HK1AFF
HONG KONG DOLLAR FINANCE
*
The
1. We have been in touch with the Treasury and ECGD on number of occasions recently in support of requests for
Hong Kong dollar finance to be extended to British
contractors and suppliers bidding for major project work in Hong Kong. The requirement for fixed rate finance in Hong Kong dollars is now commonplace in calls for tenders for public sector projects in the territory. However, although EOGD have authority to guarantee fixed rate project finance in "standard currencies", including the pound and the US dollar, they must seek the agreement of Treasury for financing in "non-standard currencies",
including the Hong Kong dollar, which under present
arrangement s is given only when there i s evidence of a competing supplier offering a similar arrangement. Treasury have resisted the extension of fixed rate
in Hong Kong dollars, principally because of their fears
for the long term stability of the Hong Kong dollar. Given that under the terms of the Agreement on the future
of the territory we are committed to maintaining the
prosperity of Hong Kong over the next 12 years, the
Hong Kong Government consider this attitude to be
Recently the GEC-led consortium, which tendered unsuccessfully for the large Tuen Mun Light Rail Project, argued
argued subsequently that HMG's refusal until a
very late stage to offer official support in Hong Kong dollars might well have been a major factor in their loss
of the contract.
perverse.
terms
2. The project market in
in Hong Kong was, until recently, one in which British companies were pre-eminent. It is
essential, not only for commercial reasons but as a
visible expression of the UK's political and economic
commitment to the future of Hong Kong, that British
companies should continue to be active in this sector.