TNAG-0565-FCO40-660-Construction-of-an-underground-railway-system-in-Hong-Kong-1975 — Page 32

GRS 230

PRIORITY

CYPHER CAT/A

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112

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FMBTC HONG KONG 2410002

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MRK 21/4

TO PRIORITY E C G D TELEGRAM NO EXCED 67 OF 24 OCTOBER INFO DOT (FOR ROBERTS (CRE4), BRYANT (OPG)).

FOR COTTERILL E C G D FROM KINNEAR.

HONG KONG MASS TRANSIT.

THE CONTRACT IN WHICH J L KIER WERE INTERESTED HAS GONE TO A JAPANESE FIRM. I HOPE HOWEVER THAT KIER WILL BE BIDDING IN THE SECOND ROUND FOR ONE OF THE LARGER CIVIL CONTRACTS AND, AT THIS STAGE, E C G D TERMS ARE LIKELY TO BE OF GREATER CONSEQUENCE

THAN THEY WERE IN THE FIRST ROUND. AS I EXPLAINED IN MY TELEGRAM

NO EXCED 60, DECISION ON CONTRACTS IN THE FIRST ROUND TOOK INTO

ACCOUNT THE NEED TO ENCOURAGE INTERNATIONAL COMPETITION IN THE

SECOND, AT WHICH STAGE THE CORPORATION IS LIKELY TO HAVE MORE

REGARD TO PURELY COMMERCIAL CONSIDERATIONS AND THE FINER POINTS

OF THE VARIOUS CREDIT OFFERS. I AM GRATEFUL YOU HAVE AGREED TO

THE ABOLITION OF THE STEP PROCEDURE, BUT WE STILL SEEM TO FALL

WELL SHORT OF THE JAPANESE BECAUSE OF THEIR WILLINGNESS TO COVER LOCAL COSTS. THE FRENCH HAVE ALSO PUT THEMSELVES IN AN ADVANTAGEOUS POSITION THROUGH THE B N P ARRANGEMENT REFERRED TO IN PARA 1 OF MY TELEGRAM UNDER REFERENCE,

2. MATCHING THE COMPETITION ON LOCAL COSTS WILL NOT ONLY BE OF SIGNIFICANCE IN THE SECOND ROUND OF THE CIVIL CONTRACTS, BUT IS ALSO RELEVANT TO THOSE E AND M CONTRACTS WHERE INSTALLATION IS INVOLVED. I UNDERSTAND THAT FINANCIAL AGREEMENT IS LIKELY TO BE SIGNED WITHIN THE NEXT FORTNIGHT. I TRUST THAT THE AGREEMENT IS SO WORDED THAT WE WILL NOT FIND OURSELVES BOUND FOR EVER BY ITS TERMS, IF, AS I HOPE, YOU ARE PREPARED TO GIVE CONSIDERATION TO IMPROVEMENTS TO MATCH THE COMPETITION.

3. SPEECH BY FINANCIAL SECRETARY YESTERDAY ON MOTION SEEKING AUTHORITY OF LEGISLATIVE COUNCIL FOR GOVERNMENT GUARANTEE FOLLOWS BY BAG. THIS CONTAINS SOME DETAILS OF VARIOUS CREDIT OFFERS.

KINNEAR

EXCED DISTRIBUTION

HK10D (3)

TRED

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