TNAG-2126-FCO40-3036-Investment-in-Hong-Kong-1990 — Page 5

35g.mcu.hs53.16.3

CHANCELLOR OF

THE EXCHEQUER

Treasury Chambers, Parliament Street, SWIP 3AG

01-270 3000

Rt Hon Michael Heseltine MP

House of Commons

LONDON

SW1

Dar Michael

26 March 1990

Thank you for your letter of 5 March enclosing correspondence from Sir Adrian Swire and Mr Henry Keswick who question the reply I gave to your PQ on 20 February on the value of UK assets in Hong Kong.

Of course I accept that I was only able to give a partial estimate of the UK's total assets in Hong Kong. This was made absolutely clear in the answer. In particular, as the correspondents note, the available figures relate to the book value rather than to the market value of direct investment; and the Government has no estimate of UK portfolio investment in Hong Kong (though this could be substantial). I do not however accept that there was anything inaccurate, irrelevant or methodologically incorrect in the information I gave.

The figure of the book value of UK direct investment was based on information supplied by companies under statute for the Census of Overseas Assets 1987. This triennial survey was conducted by the Statistics Division of the Department of Trade and Industry but, following the reorganisation of government statistics last year, is now the responsibility of the Central Statistical Office.

I am enclosing a copy of the article which announced the results of this survey and which was published in British Business last September. This gives details on how the figures are compiled. In particular I would highlight:

the figures relate to the book value of overseas investments

basis companies use in their

i.

since this is

the