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price of land. But it is already beginning to deter
the type of industrial development of most value to the
economy.
Some very large and beneficial long-term investments
are being made. But we know of many other cases in which
the comparatively short length of lease offered by the Hong
Kong Government has proved a deterrent. Such investors are
not generally deterred by their assessment of the future
policy of China towards Hong Kong. But they are concerned
about the legal limitation on their period of ownership
imposed by the terms of the leases they can be offered.
Lawyers and accountants for firms investing in Hong Kong, or
interested in doing so, are already getting worried about
what value should be placed on assets.
Government's view it is desirable to remove this legal
limitation as soon as possible.
In the British
At present this could be
done relatively easily. If we wait until a crisis of
confidence has developed in a few years time the problem
will be more difficult to handle.
3.
In view of China's interest in the healthy development
of Hong Kong's economy a solution of the problem of land
leases in the New Territories is in our mutual interest.
As the Governor explained to the Vice Premier, the action
to be taken must on the one hand maintain confidence in
investment, and on the other hand must not contradict
China's position on Hong Kong. The method we propose
is to remove the date from existing leases, and issue
new leases without a fixed date. This has to be done by
There are two reasons for this.
legislation.
Firstly,
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/leases
2.