TNAG-0564-FCO40-659-Construction-of-an-underground-railway-system-in-Hong-Kong-1975 — Page 145

JU

Department of Trade and industry

Overseas Projects Group

1 Victoria Street London SW1H OET

Telex 27366 Answer Back DTIHQ London Teiegrams Advantage London SW1

COMMERCIAL IN CONFIDENCE

I A C Kinnear Esq

British Trade Commission HONG KONG

HONG KONG MASS TRANSIT

Ex

i

RECEIVED IN REGISTRY No. 51

22 APR 1975

+38

4KK 21/4 p...

21/1(A)

OPG 300

Your reference

Our reference

Date

175 April 1975

Telephone 01-22278778** 215

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Quite a lot has happened since the MTA issued, in January, its call for firms to prequalify for the collection of contracts into which it has chosen to divide the scheme and this may be a good time to take stock of the situation.

2 While accepting that Hong Kong's need to solve its traffic problems must weigh heavily in a HK Government decision on the project it seems clear that the Government is not committed to proceed. Indeed the Governor said as much at his meeting in London last week with representatives from Lazards, GEC and the EGCI. He pointed out that Hong Kong had no intention of undertaking a project of this magnitude if it looked uneconomic and that any kind of Government subsidy was ruled out.

3 We had taken advice within Whitehall and consulted the industry interest concerned on whether a meeting with the Governor was desirable and the consensus of opinion was that it would do no harm and might do some good. We considered that it might have helped, through an informal exchange of views, on the one hand to secure a clearer appreciation in Hong Kong of the reasons underlying the industry's position (especially that adopted by the civil contractors) and on the other to add to the pressure we had applied in attempting to get the industry to give the project a higher priority. As it turned out the Governor made it clear that he regarded these matters as being, at this stage, the sole responsibility of the MTA and that the question of whether British firms should seek to parti- cipate in the bidding was purely a commercial one for the firms concerned. This rather unresponsive attitude almost certainly stemmed at least in part from his impression that we were seeking, through him, to influence the HKG in favour of British industry.. He seemed, however, to have accepted my assurance that we were not attempting to put any such pressure on him then and had no intention of doing so in the future.

4 Although we have been trying to persuade the industry to pursue this project with greater vigour than they have so far displayed, given the existing doubts on whether the project will go forward and the expenses that would be incurred by any serious bidder for a substantial part of the scheme, a more intensive pressure would at this stage be hard to justify. You know of the civil contractors' reservations about the MTA's proposed method of handling the project. These

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