TNAG-0851-FCO40-1061-Future-of-Hong-Kong-New-Territories-leases-1979 — Page 126

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1618: PROHONGAID LONDON SEVEN:

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UNCERTAINTY IS AFFECTING THE THIRD STAGE OF HONGKONG'S ADMIRABLE HOME OWNERSHIP SCHEME WHICH WILL REQUIRE BANK FINANCING OVER 15 YEARS AFTER 1982. IT WILL AFFECT PLANS TO EXTEND THE UNDERGROUND RAILWAY, THE COSTS OF WHICH AT PRESENT ARE HAVING TO BE AMORTISED BEFORE 1997. THERE IS ALREADY PLENTY OF EVIDENCE TO SHOW THAT LONG-TERM INVESTMENT IN THE NEW TERRITORIES IS LESS 'ATTRACTIVE FOR PRIVATE ENTERPRISE SINCE PRUDENT ACCOUNTING

PROCEDURES REQUIRE ALL CAPITAL INVESTMENT TO BE WRITTEN OFF BEFORE THE EXPIRY OF THE (LARGELY FICTIONAL) LEASE, WHILE HONGKONG TAX AUTHORITIES DO NOT ALLOW THE COST OF LAND TO BE AMORTISED OVER THE SAME PERIOD. INCREASINGLY, INVESTMENT IN THE NEW TERRITORIES IS BECOMING LESS ATTRACTIVE TO INVESTORS, AND THE PLOUGHING BACK OF PROFITS LESS ATTRACTIVE TO SHAREHOLDERS. UNCERTAINTY ALSO UNDERMINES THE WHOLE AIM OF UPGRADING HONGKONG'S INDUSTRIES INTO MORE CAPITAL-INTENSIVE, SOPHISTICATED INDUSTRIES WHICH WILL REQUIRE LONG-TERM FINANCING. FOR 30TH CHINA AND HONGKONG THE TIME IS RIPE NOW. THOSE WHO ADVICE YOU OTHERWISE ARE WRONG. MORE==

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1622: PROHONGAID LONDON EIGHT:

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WE REALISE THAT THE PROBLEM IS, NOT A SIMPLE ONE AND THAT A NEW STATUS FOR HONGKONG MUST BE NEGOTIATED BY IMAGINATIVE MINDS UNFETTERED BY LEGALISTIC PRECEDENTS. WE REALISE TOO THAT THERE MAY BE SOME DOUBT (PROBABLY UNFOUNDED) ABOUT THE PERMANENCY OF CHINA'S NEW POLICIES AND THE WELCOME IT IS EXTENDING TO FOREIGN CAPITALISTS TO PARTICIPATE IN ITS MODERNISATION .PROGRAMMES. IT MAY ALSO BE THAT DIFFERENCES EXIST BETWEEN NATIONAL POLICY-MAKERS IN PEKING AND THOSE WHO IMPLEMENT THEM IN GUANGDONG, THE PROVINCE BORDERING HONGKONG. SUCH DIFFERENCES CAN BE LARGELY DISPELLED IF HONGKONG DEMONSTRATES GOODWILL AND WILLINGNESS TO PARTICIPATE, FOR EXAMPLE 3Y SWIFTLY IMPROVING THE INFRASTRUCTURAL COMMUNICATIONS BETWEEN HONGKONG, CANTON AND THE SPECIAL MUNICIPALITY ADJACENT TO HONGKONG WHICH CHINA HAS SET UP SPECIFICALLY TO ATTRACT JOINT ENTERPRISES AND COMPENSATION TRADE ENTERPRISES.

. IT IS NOT ONLY AN HISTORIC DUTY FOR A STATESWOMAN SUCH AS YOURSELF TO ENCOURAGE THE FORCES OF MODERATION IN CHINA= IT IS GOOD BUSINESS SENSE. THIS IS NO SELFISH HONGKONG VIEW. CHINA HAS MADE IT PUBLICLY CLEAR THAT IT HOPES FOR MUCH FROM HONGKONG FOR CAPITAL, FOR EXPERTISE IN THE FIELDS OF BANKING AND INTERNATIONAL FINANCE AND FOR MANAGEMENT KNOW-HOW - PARTICULARLY IN THE FIELDS OF FACTORY ORGANISATION, TOURISM, THE BUILDING AND RUNNING OF HOTELS, AND IN MANY OTHER FIELDS. THE DISCOVERY OF OIL IN THE SOUTH CHINA SEA COULD MEAN THAT HONGKONG WILL BECOME A LOGISTIC BASE FOR CHINA'S EXPANDING OIL INDUSTRY. MORE==

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