TNAG-1060-FCO40-1310-Mass-Transit-Railway-in-Hong-Kong-1981 — Page 135

SON PRO DOBIR HEAD/FROJECTS & EXPORT FOLICY DIVISION BRANCH I Sowland 22

DEPARTMENT OF TRADE

Mr M Morrice

1 VICTORIA STREET

LONDON SWIK DET

COMMERCIAL IN CONFIDENCE

Tolupulons Direct List 01 (13

Switchboard 01-210 787

HV Hawtin Eg

HM Treasury HKK 173/1

Parliament Ste

London SW1PARECEIVED IN REGISTRY NO. 51

2 1 MAY 1981

DESK OFFICER

INDEX

Дес

la

lout

PA

REGISTRY

Action Taken

AW 31

Enter ups

и

18 May 1981

19

2"15

HONG KONG: MASS TRANSIT RAILWAY: ISLAND LINE EXTENSION

See

I have seen the recent exchange of correspondenge or 2iheno for the above contract culminating in the letter of 15 lay fans Charles Birch.

21

Without here going into the general arguments about Hong Kong (on which we will commont shortly), we would like to support very strongly the arguments for providing HK dollar Musee for these contracts. It is quite clear from all the comments made

Nowsen Thompson, of the MBR, What I dollar finencing will sheolutely essential if we are to achieve any succe83 on Island Line contracte. The MBR suffered badly from excionage malo Losses in their earlier contracts and Thompson is detou last that he will not inour the same sort of risk again.

Om electrical and mechanical manufacturers were of counge, successful in previous bids, and I believe that we could effectively preclude them from the next stage 12 we failed to enable ther; to offer HK dollar financed bids. The consequences of this would be severe, particularly for the 's only car builders, Metropolitan Cammell. It is essential to their survival as a car builder that they shold secure tais contract. If they are unable to put in a 1 dollar bid we can be sure thav the Japanese, who must be aware of Netcan's precarious order book, will sėize with both hands, the opportunity thus presented to them.

While I agree that we should, as far as possible, resist attempts to insist on HK dollar finance for the construction contracts, it would be a mistake at this stage firmly to rule this out, These are important contracts, and in particular e void hope ther our tunnelling contractors would be given every opportunity to succeed. If at the end of the day, others (notably the Japanese once more) are prepared to offer dollar financing then our refusal to do so would eliminate sur contractors. his to b issue which we would be prepared to bake to Ministers it

necessar

uf 15.0

ceme Clift, Hk. J. Dept

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