Financial Secretary Paul Chan says he hopes a novel approach that allows developers to pay land premiums in a more flexible way based on what they will build can help speed up development.

Under the "pay for what you build" proposal, developers do not have to pay premiums based on the maximum floor area permitted for the site.

The approach will, as unveiled in the Policy Address this week, be adopted for the Northern Metropolis development.

Speaking on RTHK on Friday, Chan said the traditional approach required developers to pay the premium in one lump sum upfront.

He explained why the new approach would also cover citywide commercial and industrial sites on a three-year pilot basis.

"For instance, in urban redevelopment projects – or for some plots of land in old districts, say Kwun Tong and Kowloon Bay – some plots have been earmarked for commercial purposes for a long period of time," he said.

"But why has nothing happened? We hope that by adopting this approach, we can speed up redevelopment."

Chan said the new approach will not affect the government's land revenue, adding that developers have sufficient experience to make adjustments.

The latest policy blueprint also revealed tax incentives in an attempt to lure companies to set up shop in Northern Metropolis.

Chan, who will lead a working group to devise development and operation models for the mega project, said the government can repay firms in various ways even if it is not offering concessions.

The government will ultimately decide on the tax breaks to be offered, while parameters will be delineated for future bodies tasked to manage various industrial parks, the financial secretary added.