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Kowloon Motor Bus Company
6. The proposed contract is for 406 buses. ECGD are concerned that the assets of the company are not sufficient to cover the commitment. They have asked for a bank guarantee which would be forthcoming, but the company objected to the collateral which the bank are demanding for this. KMBC have therefore suggested that the Hong Kong Government should provide a guarantee. Again the Government are objecting.
7. A major problem in this case is the risk that the Legislative Council might insist on the deletion of the ''Commonwealth manufacture' clause from the Public Omnibus Services Ordinance. (This obliges companies to whom franchises are granted to use buses of Commonwealth in practice British - manufacture). If this happened German competition would move straight in and establish a dominant position in the market. At present Hong Kong is the only major overseas market for the British bus industry.
8. We have made all these points to ECGD. So far they have not budged. At our instigation the DOT and DOI have taken a hand. A meeting is to be held on 7 October to discuss the question.
9. The Governor is concerned about this case, I understand that he may telegraph Sir Peter Carey at the DOI to emphasise Hong Kong's problems and the commercial implications. I think such an approach would be a good idea.
Бир
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3 October 1980
cc Mr Donald
R D Clift
Hong Kong and General Department
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