’s going to be a little bit worse in the US than in other countries. Do you think about, given that we’re not in a stable period of politics in the West either, how does that factor into your decision-making when evaluating potential host countries?
Ivan: I think this is the best timing. First of all, the demand from Hong Kong people is very, very strong and very urgent. The second thing is the weakening or the slowing down of the economy in the West, in developed countries like the United States. I think we can come in and help and contribute.
But when the economy is very good in your country and you are enjoying very good times, the effect of the things that we can contribute might be very little or insignificant. I think right now many governments are trying to uplift their economy, revive their economy quickly, by starting some exciting new projects, mega projects. An international charter city is an ideal solution. A very good recipe for that, because it is a big investment. It brings in a lot of talents and capital. At the same time, it creates a lot of forward-looking stories every day. When you wake up, you are thinking about the city, how it will be developed in the next two, three years and where do you attract more people to come in?
These kinds of things are very, very encouraging in an economy which has been badly hurt. I think this is just a perfect timing, and we are not worried about the situation where the economy is not too good now and then the so-so situation is a little bit uncertain. I think for these developed countries, you always have a tough time or good time. This is almost like some kind of tough time that you will go through once in a while. I think an international charter city would be a perfect project for these countries to revive or to uplift their economy again.
Mark: I guess your perspective is a little bit different when your uncles or your grandparents escaped from the Chinese Civil War or communist China and are now are seeing substantial restrictions on some freedoms that you’ve grown accustomed to and some of the challenges that dominate the discourse in the West might not seem as pressing or as urgent.
Let’s go into the history of this idea. Where do you draw inspiration from— it can be recent history in the last 10 or 20 years, or it can be going further back. Mass migrations have happened throughout human history, sometimes it’s organized, sometimes it’s less organized. Sometimes there is a plan on the other side, sometimes there isn’t much of a plan. Where do you look at these historical examples and what do you see as lessons to draw from them and where do you get inspiration from?
Ivan: First of all, the idea of developing an international charter city was almost like seven or eight years ago when I went to east Malaysia frequently and was trying to develop an international charter city for baby boomers. Because Asian baby boomers are going to the retirement age and a lot of us have gone through this urban life for the past 30, 40 years in their career. So, some of them, they just wanted to go for a natural environment, farming, doing agriculture, growing plants for their own consumption. That was the idea.
At that time, I studied the idea of international chartered cities proposed by Paul Romer, and I found it fascinating because he was suggesting that all people can just move in if they like the charter. If they don’t, they move out. I think that is very interesting and he certainly used Hong Kong as the example. But then I think at that time, some of our friends were really interested in this kind of international charter city to be developed in east Malaysia, where people can move in and have their own farmland and their own ranch. But I found out that the demand is not certain, and we don’t know how many of these baby boomers would really like to buy the land and build their house. The second thing is about this unfortunate MX370 airplane which disappeared. So, later on, that plan was dropped.
Last year, at the peak of the protests against the extradition bill in Hong Kong around September, Simon Shen, my friend, called me up one day and said, “Why don’t we develop a project for Hong Kong people to migrate to?” Because at the time, we already knew that a lot of expatriates and our friends are thinking of moving away from Hong Kong. I told him, “Why don’t we just do an international charter city?” That’s where the idea of developing this Victoria Harbour Group came from, to develop several international charter cities in different countries.
First of all, we see the demand is already there. Not like the baby boomer international charter city that I wanted to do seven or eight years ago. The demand for Hong Kong people wanting to leave Hong Kong and migrate to other countries is solid, with massive numbers. That is the most important requirement for developing a new city, that you will have the residents. You will have people moving in. You will have businesses moving in. That’s the most important thing.
After that, we just have to identify the right country and a good location of where to develop the international charter city. Then we solve other problems, like the master planning, the investment, raising funds, and trying to do investment promotion to attract businesses to come in. We can do it step-by-step.
