W(B)L 51-7433
NOTHING TO BE WRITTEN IN THIS MARGIN
Registry No.
SECURITY CLASSIFICATION
Top Secret. Secret.
Confidential.
Restricted.
Unclassified.
PRIVACY MARKING
DRAFT
LETTER
To:-
R. A. Dickinson, Esq.
E.C.G.D.
CMG.
Type 1 +
From
26
Mr. J. O. Moreton
Telephone No. & Ext.
Department
161581
In Confidence
KAI TAK AIRPORT
I was grateful for the recent opportunity to discuss informally with you the question of assisting the Hong Kong Government to finance a project for the development of Kai Tak
Airport. We agreed, as a result of our discussion, that it would be necessary to look more closely into the "export content" of the project as a first step before considering further the possibilities of obtaining loan finance backed by an ECGD guarantee.
2.
As much detailed information on the
project as we have at present is set out in the attached memorandum prepared in co-operation with the Board of Trade for purposes of consultation with other Departments in Whitehall. It indicates in paragraphs 14-20 the very considerable value of the project to
our aviation interests. The case for assisting Hong Kong on financial grounds, as put forward in paragraphs 8 and 21-23, is not so strong; experience has shown that Hong Kong's buoyant
financial position and conservative
financial policies have always belied the
somewhat cautious forecasts made. But because
of our aviation interests and certain political considerations it is most important that we
should make some contribution to the project.
3.
The Hong Kong Government are looking to us to provide an element of loan finance on
favourable terms. The suggested sum is about £6 million, much the same as the estimated
cost of the runway extension. The "profitability forecast" (Appendix E of the enclosure) hypothecates the amortisation of
capital expenditure over fifteen years and
charges of 7% on the funds employed.
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