TNAG-0423-FCO40-469-Construction-of-an-underground-railway-system-in-Hong-Kong-1973 — Page 46

Government know this week whether we can offer terms similar to those of our competitors.

It'

In my view it is vital that we should succeed here. would be highly damaging to our business reputation throughout the world not to secure this major project in one of our dependent territories. The project is also of great importance in its own right since the value of British exports and services would total £250-£300m. Even more important, however, is the need to establish UK industry in the enormous market for urban rapid transit business throughout the world. We badly need a break- through into this business and, if we cannot succeed in Hong Kong, we shall be most unlikely to get a foothold in this field elsewhere.

❤

I am told that the Bank of England have made calculations which suggest that the degree of subsidy involved in our proposals would be some 36%. I have not had time to

examine fully these calculations.

They are in the nature

of things theoretical, and depend on the assumptions made. But my officials have doubts about them, and have suggested that an alternative approach (comparing the present value of the advances with the present value of the receipts) would produce a subsidy figure of just over 20%. I am perfectly willing that our officials should have further talks about these calculations, but time is against us. We need to decide now whether we want this contract or not, and whether we are prepared to tell British industry the Government will not match Japanese and European credit terms in a major project in Hong Kong.

: