CONOTRAD LON CONOTRAD LON CONỌNG HX599
TELEX FROM HEAD OFFICE
TO LONDON OFFICE DATED 27/11/68:
REF CONLON-61/68
27.11.68
passed
FOLLOWING FOR MCKELLAR AND ONWARD TO SELLERS RECOMMENDED FOR USE AS BACKGROUND RATHER THAN RELEASE AND IN ANY CASE NOT TO BE RELEASED BETORE 5 PM HONGKONG TIME TODAY TEXT OF STATEMENT BY T.D. SORBY FOLLOWS:
10.25-
THE NATURE OF THE CURBS ON IMPORTS IS BY NOW WELL KNOWN. AS FROM TODAY, BRITISH IMPORTERS WILL HAVE TO DEPOSIT WITH CUSTOMS 50% OF THE VALUE OF MOST IMPORTS FROM HONG KONG BEFORE THE BRITISH CUSTOMS WILL RELEASE THEM, THAT IS TO SAY, THEY WILL HAVE TO FIND ADDITIONALLY ABOUT PA MILLION EACH MONTH, UNTIL NEXT: MAY, IN ORDER TO SECUIES CLEARANCE OF NEWLY ARRIVING HONG KONG 2OODS. THIS IS ABOUT AY OF THE TOTAL ESTIMATED DEPOSIT PAYMENTS TO BRITISH CUSTOMS FOR SUGILIA GOODS FROM ALL COUNTRIES IF THEY CONTINUE TO BE IKPORTED AT CURRENT LEVELS. THE DEPOSIT SCHEME DOES NOT DISCRIMINATE BETWEEN COUNTRIES SUPPLY ING GOODS.
BY THE END OF HAY 1969, BRITISH IMPORTERS MAY BE EXPECTED TO HAVE ABOUT £24 MILLION (MKDOLLARS 350 BILLION ON DEPOSIT, ALL ADDITIONAL MONET WHICH THEY WILL HAVE TO FIND FROM SOME SOURCE, IN ORDER TO FINANCE THEIR PURCHASES FROM HONG KONG. THEREAPTER THESE SPECIAL DEPOSITS WILL BE RETURNED AS REPAYMENT BECOMES DUE, AND NO SIGNIFICANT FURTHER ADDITIONS TO THE TOTAL OUTSTANDING DEPOSIT SHOULD BE NECESSARY. IF THE BRITISH GOVERNMENT FEELS ABLE BY THAT TIME TO REDUCE THE PERCENTAGE OF VALUE REQUIRED TO BE DEPOSITED, THE TOTAL CREDITS COULD BE REDUCED PROPORTIONATELY.
SOME BRITISH IMPORTERS, PARTICULARLY UNDERCAPITALISED IMPORTERS. MAYⱭHAYE DIFFICULTY IN RAISING THE MONEY TO MEET THE SPECIAL, DEPOSITS DURING THIS PERIOD OF CREDIT SQUEEZE ON BANK BORROWING IN BRITAIN,
THIS THEN IS THE BACKGROUND, AND I SHOULD SAY HERE AND NOW THAT
AT NO TIME HAVE I BELIEVED THAT THE MEASURES THE BRITISH GOVERNMENT HAS CHOSEN TO ADOPT WERE LIKELY TO PRODUCE IN ANY SENSE A CRIS19 FOR HONG KONG. BUT THESE MEASURES DO NEED TO BE EVALUATED CALHLY AND LOOKED AT IN PROPER PERSPECTIVE.
THE VALUE OF HONG KONG'S TRADE WITH BRITAIN THIS YEAR IS RUNNING AT ABOUT 15% ABOVE THE 1967 LEVEL. THE DEVALUATION OF THE POUND HAS CERTAINLY NOT THEREFORE DEPRESSED IMPORTS FROM HONG KONG. IN FACT HONG KONG'S TRADE HAS BENEFITED PROM INFLATED DEMAND IN BRITAIN, THE BRITISH GOVERNMENT'S NEW HEASURES ARE BENEFICIAL TO HONG KONG IN THE LONG TERM INSOFAR AS THEY CONTRIBUTE TO THE IMPROVEMENT OF BRITAIN'S BALANCE OF PAYMENTS AND TO STRENGTHSYING THE POUND, WE CANNOT EXPECT OUR TRADE TO ESCAPE MINOR SHORT TERM ADVERSE EFFECTS, BUT ARE PERHAPS IN A BETTER POSITION THAN SOME OF OUR COMPETITORS TO MITIGATE OR ADJUST TO THEP.
