XN000022-1992-09-14 — Page 3

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MONDAY, SEPTEMBER 14, 1992

TALKING ABOUT THE BENEFITS TO HONG KONG BROUGHT ABOUT BY THE ACP, MR YEUNG SAID THE SAR (SPECIAL ADMINISTRATIVE REGION) GOVERNMENT WOULD RECEIVE SUBSTANTIAL LAND PREMIUM, PROFITS TAX, RATES, DIVIDENDS, AND SO ON FROM THE PAA AND MTRC.

"IT IS ESTIMATED THAT, BY 2020, THE

NEW AIRPORT WOULD BRING SOME $48 BILLION AS ADDITIONAL INCOME TO THE GOVERNMENT. THE AIRPORT RAILWAY WOULD GENERATE SOME $77 BILLION. THESE ALONE ADD UP ΤΟ OVER $125 BILLION.

"APART FROM DIRECT FINANCIAL BENEFITS, GOING AHEAD WITH THE NEW AIRPORT ALONE WILL INCREASE OUR GDP (GROSS DOMESTIC PRODUCT) BY AT LEAST $420 BILLION OVER THE PERIOD 1997-2010, HE SAID.

**

BEFORE GOING INTO DETAILS OF THE FINANCIAL PACKAGES FOR THE NEW AIRPORT AND THE AIRPORT RAILWAY, MR YEUNG EXPLAINED THE REASONS WHY THE TWO PROJECTS COULD NOT BE ENTRUSTED ENTIRELY TO PRIVATE SECTOR CONSORTIA.

IT WAS MAINLY BECAUSE THERE WAS THE NEED ΤΟ ENSURE THAT THE NEW AIRPORT MET HONG KONG'S STRATEGIC NEEDS AND INTERNATIONAL OBLIGATIONS, HE SAID.

"THIS ENTAILS A DEGREE OF PUBLIC CONTROL WHICH, IN OF EXTENSIVE INTERNATIONAL EXPERIENCE, IS BEST ACHIEVED GOVERNMENT-OWNED CORPORATION.

THE LIGHT THROUGH A

IN THE CASE OF THE AIRPORT RAILWAY, IT WAS CLEAR THAT OUR EXISTING RAILWAY OPERATORS WERE BEST PLACED IN TERMS OF LOCAL KNOWLEDGE AND EXPERIENCE.

"BOTH THE KOWLOON-CANTON RAILWAY CORPORATION AND THE MTRC WERE INVITED TO MAKE PROPOSALS AND THE LATTER WAS CONSIDERED THE BEST," HE SAID.

MR YEUNG ALSO POINTED OUT THAT BOTH THE PAA AND THE MTRC WOULD BE REQUIRED TO OPERATE AS BUSINESSES IN ACCORDANCE WITH PRUDENT COMMERCIAL PRINCIPLES.

"THE TWO CORPORATIONS WILL ATTRACT HIGH LEVELS OF PRIVATE SECTOR INVESTMENT, WHICH WILL BE ACHIEVED PARTLY THROUGH THE GRANT FRANCHISES AND PARTLY THROUGH COMMERCIAL BORROWING.

OF

"THESE FORMS OF PRIVATE SECTOR PARTICIPATION ARE ESSENTIALLY NO DIFFERENT FROM TAKING AN EQUITY STAKE IN THE TWO CORPORATIONS. THERE IS, AFTER ALL, LITTLE TO DIFFERENTIATE BETWEEN THE INVESTOR WHO PUTS UP HIS MONEY IN THE FORM OF A LOAN AND GETS HIS RETURN IN INTEREST, AND THE ONE WHO PUTS UP HIS MONEY IN THE FORM OF EQUITY AND GETS HIS RETURN IN DIVIDENDS, HE SAID.

MR YEUNG

TURNING TO HONG KONG'S OBLIGATIONS UNDER THE MEMORANDUM OF UNDERSTANDING (MOU) SIGNED BETWEEN BRITAIN AND CHINA,

SAID THE HONG KONG GOVERNMENT

ACTING IN FULL COMPLIANCE WITH THE MOU.

HAD CONSISTENTLY

BEEN

HONG KONG