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a further study for two years would only result in transport chaos in the area because the growth of the new towns is so rapid that the population will require something beyond the existing inadequate bus services. Once again McCluskie believes that Hong Kong Wharf and Godown Company could complete their study within six months.
5.
These two tramway system modernisations must surely provide an opportunity for British manufacturers. I know that in the past Tony Sampson has talked about the possibility of some form of manufacture/assembly in Hong Kong and given that there is now the prospect of a double project, you may like to contact him to find out what his current thinking is.
6.
Finally, I gather from Norman Thompson that during his recent visit to London he met Sir Arnold Hall and senior members of the Hawker-Siddeley Board including the Managing Director of Westinghouse to discuss deficiencies in the Westinghouse performance on the present MTR signalling contracts (see paragraph 6 of my letter of 11 December). For the moment no action seems to be required although I have told Norman Thompson that if he has reason to believe that the situation has not improved to the extent that a negotiated contract becomes possible, I should be prepared to ask for help from senior officials in the Department. Norman Thompson also suggested that once the go-ahead for the Island Line is given by Exco, he may consider recommending to the MTR Board that they should negotiate the majority of the contracts for the E and M equipment for the new extension. He believes that the key factor will be the terms of ECGD finance because he hopes to avoid recourse to further international loans. He asked me whether there is any possibility of negotiating a credit package with ECGD at existing rates of interest. I wonder whether you would like to take informal soundings of Ken Cotterill. It seems to me that if Thompson does persuade his board to go for negotiated contracts, it would be well worthwhile you and a senior member of the ECGD coming out to Hong Kong for informal discussions early in the New Year.
cc: A G Manzie Esq
Deputy Secretary
Department of Industry
RD Clift Esq
Hong Kong and General Dept
FCO
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D M March
Senior Trade Commissioner