pension at normal retiring age. This is a common modern provision on a change of employment;
the relatively high salaries, with consequences for retiring benefits, received by many Hong Kong HMOCS officers, by comparison with HMOCs officers in former dependent territories and public servants in the United Kingdom; and
the evolution of the public service in the United Kingdom with changing expectations since the 1960s of continued employment by the same employers.
the small number of posts for overseas officers in the remaining Dependent Territories and the consequent impossibility that these could accommodate more than a handful of Hong Kong HMOCS officers.
and
HMG wishes to contribute to a smooth transition in 1997 to ensure the maximum measure of continuity so as to assist in maintaining the economic prosperity and social stability of Hong Kong and the lifestyle, rights and freedoms of Hong Kong people.
The provisions of the Hong Kong limited compensation scheme have also been a relevant consideration in the drawing up of the proposed Scheme.
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love
CONFIDENTIAL
CM
18 November 1991
Bring
HKD
Foreign & Commonwealth
Office
109
Dear Stephen,
,
HONG KONG AIRPORT PROJECT
London SWIA 2AH
HKE
18217
Dr Markin
Д
for
Pes
folder..
your useĥil Thank you for your letter of 25 October about British interests in the Hong Kong airport project. The DTI and we have been working intensively in this area. The projects involved are some of the biggest civil engineering works ever undertaken and, with the new power station at Black Point, are excellent opportunities for British business. During his visits to Peking and Hong Kong in September the Prime Minister spoke out in support of their efforts.
As you say, there are two main elements to the British Government role: how far we can expect, or persuade, the Hong Kong Government to ensure that British firms do well; and the vital ingredient in having a chance of doing well - the issue of ECGD cover.
This letter is based on discussion among the FCO, DTI, ECGD and HM Treasury.
ECGD cover
I enclose (Annex A) a note, whose contents have been agreed among the Departments concerned, setting out the position on ECGD cover. Our summary of this is as follows:
-
All Departments agree on the importance of ECGD cover to UK companies' prospects, both for the airport and the power-station.
There is considerable spare capacity within the Market Exposure Control which ECGD's Advisory Council have approved for Hong Kong and within the annual business budget.
- However the Treasury is very concerned about the potential implications for ECGD's finances, and thus for the taxpayer, of increasing ECGD exposure in Hong Kong - already its most heavily concentrated market for medium-term exposure and commitments.
- The Treasury therefore believe that new ECGD commitments in Hong Kong should not exceed expected repayments ie around £200 million per year.
- The Foreign Secretary and the Trade and Industry Secretary both believe that it should be possible (even under ECGD's
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present Portfolio Management System) to provide British companies with much more substantial support than this in Hong Kong, and that there are strong commercial, political and foreign policy reasons for doing so.
- The immediate issue before us is that Trafalgar House have already asked (in October) for an indication of support, involving new exposure of about £400 million, for their share. of a bid for the main airport bridge, ie the Lantau Fixed Crossing. EGC will meet on 19 November to consider this, but in view of the deep difference between Departments, agreement is unlikely and Ministers will have to decide. There will be very little time for consideration before end-November, the effective deadline if Trafalgar House and their partners are to include attractive financing proposals in their bid which must be lodged on 16 December (Annex B shows other timing constraints).
The Hong Kong Government role
The Governor, the Chief Secretary and other senior figures in the Hong Kong Government and the Chief Executive of the Provisional Airport Authority, who is British, all want to see British companies do well. At the same time Hong Kong has an interest in securing value for money and broad international participation in these projects. Unquestionably the competition will be severe. It is against this background that we have been seeking to promote the interests of UK firms. As you say, there has in the past been an argument about Hong Kong's level playing-field. For the reasons set out in Annex Cto this letter we cannot direct the Governor or his administration to show favouritism to British companies.
This does not mean however that we must sit on our hands and can do nothing to help British companies. We have been active at both Ministerial and official level:
- We brief all Ministers to lobby for UK firms when they visit Hong Kong, making clear the strengths of British firms and the degree of the Government's commitment to their worldwide export success. Mr Lilley and Mr Sainsbury have both visited Hong Kong in the past year and they are keeping under review the timing of further visits. (But, as discussed below, Ministers must be able to take a more positive line on ECGD cover than at present if their message is to seem really credible.) The Duke of Kent will visit the airport site in early December.
-
In their lobbying DTI and FCO Ministers and officials also impress on the Governor and Chief Secretary the advantages to Hong Kong of factoring into their considerations points such as cementing the long-term British commitment to Hong Kong and the Parliamentary goodwill that would flow from contracts. (The Hong Kong Government are considering establishing a more
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