CONFIDENTIAL
MNB 090/4
75
025764
MDHIAN 6614
CONFIDENTIAL
FM SINGAPORE
TO DESKBY 15093OZ FCO
TELNO 197
OF 15083OZ MAY
INFO IMMEDIATE HONG KONG, UKREP JLG HONG KONG
INFO IMMEDIATE PEKING, WASHINGTON
TOP COPY O DIS
YOUR TELNO 920: MFN STATUS FOR CHINA
■
1 SINGAPORE HAS NO EXCHANGE CONTROLS OR TAXES ON UNREMITTED FOREIGN EARNINGS AND THE SINGAPOREANS THEREFORE HAVE NO DETAILED FIGURES ON CURRENT INVESTMENT IN HONG KONG. THIS IS, HOWEVER, GENERALLY RECOGNISED TO BE SUBSTANTIAL. MANY SINGAPOREAN FIRMS HAVE SUBSIDIARIES IN HONG KONG AND THERE ARE ALSO SIZEABLE PORTFOLIO, SECURITIES, BONDS AND CURRENCY INVESTMENTS. MANY SINGAPOREAN BUSINESSMEN HAVE BANK ACCOUNTS IN HONG KONG, WHERE TAX RATES ARE LOWER THAN HERE.
2. THE GOVERNMENT LAST MONTH ANNOUNCED PLANS TO EXPAND INVESTMENT IN HONG KONG, THROUGH THE RECENTLY ESTABLISHED HONG KONG BRANCH OF THE GOVERNMENT OWNED DBS BANK, BY ACQUIRING EQUITY STAKES IN, AND, WHERE APPROPRIATE, MANAGEMENT CONTROL OF, A NUMBER OF HONG KONG BUSINESSES. TELECOMMUNICATIONS, TELEVISION, THE PRESS, ENTERTAINMENT, FINANCIAL SERVICES AND PROPERTY WERE MENTIONED AS POSSIBLE TARGETS FOR
SINGAPOREAN INVESTMENT. THERE IS ALSO TALK OF LINK UPS WITH SHIPPING
AND OIL SERVICE COMPANIES FOR OIL EXPLORATION IN CHINA.
3. MINISTERS HERE REGULARLY STRESS THAT SINGAPORE HAS A MAJOR STAKE IN HONG KONG'S CONTINUING PROSPERITY AND HAVE, IN THE PAST, INDICATED A GENERAL WILLINGNESS TO HELP MAINTAIN BUSINESS CONFIDENCE.(LORD CAITHNESS DISCUSSED THIS POSSIBILITY WITH BG YEO DURING HIS RECENT VISIT). THE GOVERNMENT IS ALSO KEEN TO EXPLOIT TO THE FULL ECONOMIC OPPORTUNITIES IN CHINA FOLLOWING THE RE-ESTABLISHMENT OF DIPLOMATIC RELATIONS LAST YEAR. THE DEPUTY PM AND MINISTER FOR TRADE AND INDUSTRY HAS JUST BEEN TO CHINA WITH A HIGH POWERED DELEGATION OF OFFICIALS AND BUSINESSMEN EXPLORING THE POSSIBILITIES FOR CLOSER ECONOMIC TIES.
4. A LETTER TO FOREIGN MINISTER, WONG KAN SENG, WOULD HELP IN THE PROCESS OF GETTING SINGAPORE TO ASSIST IN CONFIDENCE BUILDING AND, GIVEN THE COINCEDENCE OF DAN QUALE'S PRESENCE IN SINGAPORE NEXT WEEK FOR A PECC MINISTERIAL MEETING MIGHT ASSIST IN BRINGING PRESSURE ON
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