CONFIDENTIAL
19
Samlı
Private Secretary
1- HKK 173/2
5.51
See 2 (50
No
Josli
HONG KONG: MASS TRANSIT RAILWAY (MTR)
1.
The British firm Metro-Cammell (Metcam) have tendered for
The contract
a contract to supply rolling stock for Stage II of the Hong Kong Mass Transit Railway (the Hong Kong underground).
is worth some £50 million in the first instance. If Metcam are to
win it against unscrupulous Japanese opposition, Government help will be needed to enable them to lower their price by £5 million.
2.
A decision on whether this help can be made available is required today. Officials in the Departments of Trade and Industry are recommending an exeptional arrangement whereby the whole of the credit which ECGD are under-writing will be drawn down at the outset. It is possible that the Treasury may contest this proposal (an inter-departmental meeting will be held this afternoon), in which case either the Secretary of State for Trade, or the Secretary of State for Industry may telephone Dr Owen (whose agreement would not otherwise be needed) to ask for support.
3.
If the Secretary of State is asked for his support I recommend that he should give it, for the following reasons:
(a) the contract is valuable in its own right; (b)
4.
5.
(c)
Metcam were awarded (in 1976) the contract to supply rolling stock for the first stage of the MTR and have recently won a similar contract for the Hong Kong section of the Kowloon/Canton Railway, which is being modernised. Failure to win the MTR Stage II order would be taken by potential customers as an indication of doubts about Metcam's competence on the part of the MTR Corporation, and would damage Metcam's prospects of obtaining orders elsewhere in Asia;
the loss of this order could also prejudice Metcam's changes of securing business from the Chinese, who are now considering the electrification of the line between
Canton and the Hong Kong border.
I have discussed with Mr Murray who agrees.
I attach a copy of a submission to the Secretary of State
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