CONFIDENTIAL
indeed need to transfer their ships in order to be able to
compete. They conceded that HMG might be able to stop them
by controls on the transfer of capital, but argued that these
restrictions would not apply to foreign owners. Hong Kong might
therefore become a haven for all sorts of foreign ship owners,
and the aim of encouraging Hong Kong patriotism would be defeated.
The Minister pointed out that it would be possible by provisions
in Hong Kong law to ensure that the shareholders as well as the
companies were Hong Kong residents. But the owners did not like
this either, since this would finally close the loophole of
transfer for them.
4.
Mr Heseltine had intended to submit to the Prime Minister
today proposing agreement on the lines of the consultative
document. But he was deterred both by the evident difficulty
of separating the UK and Hong Kong registers and also by the
absence of the Governor's comments on the document which were
promised during Mr Heseltine's meetings in Hong Kong last month.
5. I do not think there is need for us to intervene.
Mr Heseltine is still clearly seeking an agreement acceptable to
Mr Y K Pao, and is under Prime Ministerial pressure to do so
quickly. The Hong Kong Government is, however, at fault in
not sending their own comments. If these are not received
immediately after Easter we will remind them.
34/€
6.
Jr Heseltine now proposes to write on the lines of the attached draft
to the Prime Monste
18 April 1973
Copy to:
Sir D Watson
CONFIDENTIAL
A C Stuart
Hong Kong & Indian Ocean Department
Kunhilfão
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