Mark: Two historical examples that come most to mind when thinking about what you are doing is, one, Israel. Israel was created by a mass migration of Jews, primarily from Eastern Europe. It was over a much longer time horizon and region than you’re thinking about. The Hong Kong people are relatively concentrated. But it was a people with a relatively distinct identity, many of whom saw the writing on the wall, saw that they weren’t being treated fairly. The decided to go Palestine and to create a state that they would be allowed to live the lives that they saw fit, obviously with sort of the caveat that, unfortunately, some of that process has created a lot of conflict with the Palestinian people.
Then I think the other example is Salt Lake City, which was founded by the Mormons. So, there was a mass migration of a people, the Mormons, although they’re not really as distinct as the Hong Kong people or the Jews. Mormonism is sort of an outgrowth of mainline Protestantism in the 19th century, but they developed a distinct identity and they were persecuted for it, and moved several times before moving out west to build a city where they would be able to live the lives they wanted to. That’s to me one of the hardest challenges of starting a city. It’s how do you get that critical mass of people there? Historically, it’s often been that there’s an economic reason. There might be a natural port or there might be a mine. Something that gets people living in that area where eventually enough people live there for it to become self-sustaining.
Alternatively, you can be a government. And if you’re a government, you can just make a bunch of people, bureaucrats, move to a city and then you can get a population. Brasília and Abuja are examples of government-built cities. But here, you have a mass migration of people who want to see a change in their lifestyle and their home in Hong Kong. And so, want to be able to continue to live.
Ivan: I think your analogy of the two cases is very interesting. But first of all, let me clarify. We are not building a nation. We are just building new cities. The Israel case was interesting, but it is different. I would look at it from another angle, historic angle, that now Hong Kong people is facing a situation where Hong Kong will be changed in a very serious way. We have a lot of Hong Kong people wanting to leave in a short period of time. Then we are in pursuit of freedom and democracy, which is a little bit similar to the pilgrim and the Puritan who left Europe in pursuit of religious freedom. And they sailed on the Mayflower and came to the United States with charters, either from the shipping company or from the royal family, and they established their city in New England and also in other cities. Basically, I think it is the same that whenever there is such a big migration, there was something that these immigrants or migrants, they are looking for something. They are in pursuit of something. This time it’s the Hong Kong people in pursuit of freedom and democracy, their lifestyle. This is something very, very interesting in the perspective of human history.
Mark: There is a Telegraph article recently which interviewed us about the Victoria Harbour Group and your plans, and it took a somewhat skeptical tone, which I think is natural, because this is a big project. We haven’t really seen projects this big in a few decades. I think there are going to be a lot of skeptics who will say, “Okay. Well, this is cool. This is interesting, but how does this actually work in practice?” What do you say to those people who are skeptical of the ability to execute on a project this grand? Then particularly, the ability of you and your team to be able to execute on a project this grand?
Ivan: I think skepticism is always normal. I would take it as normal, because as I said before to my friends, when everything was not yet invented, you can imagine, and people would criticize you as crazy or say that you are out of your mind. You suggest that there is a big piece of steel carrying a few hundred people flying the sky in a speed faster than a car. In that case, you just think that this guy is nuts and crazy or psycho. But when the airplane is being invented and is flying, is making travel for the whole world much easier, less costly, and much sought after, after a period of time, then people enjoying it and the globalization came.
Today, when we talk about this international charter city, or wanting to build several international charter cities, people become very suspicious when it comes to the land, the immigrants, and also the money. But we think that the basic fundamentals are already there, that a lot of Hong Kong people, massive number of us, wanting to leave and wanting to migrate to other countries. And there exist countries where Hong Kong people would like to live in, which are democratic and free, and the government is law-abiding. Those fundamental factors are there. The only thing is that we have to convince the host country government, the local government, and the local community, and then to identify the land, raise money and do the master planning.
