TNAG-0541-FCO40-636-Strength-of-garrison-in-Hong-Kong-1975 — Page 49

ANNEX B

DRAFT MEMORANDUM OF UNDERSTANDING AS PROPOSED BY HONG KONG GOVERNMENT

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An agreement between Her Majesty's Government in the United Kingdom and the Hong Kong Government:

1. The size, composition and cost of the garrison for which this agreement provides are set out in Annex A.

2.

The Hong Kong Government will contribute to the cost of the garrison in the following manner:

Details of the annual amounts and the duration of the agreement to be inserted under separate headings of cash contribution, capital works, and maintenance and minor works, [showing in each case the currency of payment.

3. The amounts set out in paragraph 2 are at a September 1974 price level and adjustments will be made to reflect changes in the relevant price levels ruling in Hong Kong and the United Kingdom as appropriate. The indices to be used for the purposes of adjustment are set out in Annex B.

The calculation for each

Financial Year will be based on the movement in the relevant indices from the end of September of the previous year to the end of September of the current year. The calculation will be applied to the three elements in Hong Kong's contribution set out in paragraph 2 as follows:-

4.

a.

In respect of the cash contribution, the figure so adjusted will be the Hong Kong Government's

estimated contribution for the following Financial Year.

b. In respect of the total amount set out in paragraph 2 for capital works, the adjustment will be applied each year to the unspent balance of the programme.

C.

In respect of maintenance and Minor works, the adjustment will be applied each year to the relevant amounts set out in paragraph 2.

in aertm.

ply (Provision

terly

The cash contribution will be paid quarterly for currencies of payment to be inserted).

5. An annual programme af maintenance and minor works for the garrison will be agreed with the United Kingdom Government before the beginning of each Financial Year. It will be undertaken by the Hong Kong Government to normal United Kingdom standards and scales. Hong Kong's contribution in para 2 includes an element to cover maintenance and minor works which is set at the notional annual figure of

(as may be adjusted in accordance with para 3), but the Hong Kong Government accepts responsibility for carrying out the agreed programme no matter what the cost may be.

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CONFIDENTIAL