CONFIDENTIAL
NOTE FOR FILE
In the course of his visit to Departments and the City prior to taking up duties as Pinancial Secretary towards the middle of next year Mr Haddon Cave paid a visit to CRE2 on 18 Noveaber. Mr Sanders, ir Toms and Mr Price were present.
Mr Cave az was only to be expected took a stoutly pro-Hong Kong line and we got the impression that he was unlikely to introduce any material changes into Sir John Cowperthwaite's financial policies. It was interesting to hear him develop the theme that the Japanese had no particular advantages in their commercial dealings with Hong Kong, if anything, they were at a disadvantage because anny of the Chinese population distrusted them and there had been Japanese allegations of unfair treatment. It was useful to have confiration that in leaning over backwards to be impartial in the adjudication of tenders the Hong Kong Government hed no anti-Sritish bias. The natural advantages Britsin held in Hong Kong remained:- the presence of the large British-owned merchant houses, the fact that English was the official language and that in the last resort the Colony was our political responsibility. It was up to commerce and industry in the UK said Mr Haddon Cave to make the most of them. There were some things that still rankled with the Hong Kong Government. Our failure to help pay for the airport extension was one of them. (Mr Haddon Cave did not mention the case of the tunnel.)
In the course of the discussion some points exerged about current issues which might be worth recording.
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Fublic sector contracts generally. All the large ones go out to international tender "for philosophical reasons" There is a Public Tender Board of which Mr Haddon Cave is currently Chairsen. Tenders are evaluated on the basis of price, delivery and other commercial considerations. Generally speaking the Government does not resort to contractor finance. A tender which offered credit teras when the specification called for a cash price would be disqualified, as would any other failure to comply strictly with the published conditions. The Governments policy would of course preclude any commitment to give preferential treatment to anyone.
11. The Kai Tak extension. This had been awarded to the
Japanese in the absence of any more favourable tender. No credit was involved. Hong Kong was not happy with the business as costs hed already escalated and they had never been fully convinced of the need for this extension. In agreeing to go ahead they had bowed to pressure from the tourism lobbies. Their case to the UK had been based on the fact that a regional airport would have sufficed for Hong Kong's own needs. It was the UK who had developed it into an international one and the benefit from any extensi on of the international facilities would accrue to the UK and not to Hong Kong.
iii.
The Mass Transit scheme. The latest,report had suggested (contrary to expectations!) that an underground scheme could be ande commercially viable. The hesitation of the Government to go ahead was leas on the score of inability to finance the project than because it was in their view very doubtful whether having committed vast resources to the scheme it would prove the solution to Hong Kong's traffic problems. Transport experts were divided on this point and would remain so. Mr Haddon Cave said he thought a package of measures designed to discourage street parking and improve public road vehicle services
CONFIDENTIAL