I think we noticed that there are a lot of different hurdles or difficulties that we have to overcome, but it doesn’t mean that it can’t be implemented or it can’t be realized. I do believe that with the strong cohesiveness of the Hong Kong people in pursuit of democracy and freedom and to carry on our lifestyle in other environment, in a new environment, I think this can be done.
Mark: I think that analogy with technology isn’t exactly right, because at least with technology, with the airplane for example, the Wright brothers didn’t need the buy-in from the government. If the Wright brothers needed buy-in from the government, we might still be riding on horses today.
To me, the primary challenge with charter cities isn’t technological. It is political. It is getting this political buy-in that you mentioned. There will be skepticism, but if you’re developing a technology, the skepticism doesn’t necessarily directly affect you, so long as you can basically keep your funding streams alive and keep developing it. But with a charter city, if skepticism is the general mood, you’ll never be able to get started, because you’ll never be able to acquire land. You’ll never be able to get visas, do the things necessary to build this new city.
Ivan: Well, I think the difficulties in these two situations are different, but the degree of difficulties would be the same. Meaning that they might face some technological difficulties or funding difficulties, and we face some political difficulties and social difficulties. I think as analogy is something, which can be crazy or unbelievable today can be realized in the future if we can keep our course and steer clear of this skepticism and take them as part of the contribution to our idea. I don’t think this skepticism is something that we look at negatively. Rather, we take them as a positive contribution to the momentum that we are building up.
Mark: I think you might be much more diplomatic than I am.
Ivan: I don’t know. I’m just telling the truth, how I feel.
Mark: One thing is in a lot of charter cities projects, we’ve seen so many different variations of teams. Paul Romer has an academic background. He also has a business background that not that many people know about. We’ve seen teams approach this in a much more startup-like manner, teams approach this in a much more real estate approach. It’s not just you. You have a team behind you. Just to mention it again, I’m Chief Strategy Officer of the Victoria Harbour Group. So how do you go about putting together the team to actually be able to execute on this?
Ivan: I think it is a very important premises that we have to have a strong team. First of all, we work together with some of our volunteers. We reached out to Mark to kind of seek help in terms of the methodology of how to do an international charter city, because you have been the founder and CEO of Charter Cities Institute and you have already dealt with a lot of different governments and tried out different plans and different ways of doing charter cities.
Then we have the luxury of some of this good talent, people whom we know, like our Chief Financial Officer, Samuel Lai. He was the chief executive of one of the two railway companies in Hong Kong. So, he knows infrastructure and city planning. Also, we have another chief development officer who used to be doing city planning, economic planning for cities in mainland China for the past 10 years for AECOM, one of the largest consulting firms in this area. We have Kelvin Kwok, who is our Chief Investment Officer and he has been doing global investment for one of the largest families in Hong Kong.
I think we have a very good combination of a core team, which allows us to do the international charter city. We’re putting it on the right track. But we are not trying to do it in a traditional real estate development way. We are trying to blend together real estate with technological startup kind of way of doing things. That’s why we have been trying to raise money both from Hong Kong and Silicon Valley, because we noticed that a lot of investors in Silicon Valley are very innovative. They like ideas. People like Larry Page. He said that Google would invest in ideas or products which do not exist today, which is totally amazing. We noticed that in Silicon Valley, you have these very, very adventurous investors who like innovative or pioneering ideas, or ideas which have never been heard before, or projects which can be very difficult to execute. But if it is successfully executed, it can be 100 times or 1,000 times more rewarding. I think this is the way that we want to carry out the Victoria Harbour Group to implement the international charter city as a hybrid between a technological startup and a real estate development or a city development business.
Mark: I think that’s interesting. One of the things that I found fun talking and getting to know you is that I think some of the people who are in the Silicon Valley space take it for granted a little bit. The investor mindset there and realizing how different it is from a lot of traditional investor mindsets where they’re a little bit more conservative. They expect a tried and true business plan. They aren’t willing to bet on big ideas. It makes me appreciate, I think, how different and unique Silicon Valley can be.
