TNAG-1251-FCO40-1584-Third-countries-and-the-future-of-Hong-Kong-1983 — Page 63

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largely been unable to take up the challenge. Lucio Tan, a local tobacco, beer and banking tycoon, has however recently gone into joint venture with Conic Investments Company of Hong Kong to make electronic consumer goods in the Philippines.

4.

Efforts to take advantage of the Hong Kong situation have taken two forms. The first has been President Marcos's Decree No 1851, of which I attach a copy, offering "special investor's resider t visas" to aliens willing and able to invest at least US$200,000 in the Philippines. This was promulgated in November but, as far as I am aware, the rules and regulations to implement it have still not been promulgated by the government departments concerned. It has aroused controversy both in Filipino and Chinese circles here. Filipino traditionalists such as the Opposition leader, Senator Laurel, fear that by increasing Chinese numbers it may upset the precarious racial balance and the capacity of the Philippines to absorb and "Tilipinise" their Chinese population. Local Chinese who have not yet obtained resident status resent the suggestion that outsiders might be given it before 'them. However, leading local Chinese with whom I have discussed the decree doubt whether it will ever have much impact because, except under extreme pressure, Hong Kong Cantonese will be most unlikely to move into the Amoy ambience of Philippines Chinese business. A few people with money to spare may think it worth investing U34200,000 to ensure themselves a bolt-hole in the Philippines, but that will be the extent of the decree's success.

5. The second, and perhaps more interesting, move to take advantage of the Hong Kong situation has been the proposal of Enrique Zobel, President of the Ayala Corporation, that Mactan Island at Cebu should be made a free zone, in competition with Hong Kong. There are a lot of obvious snags, such as Mactan's persistent and almost irremediable shortage of water. But Mactan also has some advantages as a splendid piece of flat land with good beaches, a first-class American-built airfield, and immediate proximity to the second biggest city in the Philippines. Zobel, perhaps the most forceful and influential figure in Philippines business these days, continues to press the idea and we may yet see something come of it.

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Cc:

M H Morgan

CCV Adams Esq, British Trade Commission, HONG KONG KFX Burns Esq, SEAD, FCO

A Dunning Esq, Overseas Trade Division 2, DOT Chanceries: KUALA LUMPUR, JAKARTA, BANGKOK, SINGAPORE

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