TNAG-1662-FCO40-2310-Hong-Kong-Western-Harbour-Lantau-Strategic-Development-proje-1987 — Page 89

DB2ATA

HKK 175/3

RECEIVED IN REGISPRY

- 5 FEB 1987

- 2 FEB 1987

12

G

A

WN

FROM:

CO Hum

Hong Kong Department

2 February 1987

DATE:

CC:

Mr Gillmore

DESK OFFICER

Se

REGISTRY

Adrion Taken

Securang

State

Sir D Wilson

HONG KONG: WESTERN HARBOU-LANTAU STRATEGIC DEVELOPMENT PROJECT

"1

A

Problem

1. Sir Ian MacGregor has written to the Secretary of State about the Western Harbour-Lantau Strategic Development project.

Recommendation

2.

I recommend that the Secret;ary of State reply on the lines of

the attached draft.

Background

3. In late 1986 a consortium of companies, led by the prominent Hong Kong businessman Mr Gordon Wu, approached the Hong Kong Chief Secretary with proposals for a major infrastructural development

based on East Lantau Island The development would involve

restructuring Hong Kong's port facilities and building a

airport. Both would be linked to China by means of a new highway

across the Western Territories. Mr Wu claims high-level Chinese

backing for the project.

4.

The view of the Hong Kong Government is that at first sight the

proposal is highly imaginative It is also attractive in that it

involves no up-front public funding: the Government would buy the

airport once built at an agreed price However Hong Kong are taking

the prudent view that given the limited financial information which

is currently available they need to ask a lot more questions.

In

particular they have to establish who would be the ultimate

risk-taker in guaranteeing completion of the project. While the

project would be an undoubted boost for confidence, subsequent

cancellation (perhaps because of diminishing financial viability) would be very damaging indeed. Hong Kong feel that this may argue