SHORT TRANSLATION FROM THE JAPANESE "ECONOMIC NEWS REVIEW"
PUBLISHED RECENTLY BY THE CHINESE NAM WAH MAN PAO
(SOUTH CHINA EVENING NEWS)
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The Japanese Consortium to bid for the Hong Kong Mass Transit System comprises 55 firms. They are confident that they will be successful but on the other hand the British Consortium is equally determined to get this contract. Although the Japanese Consortium will try its best, Hong Kong is under British rule and it will for certain put the British, Consortium in a more advantareous position. An example of this is the Cross Harbour Tunnel the construction work of which had been vigorously tendered for by the Japanese Mitsui Consortium. The result was however that the British Consortium got the job. In addition, Hutchison International who bids for the British Consortium is one of the largest local enterprise groups and it is for these reasons that the Japanese Consortium may eventually be unable to compete with its British counterpart.
From the technically point of view there is no problem for the Japanese Consortium. The most important point is the question of finance. The cost of the phase I constructiis about 2,45 billion yen and that of the entire system is 700 billion yen. The British Consortium can obtain loans from the World Bank, Asian Development Bank (?) and ECGD. The Japanese Consortium can only obtain financial assistance from private organisations although it is equally true that it can obtain loans at low interest from the "Overseas Economic Assistance Fund"
The attitude of the Chinese Government to Hong Kong is causing the Japanese their most concern. The phase I construction of the Mass Transit Scheme is scheduled to be completed by 1980 and that of the complete system in 1986. If the terms of the Hong Kong Government are that payment is to be made 15 to 20 years after completion then the total construction cost will not be recovered until the 21st century. Hong Kong's lease however expires in 1997. The Japanese are therefore seriously considering this point at the moment.
The same newspaper has also commented that the Japanese Consortium will be unlikely to be successful because:-
2.
It insists on using the yen as the unit of currency which is highly susceptable to further revaluation.
It refuses to negotiate on a lower rate of interest in financing the construction of the system.
SHL:sf 8.1.73