RCN51 CATHAY 773
10XK(21/4
JCM Mason Esq ECG U
PO Box No 272
PERSONAL AND CONFIDENTIAL
Aldermanbury house Aldermanbury
Mi sinadi.
24 May, 1973
1.
2. Enter
Chien
123
to Mr Glaves-
Smith
ARSI
30/5
DTI
This, I think, is more for" you imanfor me.
Riin. Erone
30 They, 1973.
(119)
HONG KONG MASS TRANSIT SCHEME
1.
It may be useful to you if I amplify our telegram No EXCED 28 of 22 May to Fell.
2. Üzu called on the Ambassador cu 21 May (not 22 May, as our telegram wrongly implied), oxplaining that a critical moment was approaching on the Schome. Interested countries had to submit estimates by the end of this month.
3. The Japenose consortiua was due to have a second consultation with the liong Kong Government in the latter part of June. The British consortium would do likewise. financial terms of the British conscrtiua seered to be more
The favourable; they were offering an interest rate of 6.2%. Japanese consortium had not yet committed themselves, but were
The thinking in terms of 7.5%. The final figure they could offer would depend on the availability of funds from the Exim Benk. Normally, this Bank provided up to 60% of the total, altnough they sometimes provided as little as 60%. Their interest rate spread was from 5.5% to 6.5%. The Japanese consortium consisted of about 30 companies, of whom the principal one was Hitsubishi. MITI had had several informal talks with the consortium on the possibility of an Anglo-Japanese bid. There talks had been very delicately handled: three or four officials within MITI, and the same number within Mitsubishi, were in the picture.
4. After the second consultation, the Hong Kong Government would have to decide whether to go for a single or a multilateral contract. He thought the former seemed more likely. the British and the Japanese (who were confident of the excellence
If so, then of their technology) would probably be left as the final candidates. The Hong Kong Government could choose one or both of these.
5. MITI had persuaded Mitsubishi of the advantages of Anglo- Japanese cooperation. They did not want either side to win the contract exclusively; the total cum involved was between $400 million and $600 million; and this was too much for one country on its own. There were also political considerations; a very long teru point of view was needed. At some stage, collaborative talks
/would