I think you’re right in how we’re trying to blend this real estate and startup mentality. I actually don’t think it’s that high risk, but it’s, I think, higher risk compared to a lot of real estate projects, at least after we have the land. The as we go down the stages, after we acquire the land, after we start to build-out, then it gets de-risked and then it becomes a little bit more analogous to a real estate project.
Ivan: I think the traditional real estate business is, first of all, you get a land and then you develop it. Then you shift the risks from the developer to different parties, including the purchaser, or the tenants. That’s a traditional way of doing real estate. But for an international charter city, no one has done that before. There is no track record or template which you can follow. I think we can do it in our way and take into account or incorporate very advanced ideas like the technology startup or Silicon Valley’s ideas to kind of make this concept of ICC into real projects with land and then with citizens and businesses moving in. I think that is a very adventurous, but very attractive and rewarding path.
Mark: How has this project been received by the people of Hong Kong?
Ivan: We’ve received a lot of attention, media attention, and people started talking about it. That is also our purpose. Because initially when we had this first interview, when I had the first interview published in one of the most popular newspapers in Hong Kong, Apple Daily in January, people were quite skeptical. Thinking, “Oh! You are doing a Sim City.” At that time, we called ourselves Sim City, because we wanted to make it easy for people to understand that we are building a new city from the ground-up. But then they think, “Oh! It’s political. It’s something that Chinese government won’t like it, and you are violating the law,” that sort of thing. But then the more we talk about it, the more interviews I received, and people start to understand that, “Oh, you are just building a new city.” We are not encouraging people to migrate. We just provide a solution for them to live together and to adjust easily to the migration. Now they understand this is something that is nothing political. It’s just a daily life of many governments that they have to build new cities.
We are undergoing a public articulation process where want many people, more and more Hong Kong people to talk about building international charter cities in different countries and they can talk about how to do it. How the city can be managed in the future? At the same time, what do they want from this international charter city? Should they be very beautiful? Very modern or is it like a garden city where we have a lot of greenery and plants, or they want it to be very technologically advanced? I think we have received a lot of attention and discussions. Throughout the past few weeks, I’ve been invited to radio programs, newspaper interviews, video interviews. So, it’s amazing. And I find that even in the developed countries we’ve had the Telegraph, and also radio programs in Ireland, they are interested in knowing what our project is or about, and how are we going to implement the project in their country?
Especially, after this coronavirus pandemic crisis in many countries, many governments are very keen and desperate to restart their economy with big tech-attractive projects, which are big enough and bold enough to arrest people’s attention and capture investments and attract businesses. I think an international charter city is just the right point of time to launch.
Mark: How has Beijing reacted? Have they reacted? Because some people, for example, might think that Beijing would view such a project negatively and with hostility and it could perhaps even prevent the Hong Kong people from leaving. How do you view their reaction to this?
Ivan: First of all, I have not heard from Beijing about any comment on our project even though we have already publicized our project quite massively in the past few weeks. But up to this moment, I have not heard about any comment from the central government. Maybe they are busy with resolving their economy and also the National Security Law. But at the same time, from our analysis, I think it is not political and they should not get sensitive or critical about our project. Because, first of all, we are talking to foreign governments, but our project is not related to Hong Kong matters. It’s just related to Hong Kong people who have plans to migrate to other countries and we are asking for land and concessions and government support to get the land and build a city in other countries. Not to mess up with Hong Kong matters or to interfere with matters in mainland China.
We believe that if the Beijing government look at it clearly, then they would understand that our action, our new city building, has nothing to do with matters in Hong Kong or business in mainland China. It’s the opposite, we are doing things in other countries for the benefit of Hong Kong people. I don’t see how the ICC would affect Hong Kong, except that we are just providing a solution for Hong Kong immigrants.
