CO129-618-6 Proposed reclamation of additional building sites 3-3-1948 - 8-9-1948 — Page 11

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starting eady year.

On second thoughts, afraid this is

I am probably

A

ath

non stestes, least at present, Since the

projects are not "productive"

in the rather narrow sense

which the Bank stipulates Stik, we might keep the dea at the back of erw

CeLOC

The

Mr. Gorell Barnes.

You should see at this stage. As you will see from No.1., Hong Kong are proposing to undertake a big reclamation scheme which, if completed, promises to be remunerative and of great general benefit to the Colony. The two schemes involved are dependent, however, on initial finance to the extent of about £3 millions, and the problem is to find this finance.

The original suggestion, made by the Hong Kong Government themselves, was for a C.D. & W. loan (paragraph 3 of No.1) but it was pointed out in reply (No.2) that C.D. & W. loans came out of the total allocation just as much as C.D. & W.. grants. Hong Kong's C.D. & W. allocation is £1 million.

We have now taken the matter further with Mr. Follows in the course of our general discussions with him and the Treasury on the whole range of Hong Kong finances, and the possibility of the Colonial Development Corporation interesting itself in these schemes has been raised. You will see from the earlier minutes on the file that preliminary consideration had been given to this possibility some time back, but that Mr. Mayle (in his capacity as Head of the Hong Kong Department) had expressed doubts. I have now put the point to him again, in his new capacity, and the result is the immediately preceding minute. You will see that he still feels doubtful, to say the least. I have no doubt there are sound reasons for this feeling,

seems to me that

9.

but it

this is, prima facie, an eminent example of a desirable development work which a sound commercial proposition and I should therefore have thought

as stated in my minute of 23.6.48 above) that it has at least some of the ingredients of a Colonial Development Corporation scheme. If you agree that the possibility should be further explored, this could either be done by semi-official letter from Mr. Newton, as Mr. Mayle suggests, or alternatively the most appropriate contact in the Colonial Development Corporation might be sounded orally. I mention the latter possibility because I think we might have to get the concurrence of the Hong Kong Government before writing to the Colonial Development Corporation, and it would be a waste of time to do this if Mr. Mayle's view thereafter proved correct!

An alternative source of finance for this project might be the International Bank. Hong Kong have, of course, been approached about the International Bank and they said nothing about these two schemes in their reply. The approach, however, was strictly on the basis that International Bank finance could only be used for dollar equipment. As you know, I am coming more and more to the

conclusion on general grounds that we shall never

get anywhere with the International Bank until this stipulation is dropped,but that if it is

dropped we might get quite a long way (whether

or not E.R.P. loans also come into the picture) on

individual/