TNAG-1060-FCO40-1310-Mass-Transit-Railway-in-Hong-Kong-1981 — Page 110

28

X

MLAD/PROJECT.

کنه

PORD POLICY DIVISION BRANCH 1

DEPARTMENT OF TRADE

1 VICTORIA-STREET

LONDON SW1H 0ET

1. Enter 2. Mu Halade 3. My Clijs

4. The Scarte.

Telephone Direct Line 01-215 5454

Switchboard 01-215 7877

33

1 V Hawtin Esq

H1 ~;

Parliament Street M. Me Quade

London SW1

3

Mr. Searle

HKK.173/1

Sheddar Ka ARDISTRY MO. 51

03 JUL198181

FFICER

Pa

Spk. 2/3/7/8400

PA

REGISTRY

Action Taken

No

Mas

Snd we not wilt

Leve Hastin

in support?

HONG KONG MTR: ISLAND LINE

3/17

Spoke. No

action required at this stage

Mas.

We have read with interest the letter from Charles Birch of 3 June following his recent visit to Hong Kong.

7.

並

The inflexible attitude of Norman Thompson on the question of Hong Kong dollar financing is not unexpected. We clearly have no reason either to expect that the Japanese will do other than continue to meet this particular requirement as they have in the past. If we are to stand any chance of success in the MTR construction contracts it is clear that we will need to meet Thompson's terms. We would very strongly support therefore a Hong Kong dollar commitment for all the contracts for the Island Line and not just the E&M. Realistically we cannot expect to be more than partially successful in the totality of contracts on offer - Thompson himself has made it clear that he will be spreading his risk among the countries concerned and our total liability is therefore most unlikely to be anywhere the potential maximum of £400m. Indeed we shall probably have done extremely well to win contracts to half this value. Given the sophistication of the financial markets in Hong Kong we believe the risks inherent in this method of financing are entirely justifiable.

HKK.

The problem of Hong Kong dollar financing does of course raise 173 the broader question of our responsibilities and attitude to Hong Kong, which Morrice spelt out in his letter of 19 May

23

The Department of Trade consider it esential, not just for local reasons but in the interests of our export effort world wide, to go to the limit in pursuing Hong Kong project business. Our villingness (or not) to provide Hong Kong dollar financing in this particular case will be seen not only in Hong Kong but more widely as a yardstick of our ability to meet both financial and technical challenges. Failure to comply with the customer's requirements would, aside from the political repercussions, push Hong Kong eren further into the as of the Japaneno.

This,

!