TNAG-1373-FCO40-1819-Ministerial-visits-from-the-UK-to-Hong-Kong-1985 — Page 65

HKLAFF

HONG KONG DOLLAR FINANCE

1. We have been in touch with the Treasury and ECGD on a

number of occasions recently in support of requests for

Hong Kong dollar finance to be extended to British

contractors and suppliers bidding for major project work

in Hong Kong. The requirement for fixed rate finance in

Hong Kong dollars is now commonplace in calls for tenders

for public sector projects in the territory. However,

although ECGD have authority to guarantee fixed rate

project finance in "standard currencies", including the

pound and the US dollar, they must seek the agreement of

Treasury for financing in "non-standard currencies" ,

including the Hong Kong dollar, which under present arrangements is given only when there is evidence of

of a

competing supplier offering a similar arrangement. The

Treasury have resisted the extension of fixed rate terms

in Hong Kong dollars, principally because of their fears

for the long term stability of the Hong Kong dollar.

Given that under the terms of the Agreement on

the Agreement on the future

of the territory we are committed to maintaining the

prosperity of Hong Kong over the next 12 years, the

Hong Kong Government consider this attitude to be

perverse.

consortium, GEC-led

which

tendered unsuccessfully for the large Tuen Mun Light Rail Project, argued subsequently that HMG's refusal until a

very late stage to offer official support in Hong Kong dollars might well have been a major factor in their loss

of the contract.

Recently the

2. The project market in Hong Kong was, until recently,

one

were

pre-eminent.

in which British companies

It

i s

essential, not only for commercial reasons but as a

visible

of the UK's political and economic

expression

commitment to the future of Hong Kong, that British

companies should continue to be active in this sector.