Our reference: CP370/81/03
Your reference:
:
MINISTRY OF OVERSEAS DEVELOPMENT
Eland House, Stag Place, LONDON S.W.1 Telegrams: Ministrant, London, Telex Telephone: 01-834-2377
26th September, 1968.
Dear Bullie,
!
I enclose herewith a copy of a CDC request for our agreement to their investing up to £500,000 in the development of a tourist class hotel at Kowloon, Hong Kong. This is a revised version of an earlier application covering a proposed investment of £654,000 on this project. The scaling down in the amount for investment has been effected by CDC after discussion of the application between our Permanent Secretary and Lord Howick, and also with the CDC General Manager. In the course of these discussions the general question was raised as to whether aid money (including CDC investment) should be put into Hong Kong at a time when aid funds are scarce and the needs of other countries are great. As a result of this discussion CDC agreed to reconsider the application and have now asked for the reduced amount of £500,000 to be approved.
2. We wish to approve the revised application and the purpose of this ✔ letter is to seek your agreement to our doing so. We should then approach
the Treasury in the usual way and write to the Hong Kong Government for their comments, before giving formal approval to CDC.
3.
I should perhaps also mention that in my view there is not much hope, if we wish to do so, of persuading CDC to reduce their investment still further, because CDC consider that a substantial investment by them is essential if they are to play the part in the project which has been designed for them, and if they are to be successful in raising a substantial part of the outside finance for this £2.6 million project.
4.
Another possible course of action would be to refuse to approve the investment altogether on the grounds of Hong Kong's general affluence and - bearing in mind the possibility that funds might be available locally to
finance the whole of this project. We would prefer to avoid this because it would mean in effect our telling CDC that we are not prepared to sanction CDC investments in Hong Kong at the present time. In this event CDC have said that they would ask for an instruction from the Minister which they could cite to those seeking to interest them in new business in Hong Kong; and they would want to state the position clearly in their Annual Report for * 1968.
We consider their view on this matter to be reasonable and we would not wish to have a showdown with them on the question of investment in Hong Kong. As you will know, we have recently had to restrict their freedom to invest in Tanzania and we have decided not to seek "blanket clearance" for them to invest in Malta. This means, of course, that CDC are particularly sensitive at the present time to any further restrictions on their sphere of operations.
K
/ 5.
I
A.T. Baillie, Esq.,
Commonwealth Office,
Curtis Green,
S.W.1.
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