01-222-7877
Ext 2240
DEPARTENT OF TRADE AND INDUSTRY
XXXXXXXXXXXXXX
26)
verseas Division
R Jones S
Finance
HN Treasury
London
15 December 1970
21
HONG KONG UNDERGROUND NAILWAY (POC 903)
I have seen a copy of Hawkins' letter of 26 November to killmon »bout this project and from the CRF point of view I too would see advantage if we could reach an agreed preliminary view on whether the case would be in principle underwritable and if so, on what basic conditions. We must of course avoid taking up too rigid a position in the absence of a fira proposition but it would be bålpful to our efforts to mobilise industry in the UK and to create the right sort of relationship with the Hong Kong people concerned if we could let it be known that the VA was standing ready to offer a financial guarantes if an underwritable proposition were put to um.
-Am to the status of the project in Song kong at the moment we in CR can only contribute such evidence as we have obtained in the course of informal conversation with Shepherd (Transport Commissioner) and Maddon Cave (Financial secretary Designate). De gained the impression that the anjority of he technical people in Hong Kồn, support the idea of an underground system as now racoɑmended by the consultants while the financial people think there are cheaper and equally effective ways of solving what is undoubtedly a severe and growing traffic problem.
During the conversation with Saddon Cave we were told that as a general rule in calling for public sector lenders the Hong Kong Government (and I am assuming that the contract in this case will be with a Government Department and not with the operating authority) states what financial terms it wants and is not likely to be influenced by credit offers in excess of these gerns. Generally they prefer not to rely on commercial credit, but of course the amounts involved are likely to make the under round project an exception to the general rule.
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