But having said that, if a large number of Hong Kong people leave Hong Kong in the future, for example, next five years, 10 years, 15 years, it will create a lot of vacancies in Hong Kong. But I think that is almost like nothing to the Chinese government, because they have 1.4 billion people in mainland China. And Hong Kong used to be the pearl, if not the diamond, in the whole of China, that every mainlander, almost all of them, would like to come to Hong Kong, live in Hong Kong, buy a property here, stay in Hong Kong, work in Hong Kong, and do business in Hong Kong.
I don’t think the brain drain in the next five, 10, or 15 years would have any effects and any vacancy, any capital brought away or any position being left empty by migrating Hong Kong people will be filled up in no time by mainland businesses and mainland people. I don’t see how the ICC would affect Hong Kong or mainland China.
Mark: How do you see the migration progressing, particularly to the ICC? Are you targeting young people first, old people first? Are you going to help with the migration in any regards? Are there any programs that you’re thinking about setting up?
Ivan: Oh, yeah. The Victoria Harbour Group, we would have 50% of our share being owned by a foundation. The foundation is to accept donation globally. And at the same time, in the future when the ICC is being built into operation mode, then there will be dividend from the Victoria Harbour Group to be distributed to the foundation. The foundation would kind of provide subsidies or financial assistance to public services in the international charter city. For example, public health, subsidized education, that sort of thing. Basically, this is something that we have in mind that we would like to help people easily adjust to the local environment, including to provide subsidized vocational training or job placement, these kind of services and social functions.
During this development period from the time we have the first secured ICC site, then we would first like to help some young people, fresh grads and young professionals, to come over to the international charter city sites to do all kinds of liaison work, groundwork. To do research, to understand the local community, build relationships, go to the local Chamber of Commerce, and understand what business opportunities or investment opportunities or job opportunities would be available for migrating Hong Kong people. And at the same time, we want some retired volunteers, baby boomers, retirees, to come and serve as volunteers to help lead or manage these young people, how to carry out their work. We are thinking about a few thousand of these young people in the beginning to do what we call the first-mover work. Then later on, when there are more people, more Hong Kong people trying to migrate to this country but they need the financial assistance or subsidized accommodation or subsidized education, then this foundation, with donations from around the world, will help these people, who might not be qualified to migrate, but we would like to help them to come into this international charter city.
To make a new city successful, we have to have a wide spectrum of residents living in this city. Not just mid-age, well-off people, but also people who are retired, people who are fresh graduates, or even students, and young professionals, businessmen. We would like to make it more comprehensive so that the whole ecosystem can be developed very soon.
Mark: Interesting. The term “charter city” as its typically used, for example, by Paul Romer and also by the Charter Cities Institute, refers to a new city with substantial legal autonomy, maybe a blank slate in law to start from. Hong Kong is held up as one of the historic examples of this, where they emerged basically from an impoverished village after World War II to become a global manufacturing hub and then a global financial center because of this degree of local government. I forget the technical term. It was either a Crown Colony or a Crown Dependency or maybe both at different times.
Ivan: I think it was Royal Patent.
Mark: Are you asking for some local autonomy? Obviously, the Hong Kong people are quite good at self-government. Maybe they could teach the US something about that. But is that something that you’re interested in? How are you weighing that option with the other needs of land acquisition and the obvious political challenges of getting a degree of local autonomy?
Ivan: I think it would be situational. That means it depends on which state that we are in and what would be available from that state. At the same time, I think we are very flexible in that if we are being given more autonomy, that would be good, because we can manage a city in a way that we want and also make it attractive for other people to move in. But if we are just given a lesser degree of self-governance or autonomy, then we can live with it because we can lay down some charters, principals, and values that everyone in this city would be aware of and they treasure. Then already, that is the basic minimum. If we can elect our mayor or choose our city manager, that is already another achievement of this international charter city. We don’t have a template or requirement one-two-three that we have to negotiate, “Definitely we need this or that.” No. I think it’s very situational, and we are ready to discuss and negotiate with whichever state would welcome us, and if we think that city is suitable, then we enter into discussion.