THE VALUE OF OUR EXPORT TRADE TO BRITAIN DURING THE SIX MONTHS ENDING 30TH SEPTEMBER WAS ABOUT DOLLARS700 MILLION, ONE-SIXTH OF OUR TOTAL EXPORT TRADE OVER THE SAME PERIOD. IN ORDER OF IMPORTANCE EXPORTS TO BRITAIN THIS YEAR CONSIST OF CLOTHING (40%), TEXTILE FABRICS AND MADE-UP GOODS (20%), TOYS (17%), FOOTWEAR C8%), ELECTRONIC EQUIPMENT (4%), #ISCELLANEOUS (11%),
WHATEVER ADJUSTMENTS WE HAVE TO MAKE, ONLY A SMALL FRACTION, IF ANY, OF THAT TRADE IS LIKELY TO BE AFFECTED. DEMAND IN BRITAIN FOR OUR GOODS MAY BE CUT BACK A LITTLE IN THE LONGER TERM BECAUSE OF INTERNAL PRICE INCREASES AND CREDIT SQUEEZE, BUT BY THEIRNATURE OUR GOODS ARE NOT EXPENSIVE, AND TO THAT EXTENT ARE LESS LIKELY TO BE AFFECTED THAN CAPITAL OR PRODUCER OR LUXURY GOODS, FOR INSTANCE. THE INCREASE IN PURCHASE TAX SEEMS UNLIKELY TO HAVE A REALLY SIGNIFICANT EFFECT,
THE IMMEDIATE PROBLEM FOR HONG KONG IS TECHNICAL, THAT IS, HOW EXPORTERS HERE CAN ASSIST THOSE IMPORTERS WHO HAVE DIFFICULTY IN RAISING THE CASH TO MEET THE DEPOSIT OF 50% OF THE VALUE OF IMPORTED GOODS WHICH COMES INTO FORCE AS FROM TODAY, THIS IS THE PROBLEM THAT HAS EXERCISED OUR MINDS HERE AND WHICH THE TRADE AND INDUSTRY ADVISORY BOARD DISCUSSED YESTERDAY IN CONJUNCTION WITH THE COMMISSIONER OF THE EXPORT CREDIT INSURANCE CORPORATION AND THE EXECUTIVE DIRECTOR OF THE TRADE DEVELOPMENT COUNCIL, WHOM I INVITED TO THE MESTING. FORTUNATELY THE CURRENT NICH LEVEL OF LIQUIDITY IN THE BANKING SYSTEM OPERATES TO OUR ADVANTADE HERE, - AND WE BELIEVE THAT, WITH THE CO-OPERATION OF THE BANKS, WE ARE IN A FAIR WAY TO FINDING A SOLUTION, IT IS AS FOLLOWS.
THE MAJORITY OF EXPORT BUSINESS TO U.K. 19 CONDUCTED ON D/P OR D/A TERMS WITH SIXTY OR NINETY DAYS USANCE. I UNDERSTAND THAT BANKS IN GENERAL WILL DO THEIR BEST TO ASSIST SY EXTENDING THE USANCE OF SUCH BILLS BY AN ADDITIONAL NINETY DAYS, AT THE USUAL INTEREST RATES, WHICH WILL HAVE THE EFFECT OF IMPROVING THE CASH FLOW OF IMPORTERS. THIS WILL ENABLE THEN TO DEFER PAYMENTS DUE TO EXPORTERS AND TO USE THE PROCEEDS OF SALE OF EGODS ALREADY IMPORTED TO MEET THE 50% DEPOSIT ON FUTURE IMPORTS.
BANKS VILL ALSO PROBABLY BE PREPARED TO CONVERT 50% OF THE VALUE OF SIGHT D/P BILLS TO D/A BILLS WITH UP TO 180 DAYS USANCE, WHICH WILL HAVE A SIMILAR EFFECT.
I MUST STRESS HOWEVER THAT EACH BANK WILL MAKS ITS OWN DECISION
AND IT MAY VARY PROH CUSTOMER TO CUSTOMER. MOREOVER THE MECHANICS OF THE OPERATION ARE MORE COMPLICATED THAN MY SEEM AT FIRST SIGHT, AND EXPORTERS ARE ADVISED TO CONSULT THEIR BANK MANAGERS.
I SHOULD ADD THAT THE HONG KONG EXPORT CREDIT INSURANCE CORPORATION IS PREPARED TO CONSIDER APPLICATIONS FOR COVER ON CREDIT TERMS UP TO A MAXIMUM OF 180 DAYS SUBJECT TO THE CORPORATION BEING SATISFIED ABOUT TE CREDIT-WORTHINESS OF THE DIVIDUAL BUYER CONCERNED FOR THE AMOUNT AND TERMS OF CREDIT IN QUESTION AND TO THE INSURED COVERING WITH THE CORPORATION ALL HIS D/P AND D/A BUSINESS TO ALL MARKETS.
THESE MEASURES SHOULD ENSURE THAT THERE IS NO SERIOUS DELAY IN THE MOVEMENT OF A LARGE PART OF THE EXPORT TRADE TO BRITAIN, BUT THERE WILL BE SOME PART IN WHICH EXTENDED USANCE OF BILLS WILL NOO ASSIST EITHER EXPORTERS OR THEIR BRITISH BUYERS TO OVERCOME IMMEDIATE DIFFICULTIES.
THE TRADE AND INDUSTRY ADVISORY BOARD YESTERDAY CONSIDERED WAYS AND MEANS OF HELPING THIS PART OF THE TRADE, INFORMATION FROM LONDON RECEIVED THIS MENING SUGGESTS THAT A SOLUTION CAN BE FOUND.
I HOPE THE PUBLIC AND THE TRADING COMMUNITY ALL APPRECIATE THAT IN THE GOVERNMENT'S VIEW THERE IS TO CARE FOR SERIOUS CONCERN. THAT IS THE VIEW OF INFORMES COM SERIAL OPINION ALSO. WHERE ADJUSTMENTS HAVE TO BE MADE, THEY MAY TAKE A LITTLE TIME, IF ONLY BECAUSE THERE ARE SUCH A MILTON TY OF TRANSACTIONS TO BE COVERED, AND CERTAIN ASPECTS juin PRINCIPLE NAY INVOLVE SOME COMPLICATI
LEAK IN BOTICS 95CAUSE
SO MANY PARTIES TO EACH TRANSACTION AAR C VOSKVEN.
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ADDED INFORMATION FROM EXPORTERS ASSOCIATION PHHH SAY :
IT IS SIGNIFICANT THAT SO FAR WE HAVE RECEIVED NO REQUESTS FOR CANCELLATIONS AND TO AVOID PANIC BY UNITED KINGDOM BUYERS
WE ARE SUGGESTING TO OUR MEMBERS THAT TACY A WISE THEIR BUYERS THAT FINANCE IS AVAILABLE HERE BUT OBVIOUSLY THE SYOT OF FINANCE MUST RE BORNE BY THE IMPORTER
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