CONFIDENTIAL
BACKGROUND
The Hong Kong Government has asked us for assistance in
financing a £13 million project for developing this airport, which
is second only to Heathrow in its importance to British aviation
interests because of the value of traffic rights there. The
request is for a loan of about £6 million on favourable terms
(i.e. over 15 years at interest below the market rate); this sum
would finance the extension of the runway so that it can take the
new generation of jumbo and supersonic aircraft. They have also
asked for a grant of about £250,000 from aid funds towards the cost
of replacing the aeronautical communications system. In 1959
we gave Hong Kong an interest free loan of £3 million to assist in
building the present runway.
2. For two years attempts have been made without success at
official level to obtain a measure of assistance.
The Treasury
the
have considered that in our present economic circumstances Govern-
mont expenditure should not be increased for this purpose;
necessary funds must be found from existing sources. The only
possible major source of existing funds is the Aid Programme;
the ODM do not consider Hong Kong to be "aidworthy" and hold
strongly to the view that Board of Trade votes for civil aviati on
are the appropriate source for expenditure in aid of British
aviation interests. Board of Trade votes have been effectively
pruned in past exercises to contain government expenditure and
there is no money to spare for additional projects; even a minor
allocation, it is claimed, could only be found at the expense of
aviation development in the UK. Other quasi or non-governmental
sources
CONFIDENTIAL