BUSINESS
AUGUST 14H
NEWS... (SUP TO S.C.M POST)
73
Bank chief deplores U.K. attitude on £ reserves
Britain's disinclination to talk on a matter so crucial as Hongkong's large sterling reserves was disturbing, Mr G. M. Sayer, chairman of the Hongkong and Shanghai Bank, said yesterday.
"If one looks hard enough it is always possible to find a reason for not tackling an issue but, surely, the relationship between Britain and Hongkong has not got to a stage where a subject of such importance cannot even be discussed," he said.
"Hongkong has paid dearly for keeping her reserves in sterling - funds that could have
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benefited our far from affluent community and we are naturally gravely concerned at the prospect of absorbing further losses.
"Britain's actions and attitudes have frankly been difficult to understand.”
Mr Sayer, also a recent appointee to the Government's Executive Council, was addressing a luncheon meeting of the Hongkong Cotton Spinners' Association.
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Although the immediate outlook was favourable for the industry, he said, it overshadowed by increasing economic problems caused by difficulties in reaching understandings covering the orderly flow of trade.
"Commodities are often scarce and price fluctuations so frequent and significant that forward planning becomes difficult.
"On top of this almost chaotic conditions now exist in currency markets with little prospect of early settlement.
"The primary responsibility for reaching an effective and workable agreement in these matters rests with the major trading blocs. They have the wealth and technical ability to
do something.
"The smaller and poorer countries of the world can be excused for demanding from them a much greater degree of serious intent than displayed so far, as well As a greater recognition of their collective responsibility towards economically weaker territories who are striving to improve basic living standards."
Mr Sayer then made his remarks about Britain's attitude to Hongkong.
"How then will the spinning industry be affected in the future?" he continued.
"Traditionally banks in Hongkong have been able to provide working funds at rates of interest which were not only stable but often lower than those prevailing elsewhere, „Į "ause money raised locally and in the immediate region stayed in the banking system here.
"Recently, new influences have appeared which have tended to disturb the status quo.
"We have, for instance, seen a rapid improvement in communications of one kind or another and with it the influx of
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institutions who have brought with them a degree of financial sophistication not previously known in our economy in many ways there have been benefits from this influx but there is always a price to pay for becoming an international financial centre,
"Competition for funds is bound to be fiercer and funds will tend to leave banks if interest rates elsewhere.
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therefore anticipate greater and more regular changes in interest and exchange rates.
"Apart from this Mr Woo has mentioned the need for more expenditure on equipment modernisation and even vertical integration by provision of a petro-chemical plant. I would add the need for, continuous development of modern management techniques.
"Having said this, I am confident that you can and will be able to meet these and other problems just as you have done 1 during the last 25 years.
"The enterprising spirit is still there and I am sure the rest of us in Hongkong will continue to reap great benefits from your efforts."
Mr Vincent Woo, the chairman of the Hongkong Cotton Spinners' Association, said earlier that 1973, the 25th anniversary of the founding of the cotton spinning industry in Hongkong, was "marked by particularly favourable business conditions.
"We are cheerful in the knowledge that our efforts have brought Hongkong close to the front among the world's leading textile exporting countries,” he said.
"One concrete expression of this is that the prestigious British Textile Institute has chosen Hongkong to be the venue of its overseas annual conference in November, the first time it has been held in the Far East.
“I believe it will rerve to give Hongkong's, textile industry an uplift in its standing and its morale."
Mr Woo said it had been reported that the size of spindleage in Southeast Asia would be enormously expanded in the coming two to three years by up to three million spindles.
"The prospect is that we will face very severe competition.
"To deal with the developing situation, it is imperative that we see to it that our position be improved on two fronts.
"One, we must modernise our productive equipment, so as to improve the quality of products and to reduce unit
costs.
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"Two, we must face up to the problems of uncertainty in the supply of artificial fibres by establishing petrochemical plant in Hongkong. This would require appropriate arrangements to make available technical co-operation and heavy capital investment.'
Resolving these problems, he said. "will test our capability and resolution to the utmost."
"The prerequisite conditions are clear enough, namely, government encouragement. banking support and of course, the determined efforts of industries concerned."
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