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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.
In the British Government's view it is desirable to remove
this legal limitation as soon as possible. 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.
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 nust 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 legislation. There are two reasons for this. Firstly, leases without a fixed date have not been
issued before in Hong Kong. The second reason is that there are many thousands of land leases in the New Territories: they must all be altered at the same time.
Similarly, there is a legal problem about the Governor's powers to administer the New Territories. Doubts about this could undermine the value of removing the 1997 date from the leases. Under present British law it might be argued that the Governor's powers of administration in the New Territories end in 1997. We therefore intend also to remove this purely legal obstacle. This would remove any legal impediment under British law to the continuation of the present administration
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