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Mr. Wilford
CONFIDENTIAL
Application by the Hong Kong Government for Financial Assistance in the Development of
Kai Tak Airport
Flag B
6/4/11
Flag A
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Problem
Hong Kong has plans costing £13.7 million to develop its airport at Kai Tak to cope with fast increasing traffic and to meet require- ments of new generation of supersonic and "jumbo" aircraft. The airport is of considerable value to British civil aviation interests. Hong Kong has therefore asked for assistance from HMG in financing the project in the form of :-
2.
(a)
(b)
a loan on favourable terms equal to the cost of the runway extension (approximately £6 million);
a grant of about £4 million from C. D. & W. funds towards the cost of improvements to the air traffic control system.
The department has been unable to obtain inter-departmental
agreement to the provision of any government funds for these purposes or to identify any other possible source of finance. Although the Hong Kong Government have decided to go ahead with the project financing it if necessary from their own resources, they are likely to continue to expect, and to press their case for, a measure of
financial assistance.
Recommendation
3. I recommend that at ministerial level a final attempt should be made to secure a measure of assistance to this project. A draft
letter for Lord Shepherd's signature is attached.
Background and Argument
4. A note setting out background information and the principal
considerations is attached. The conclusions are :
(a) There is not a strong case on economic and financial grounds
for giving capital aid to Hong Kong, in view of the buoyant state of its economy and our own pressing need to restrict overseas expenditure, Hong Kong admittedly has a large
&needs
/ capital
CONFIDENTIAL