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Associated Press Writer

HONG KONG (AP) – A technology zone touted as Hong Kong’s answer to Silicon Valley is more than half empty, and has run up multimillion-dollar operating losses – but the government called the situation understandable, and insisted the tech park’s future is bright.

Cyberport, which opened its first phase in 2002, recorded an operating loss of 90.8 million Hong Kong dollars (US$11.6 million; euro8.6 million) as of the end of March, the Hong Kong government said in a report seen Tuesday.

The losses are being covered by the project’s developer, Hong Kong telecommunications company PCCW Ltd.

The HK$15.8 billion (US$2.0 billion; euro1.5 billion) tech park has 33 tenants – including U.S. software giant Microsoft Corp. – occupying 42 percent of its space, the report said.

“The initial operating loss for an information infrastructure of that scale isunderstandable,” the government said, predicting that Cyberport will break even in the 2009-10 financial year.

The report said it will take time for Cyberport to gain international name recognition, and noted that the project rejects tenants who don’t fit its focus on digital media technology.

“We are confident that Cyberport is capable of making significant contributions to the development of the IT (information technology) and digital entertainment industries in Hong Kong,” the report said.

Critics have attacked Cyberport, which has a real-estate component, as a property development masquerading as a technology project.

The report showed that brisk sales of the luxury Bel-Air complex have already paid handsome dividends for the government, which has received a share of the profits totaling about HK$1.7 billion (US$217.9 million; euro160.6 million).

The project was launched amid controversy, with the government awarding Cyberport’s development rights without bidding to PCCW – a company controlled by Richard Li, a son of Hong Kong’s richest man, Li Ka-shing.

Copyright 2004 Associated Press. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.

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