XN000022-1982-11-24 — Page 5

WEDNESDAY, NOVEMBER 24, 1982

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MR BREMRIDGE ALSO COMMENTED ON THE SUGGESTION THAT LONG AGREED RISES SHOULD ONLY BE POSTPONED FOR A PERIOD, THUS HELPING HONG KONG IN THE CURRENT RECESSION. THIS IS A FAIR DECISION FOR THE POWER COMPANIES TO TAKE NOT GOVERNMENT. WE WOULD CERTAINLY ACCEPT THEIR DECISION. HE NOTED, HOWEVER THAT. HONG KONG IS RIDING THE PRESENT RECESSION BETTER THAN MOST AND WONDERED WHETHER PEOPLE REALLY WANTED DOUBLE INCREASES IN A YEAR'S TIME, OR TREBLE IN TWO YEARS' TIME.

+MOREOVER THE COMPANIES MUST CONSIDER CASH FLOW AND COMMITMENTS TO BANKERS. ANY ATTEMPT BY GOVERNMENT TO MEDDLE IN THIS AREA WOULD SCARCELY BE AN ATTRACTIVE SIGN TO THOSE SEEKING TO RAISE FUNDS FOR NEW ENTERPRISES IN HONG KONG.+

HE ADDED, THERE EXIST ANYWAY FIRM LEGALLY-ENFORCEABLE AGREEMENTS BETWEEN UTILITY COMPANIES AND THE GOVERNMENT WHICH CANNOT BE ALTERED IN THE CASE OF THE POWER COMPANIES BEFORE 1993, EXCEPT WITH THE CONSENT OF BOTH SIGNATORIES.

+ON THE BACK OF SEVERAL OF THESE AGREEMENTS FINANCE HAS BEEN ARRANGED AND LARGE FORWARD ORDERS FOR EQUIPMENT PLACED. UNILATERAL ACTION IS QUITE UNTHINKABLE.+

MR BREMRIDGE SAID ALL THE INDUSTRIES SUBJECT TO SCHEMES OF CONTROL WERE DIFFERENT. +THERE IS NOT MUCH IN COMMON BETWEEN TELCO WHICH REQUIRES TO INVEST $5.6 BILLION IN THE NEXT FIVE YEARS, CHINA LIGHT AND POWER WHO ARE COMMITTED TO $35 BILLION, THE BUS COMPANIES AND THE SMALL HATS. CONSEQUENTLY ALL SCHEMES OF CONTROL MUST BE TAILORED TO SUIT EACH INDUSTRY, THERE IS NO VIRTUE IN A STANDARD PATTERN.+

MR BREMRIDGE SAID HE WAS PERSONALLY NO GREAT PROTAGONIST OF SCHEMES BASED ON NET FIXED ASSETS. HE MUCH PREFERRED A CRITERION OF SHAREHOLDERS' FUNDS, THOUGH THERE ARE SOUND ARGUMENTS EITHER WAY. BUT GIVEN THAT GOVERNMENT HAS AVAILABLE EXPERT TECHNICAL CONSULTANTS WHO IN THE CASE OF THE POWER COMPANIES CAN ADVISE PROFESSIONALLY ON EQUIPMENT AND ON FUTURE PLANNING AND CURRENT EFFICIENCY. THE BASE ON WHICH PROFITS ARE CALCULATED IS NOT VERY MATERIAL EXCEPT AS A MATTER OF PRESENTATION TO THE MAN IN THE STREET.

+PROFIT THERE MUST BE. DOES IT MUCH MATTER IF THIS PROFIT IS BASED ON 15 PER CENT OF NFA OR AN ALTERNATIVE OF PERHAPS 24 PER CENT OF SHAREHOLDERS' FUNDS? BOTH MIGHT OFFER FAIRLY SIMILAR OUTCOMES. DO NOT BELIEVE THAT THE PERCENTAGES WILL REMAIN SIMILAR, FOR THEY CERTAINLY WILL NOT.

+OF COURSE NO GOVERNMENT WILL ALWAYS GET IT RIGHT. FOR INSTANCE OUR BUS COMPANIES ARE NOT EVERYONE'S FRIENDS. BUT AT LEAST THEY PROVIDE REASONABLY SUFFICIENT SERVICES AT A PRICE WELL BELOW THOSE FOUND IN SINGAPORE. DO PEOPLE REALLY BELIEVE THAT GOVERNMENT OWNERSHIP COULD DO BETTER? OUR TELEPHONE COMPANY, THOUGH REGULARLY EXECRATED, IS PROBABLY THE CHEAPEST AND BEST IN THE WORLD. OUR ELECTRICITY COMPANIES, THOUGH SUBJECT TO CONSTANT ATTACK, OFFER ELECTRICITY AS CHEAP AS MOST IN ASIA, A RELIABLE SUPPLY, EFFICIENT LONG-TERM PLANNING AND COMPETENT MANAGEMENT.+