Hong Kong Disneyland anything but fun

If the Shanghai park goes ahead, it would be Disney's third in Asia, after Hong Kong and Tokyo

HONG KONG, China -- Hong Kong Disneyland is turning out to be anything but fun and games.

The fun park is due to open in early 2006 on Hong Kong's outlying Lantau Island -- but the magic kingdom is already mired in controversy.

Local newspapers reported recently that Disney has signed a letter of intent to build another theme park in the thriving city of Shanghai.

Disney has not confirmed the reports, but alarm bells are already ringing in this territory of 6.7 million people on China's southern coast.

"It could provide very stiff competition.. Because if there is a theme park in Shanghai then many of the mainlanders will go to that theme park instead of coming to Hong Kong," says legislator Emily Lau.

Hong Kong, which is battling its second recession in four years, is banking on the park to create thousands of jobs and lure millions of tourists, especially from mainland China.

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Hong Kong legislators grilled the government on Monday, urging it to clarify the situation with China, and challenging its failure to get a guarantee that Disney wouldn't build another theme park in China in the near term.

Taken for a ride?

But the new secretary for economic development has defended the government's position.

"The exclusivity arrangement could be reached only with the consent of both parties. And both parties agreed there would not be such a provision," Stephen Ip told the legislative council economic panel.

"Hong Kong was in fierce competition with other places then, and we believe in market forces."

But Ip's disclosure has only unleashed more criticism of Hong Kong's leadership.

Financial commentator Jake Van Der Kamp has questioned Ip: "We wouldn't sign a deal on terms that were advantageous to us because the other people might not sign it. Well then don't. It's so obvious."

The government has had to defend itself from the start for what many see as a lopsided deal.

Hong Kong pledged a whopping 2.9 billion dollars for the park and related infrastructure, while Disney is investing just 315 million dollars.

Now, a fairytale ending is in question, especially since the Hong Kong government also revealed that there is no written contract preventing Disney from opening in Shanghai, even before its own Disneyland gets off the ground.