TNAG-0276-FCO40-312-Plans-for-construction-of-underground-railway-system-in-Hong-1970 — Page 53

Our Reference: 2-F.45/54/01

Your Reference:

Date

Treasury Chambers

Great George Street, London, S.W.1 Telephone: 01-930 1234, ext.1143

JM Willson Esq

Export Promotion Department

Foreign and Commonwealth Office

Great George Street

LONDON SW1

26

November 1970

FINANCIAL GUARANTEES COMMITTEE CASE NO 903

HONG KONG UNDERGROUND RAILWAY

I am sorry to be opening business with you with what can in some sense be considered a reminder. But there are a number of points on which we need Foreign and Commonwealth Office advice on this project about which Hooker of ECGD wrote to me on 9 September last.

2. We need first any general advice you can give about the project and its standing within Hong Kong and what ideas there may be about where the contract could be placed. There have been press references to a Japanese interest.

3. Second, we would like general advice on the political situation in the Colony. This, and the attitude of the Hong Kong Government to the project, is what will have the greatest bearing on our willingness to cover the project A recent press and on the terms on which we will do so. report suggested that private business is unwilling to put money into Hong Kong unless it can see the prospects of recovering its capital over a period of no more than 5 years. This project may have a 5-year construction period. The idea of 15 years credit after that is really out of the question. The 7 years that we gave for the tunnel would mean a total risk of about 12 years from contract. This probably goes beyond what commercial interests from outside the Colony would accept and it may be that ECGD's Advisory Council will take a similar view and we shall be invited to take it under Section 2 (as was the tunnel). This clearly brings in the involvement of

HM Government to cover the contract "in the national interest". Similarly, I think we need the involvement of the Government of Hong Kong "in the Colony's interest".

Otherwise one

would doubt whether the project was in the interest of Hong Kong and whether it would be economically viable.

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