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commitment, and the consultants are clearly somewhat surprised that the Hong Kong Government has gone so far in recruiting staff for the new Mass Transit Railway Corporation.
3. In talking to the consultants I made the point that I have two interests in the present negotiations: to keep my ear to the ground for any possible breakdown in the negotiations; and the possibility of openings for British equipment if the Japanese sign the contract. The consultant's view is that it will be some considerable time before it is possible to tell whether the Japanese are going to sign a contract; and while there may be some openings for British equipment, they doubt that these will be significant. They told me the official Hong Kong Government line was no Japanese contract, no Mass Transit.but they made the point that if the Japanese do go ahead, a decision is likely to be taken to proceed with the Island Line extension to the scheme as soon as the completion date for the first stage is in sight and the new Corporation can see revenue in prospect. They believe this will go out to international tender and that there is, therefore, no guarantee the Japanese will get it automatically. It is clear that they are very disenchanted with the pre-emptive bid procedure. They would have preferred to see bids called for once all the design and other information was available and they are obviously concerned that their own reputation will be at stake if there appears to be any departure from the performance criteria if, and when, a contract is signed.
4. Before I came out here all those people I talked to were convinced the Japanese could only build the Mass Transit Railway at very considerable loss. The consultants regard this as something of an exaggeration and take the view that there was probably some fat in the original pre- emptive bid although this will now have been eroded by inflation. It seems very likely, for instance, that the Japanese will employ a great deal of their own labour and plant for the underground works; this will probably be a good deal cheaper than using local contractors.
5. I understand from the Japanese Consul-General that some of the Japanese consortium wished at one stage to pull out and had to be brought back into line although he believes things are now a good deal happier. All I can say at
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