CONFIDENTIAL
Diar
Dickinson,
FILE COPY
Foreign and Commonwealth Office
London S.W.1
16 May 1969.
26.
Kai Tak Airport
I was grateful for the recent opportunity to discuss informally with you the question of assisting the Hong Kong Government to finance a project for the development of Kai Tak Airport. We agreed, as a result of our discussion, that it would be necessary to look more closely into the "export content" of the project as a first step before considering further the possibilities of obtaining loan finance backed by an ECGD quarantee.
2.
As much detailed information on the project as we have at present is set out in the attached memorandum prepared in co-operation with the Board of Trade for purposes of consultation with other Departments in Whitehall.
It indicates
in paragraphs 14- 20 the very considerable value of the project to our aviation interests. The case for assisting Hong Kong
on financial grounds, as put forward in paragraphs 8 and
21
-
23, is not so strong; experience has shown that Hong Kong's buoyant financial position and conservative financial policies Eut have always belied the somewhat cautious forecasts made. because of our aviation interests and certain political considerations it is most important that we should make some contribution to the project.
3.
The Hong Kong Government are looking to us to provide an element of loan finance on favourable terms. The suggested sum is about £6 million, much the same as the estimated cost of the runway extension. The "profitability forecast" (Appendix E of the enclosure) hypothecates the amortization of capital expenditure over fifteen years and charges of 7 per cent on the
/funds
R. A. DICKINSON, ESQ., CIG,
EXFORT CREDITS GUARANTEE DEPARTMENT.
CONFIDENTIAL
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