TNAG-0453-FCO40-518-Budget-of-Hong-Kong-1974-1975-1975 — Page 217

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blowly. I hope that they can be persuaded to review their ration to Hong Kong so as to give it special weighted advantage in view of the special considerations likely to be created by the Budget.

21. nother effect of the taxes on vehicles - and particularly the tax on the mini puses - is likely to be an increasing use of the two franchaised public bus services. We shall have to wait for the Green Paper in April before we know exactly how the Government is planning the overall future transport policy out the Budget is a clear indication that ... the weight is going to lie mainly on the public bus service. All this in turn is bound to mean that both bus

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companies and the Government will look to BLMC to make a special effort to supply how double deck (and single deck) buses fast. I need not elaborate further on this in view of the hefty correspondence that there has been at every possible level on this subject over the past year. Suffice it here to say that the latest indication@renat Leyland delivery schedules to both bus companies are slipping again to well behind programme and there is an increasing risk that this unreliable performance will open the way for perhaps resistable pressure to relax the present monopoly for British and Commonwealth buses written into the franchaise. I shall be writing again separately on this in the near future but I would like to sound a warning in this general Budget context to ensure that it is hammered home to Leylands at the highest possible level, how important it is that they give maximum priority to ensuring that they moet what is likely to be un accelerated demand from Hong Kong.

22. Aid Hitherto Hong Kong has not been regarded as being an appropriate recipient of aid. With the notable exception of the aid for the technical institutes the usual reaction to any proposal has been that llong Kong can afford to pay for it out of her own pocket. It wouldvobviously be going to far to pretend that Hong Kong has become a "have not" but certainly they are now moving into the position where they have seriously to consider borrowing if only on the short term. The Financial Secretary has still set his face firmly against getting into a loan position but has equaly made clear that they will be looking for loan type fin mice for self liquidating projects. These will by defination usually be projects ofthe kind that will have a high import content in them. They should prima facie therefore be good canlidate for consideration in theBOTB's new approach to financing oversea projects. Moreover I would hope that the combination of the trade spin-off plus Hong Kong's probable less evident affluence might make it more possible to consider using modest loans or grants occasionally as sweeteners or toppers-up to enable British manufacturers to get in on projects or major contracts.

23. Tail Piece I have written the above hot on the heals of the Budget itself und inevitably largely on the basis of first reactions. I have done so because I felt it would be more useful to have than a longer range and less topical view produced The..... after long process of debate and discussion over the next several wecks. debate, which will take place once a week in the LECCO first on the Budget as a whole and then the examination of the estimates on each Department in turn, will no doubt produce a lot more information and pointers although I doubt whether it will either significantly alter the Budget proposals or invalidate the first broad reactions. Le chall of course send you reports of it as it proceeds mainly addressed to the Departments concerned with whatever subject which is under dis- cussion but with copics to you. Since most of it is likely to be on subjects of concern to ES. I am sending a copy of this letter and also of the supporting documents to ir limber, not only to give him a starting point but also becul se much of what I have said above about opportunities indicated for British exports is already relevant to ESD.

Every dort is made to ensure that the information given herein is accurate, but no legal responsibility is accepted for any errors or omissions sa that information and no responsibility is accepted in regard to the standing of any firms, companies or individuals mentioned.