TNAG-0955-FCO40-1174-Legislation-for-traffic-on-roads-in-Hong-Kong-1980 — Page 94

Original at: NKK 164

This Copy for:

Information only / Action on

Para(s)

Mr Williamson

sus prex

Reference

HKK 164/1

HKK 172/1

N-CONFIDENCE

RECEIVED IN REGISTRY NO. 51

2 4 SEP 1980

DESK OFFICER

INDEX

PA

REGIST

Acton Taken,

19

CONFIDENTIAL COMMERCIAL

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A (1)

BACK

ECGD COVER FOR HONG KONG PROJECTS

1.

No

MS

гига

AW 267

A number of Hong Kong telegrams have underlihed the concern of the Hong Kong Government that ECGD insistence on cast iron guarantees for their cover of major projects in Hong Kong could jeopardise the contracts. The telegrams are:

a) Hong Kong Telegram No 1214 to FCO of 20 September;

b) Hong Kong Telegram No 1032 to Hong Kong Government Office, London

giving the text of Hong Kong's reply to a letter of 9 September from Mr Morrice in this department about cover for the Castle Peak 'B' Power Station;

CHEK 1411

c) Hong Kong Telegram No 1031 to Hong Kong Government Office, London,

asking the Hong Kong Commissioner to take an interest.

15

In addition, BTC Hong Kong Telegram No EXCED 24 of 18 September describes discussions in Hong Kong on cover for the sale of buses to the Kowloon Motor Bus Company.

(18)

2. There are two distinct issues. ECGD's worries about the buses contract stemmed from concern that the share base of the company is not broad enough to sustain so valuable a contract. They are therefore asking for additional security. In the case of the Castle Peak 'B' Power Station, their problem appears to be a general economic and political one. This is therefore the more difficult issue.

3.

ECGD are worried at the size of their prospective commitment in Hong Kong over the next 20 years and beyond 1997. I understand that at the ECG meeting which you attended recently the ECGD and Treasury representatives said that 1997 itself was not a problem. However, Mr Burges Watson tells me that Mr Cotterill of ECGD told him last night that the political problem did still concern them.

The DOI will be chairing a meeting shortly (time to be fixed) to discuss this problem. I would be grateful for a short brief. This should cover:

4.

a) The political issue. It should stress the satisfactory

long-term outlook; the impossibility of getting absolute guarantees from the Chinese; the importance of confidentiality and of positive demonstration of HMG's faith in the future in order to maintain confidence.

b) The general economic outlook. Hong Kong's position in Asia;

its preparation to meet recession; its adaptability and good prospects in the long-term. This makes it a good area within which to place a large proportion of ECGD's risk compared with other places.

CODE 18-77

/c)

CONFIDENTIAL COMMERCIAL IN CONFIDENCE