TNAG-0366-FCO40-412-Visits-of-UK-Members-of-Parliament-to-Hong-Kong-1973 — Page 116

A

bring into the net tenancies which escaped the limited controls introduced in 1970. These controls were brought in to hold down rent increases to 15% over a two year period; but they did not apply to properties with a rateable value of HK$15,000 or more, nor to tenancies of fixed three year terms. It is not intended to introduce controls over commercial or industrial rents.

9. MASS TRANSIT SCHEME

In June 1972 the Hong Kong Government decided in principle to construct an underground railway. The estimated cost at mid 1972 prices is some £550 million. The Hong Kong Government have not yet decided whether to let the contract to one consortium or to adopt a multi-contract approach. In any case the competition is fierce. There are four main consortia: the British, the Japanese, the Italian and the Franco-German. The latter also has a British company, Guest, Keen & Nettlefield, in its membership. The British consortium is led by GEC on equipment, Costains on construction and Lazards on finance.

Preliminary bids were submitted in October and further information was called for in April. The British consortium appears to be in a good position; the strongest competition appears to be from the Japanese who, however, have been making noises about a joint British/Japanese bid. HMG are giving full support to the British consortium, particularly through the Export Credits Guarantee Department and the Senior Trade Commissioner in Hong Kong. The next round of talks is fixed for the end of June.

10.

TEXTILES

The

Hong Kong's major and vital exports are textiles and garments. She comes up against restrictions from her major export markets. The United Kingdom have a voluntary restraint agreement with Hong Kong covering cottons and a separate agreement, negotiated last summer, on polyester cottons. Six have a Community agreement with Hong Kong restraining Hong Kong exports of cotton textiles to them. The other two new members of the EEC have bilateral arrangements with Hong Kong on similar lines. All either have or have expressed interest in reaching additional agreement to include man-made fibres and woollen textiles. Hong Kong has a clear and substantial interest in any moves to control international trade in textiles in view of the importance of her exports in these commodities. At present the UK imports from Hong Kong

- 5 -

/more