Mark: Cool. The last few questions, you’ve talked a little bit about building an advanced city, integrating new technology, particularly in the US, right? No new cities have already been built in the last 40 years. In the US, it’s interesting if you look at the East Coast versus the West Coast. East Coast cities tend to be a little bit more dense. On the West Coast, Los Angeles, I sometimes describe it as a “giant parking lot with some houses” because there’re a lot of cars, a lot of highways. How do you integrate this cutting-edge urbanism? How do you integrate new technologies?
Ivan: I think that’s a very good question that we definitely have the answer for, but the answer might not be final. We are exploring different ideas of how to make this city advanced, modern, and the city of the 21st century. Primarily, we would like to see some technological improvement and environmentally-friendly features and practices. For example, the zero-carbon emission or carbon neutral, positive energy. We would like to have more plantation, greenery, and we might also like to have shared space for cars, pedestrians, and bicycles. We would like to encourage walkability and cyclability. Maybe on the road, there would be just autonomous cars or personal transportation mode. But for other fuel-driven cars, maybe they have to go underground and once they enter into this charter city.
Mark: Ban cars!
Ivan: Or we are all on the ground level. Maybe we have some electric trains or different fast-moving mode of transportation, which can be personalized. We would like to see things like very innovative property designs, because as you might not have noticed that in Hong Kong, the building code has been almost frozen since the 50s or 60s.
In Hong Kong, if you have a very crazy or innovative building shape, you submit for approval from the building department. For sure, it will not be approved. Basically, we see Hong Kong buildings are very typical, just high-rise and they maximize the gross floor area, curtain wall. That’s almost like the same formula we have for every new building in Hong Kong. We would like to have some good urban design, beautiful buildings. And at the same time, some of the infrastructure can be beautiful too.
We can beautify bridges, roads, and encourage less use of cars or vehicles more. Encouragement of interaction among neighbors, because Hong Kong in the last three, four decades, we have been developing these vertical communities. Meaning that we always have high-rise, even residential buildings. We have, easily, even public housing. We have 40 something story to 60 stories. We are putting all the residents and the communities in a vertical form and we have this discussion that vertical community destroys the neighborhood. Now, people living in high-rise buildings, they don’t know their neighbors right next door. Whenever we take a lift to get down to the street level, some of our neighbors would like to wait until the other neighbors have already gone down with the lift and before they get out of their door. It is becoming very discouraging, and we don’t have enough open space in Hong Kong where neighbors can interact with each other, children can play with each other. And public spaces in Hong Kong are being over-managed. There are always security guards, property management people looking after you. Almost like every single action that you have been in their venue, they try to scrutinize. This kind of thing is very unpleasant, and people like to have a more free and enjoyable environment in the international charter city.
Mark: I think that’s interesting. To me, some of the key issues for making a city livable are— I think the level of density is important. It doesn’t have to be high-rises per se. If you look at, for example, Paris or Barcelona, those are two of the more dense cities in the world. But downtown Paris, it caps-out at about 6 stories. It’s just a lot of six story buildings that allow for a fairly high level of density. Even if you don’t know your neighbors, you’re walking on the streets enough and you interact there. Then I think the other thing that’s quite important that might be somewhat underrated is street size, where our streets these days are built for automobiles. A person is seen as an intrusion on the street rather than car being an intrusion on the person.
It’s interesting. If you look back at early videos of the 20th century when cars were very rare, people walk around like they own the streets because they did own the streets. You can return to that. They’ve been doing this in northern Europe a little bit where they, instead of having sidewalks, the entire street is just the same level, which basically forces the cars to drive much slower because it gives ownership of the streets to people. You see images of Amsterdam from 40 years ago or so where there were a lot of cars. And now Amsterdam has one of the highest biking populations in the world. Maybe you shrink the street size. Maybe you just make cobblestones, so the cars don’t go very fast. Maybe you just put a very high tax on cars driving in certain areas so that discourages use of those areas.
