TNAG-0425-FCO40-471-Construction-of-an-underground-railway-system-in-Hong-Kong-1973 — Page 132

CONFIDENTIAL

DRAFT MESSAGE TO THE GOVERNOR, HONG KONG, FROM THE SECRETARY OF STATE FOR TRADE AND INDUSTRY

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You will doubtless have heard that an Anglo-Italian

consortium has been formed to compete for the contract

to build a mass transit system in Hong Kong, and that

forward in a letter this consortium have put to the Hong Kong Steering Group

for the Mass Transit Scheme a proposal which they believe

could match and beat that from the Japanese.

This new group have the same firm support from the UK

Government that was enjoyed by the wholly UK group which

preceded it. Aston has instructions to make at his level

certain points not covered in the letter but which, in

straight trade promotion terms, we believe could persuade

the Hong Kong Government to allow the Anglo-Italian

consortium to stay in the race. Aston's instructions

ask him to make clear the UK Government's belief that

the Anglo-Italian Group will be strong technically, that

they will be able to put in a highly competitive price

and that the flexibility shown towards the Japanese

pre-emptive bid on the matter of a guarantee argues for

some flexibility towards the Anglo-Italian consortium.

In addition to these two points, I do not doubt that

you will be considering whether the bid from the Japanese

expressed in Yen might not imply an element of escalation

despite its seeming fixity. If past performance is any

guide, the Yen's exchange rate over the period of years

covered by the contract might very well harden.

Secondly, I am sure you will have recognised that if the

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