XN000022-1972-06-28 — Page 5

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Wednesday, June 28, 1972

"This would require the service of highly qualified engineers

and other professional people which banks do not normally employ. If the

assessments were left to the banks themselves they would, as a matter of

normal commercial prudence, have no alternative but to refuse the loan

applications," Mr. Porter said.

It was estimated that the average cost to the Productivity Centre

of each feasibility study would be HK$3,000. However, both the Loans for

Small Industry Committee and the Trade and Industry Advisory Board realised

that an initial charge of HK$3,000 would be too high for the Scheme to

have any chance of success.

A compromise was therefore reached whereby the cost would be

recovered by an initial payment of HK$1,000 plus a charge of one per cent

per annum on the amount loaned, to be paid to the Productivity Centre.

Mr. Porter said both the Committee and the Board realised that an initial

payment of HK$1,000 would be unpopular, but felt that this was the best

payment system which could be devised, and probably the only one which would

be in any way acceptable to all those concerned with the Scheme.

To successful applicants the charge would represent only a small

increase in the cost of the loan, equivalent to 0.67 per cent to 0.08 per cent

per annum depending on the size of the loan and the period over which it

was granted. Unsuccessful applicants would receive a copy of the Productivity

Centre's report which would prove most valuable to them.

/Mr. Porter