I’m not sure exactly what the solution is. Returning to this idea of a nice, walkable city where people see their neighbors, where there are these spontaneous interactions, where you can go to the park and hangout. Obviously, keeping all of these things, you need property prices to be relatively low to make it accessible for everybody, I think is really crucial to a thriving city.
Ivan: These are all the right elements. We should rethink the way we can enjoy our neighborhood and enjoy the community. Because if it is still a car being given the privilege, then most of the time, this space will be occupied by them. As you might notice that in Hong Kong, there’s no way to do your cycling inside the city, because all the car drivers think that you are the nuisance, and it can be very dangerous to cycle around in Hong Kong. I have to declare my interest that I am a very active cyclist. And I also notice that from my living in Hong Kong for the past 60 years, I think that when you walk in a city or you cycle in a city, you start to learn about a city and you can interact easily and you know the neighborhoods. But when you drive around, no way. You just go point to point and you don’t understand the city. You don’t look at the shops. You don’t look at the people. You just try to get from your origin to the destination. That is not good at all for building relationships with your neighbors. Appreciate your city. So, I think we have to make the city enjoyable and at the same time people find it very livable. It can also improve our health by walking and cycling.
Mark: So, I’ve got one more question. But before that, let me ask if there are any questions that you would like me to ask that I haven’t asked yet.
Ivan: Well, I think you said that I was kind of diplomatic, more diplomatic than you are. I would say that maybe it’s my faith in God, that I’m a Christian. So, I think of this differently. When I was young, I didn’t think like that. I thought of skepticism as negative and tried to hit back or whatever. But then I think the way you look at it, after you read the Bible, you believe in God, then you take criticism as almost like adding power to your momentum and you get more momentum to move on and you’re aware of the skepticism or the criticism that you have already been confronted with. That’s the way I look at it. I just want to supplement that.
Mark: What can we expect next from the Victoria Harbour Group?
Ivan: I hope in the next few months, we can announce the site of the first international charter city and then announce the plan to be with and announce the plan to fundraise.
Mark: Great. Thanks for coming on the show.
Ivan: And thanks for the very in-depth discussion. I didn’t expect it to be so in-depth and long, but I enjoyed it because it gave me the opportunities to explain more about what we intend to do. I think I’d go back and discuss with our core team members so that we can work on the detailed concept of what our international charter city will do so as to make the public understand exactly what we will deliver in the future. I think that would be very important when we announce the first site of the international charter city in a few months’ time. And thanks for the help of this thinking process.
Mark: Great. Thank you, and it’s been an honor to work with you. And I’ve seen a lot of charter cities projects and I think this can potentially be one of the most impactful, which is why I’m really excited to work with the team and see what we can get done.
Ivan: Yeah, and thanks. It’s a pleasure and also an honor to have you onboard and working together with us. We just move on, and I always say, “Go Hong Kongers, go!”
Mark: Yes. Go Hong Kongers, Go.
Mark: Great. Thanks.
Ivan: Thank you, Mark. Bye.
Mark: Thank you for listening to the Charter Cities Podcast. For more information about this episode and our guest, to subscribe to the show or to connect with the Charter Cities Institute, please visit chartercitiesinstitute.org. Follow us on social media, @CCIdotCity on Twitter, and Charter Cities Institute on Facebook. I’m your host, Mark Lutter, and thank you for listening to the Charter Cities Podcast.
Links mentioned in today's episode:
Dr. Simon Shen — Victoria Harbour Group Co-founder
Samuel Lai — Victoria Harbour Group CFO
Calvin Kwok — Victoria Harbour Group CIO