CONFIDENTIAL
29. The Treasury have resisted the extension of Hong
Kong dollar finance on fixed rate terms principally
because of their fears about the longer term stability
of the Hong Kong dollar. The Hong Kong Government and
public see this as HMG's reluctance to express full
confidence in the future prosperity of Hong Kong,
prosperity which under the Agreement we are committed
to try to maintain over the next 12 years.
30.
The requirement for fixed rate finance in Hong
Kong dollars is now a common feature of calls for
tenders for public sector projects in the
a
British-led
consortium
territory.
tendered
Recently,
unsuccessfully for the £100 million Tuen Mun Light Rail project
project and has subsequently argued that HMG's
refusal until a very
late stage to offer official
support in Hong Kong dollars (EOGD had, without
consulting either FCO ог DTI, entered into an
agreement with other credit agencies not to provide fixed rate Hong Kong dollar finance for Tuen Mun) have
been a factor in their loss of the contract.
Following the loss of Tuen Mun, attention is now
focussing on a short list of three consortia bidding
for the Second Harbour Tunnel Crossing, a huge project
with a potential UK content of £145 million. Treasury are maintaining their existing line on Hong Kong
dollar finance for this project and this may well put
the British companies involved at a serious
disadvantage. We and DTI are pressing Treasury
Ministerial level to reconsider the case.
a t
16 September 1985
AC Galsworthy
Hong Kong Department
CONFIDENTIAL