TNAG-2259-FCO40-3255-Hong-Kong-Port-and-Airport-Development-Strategy-(PADS)-Brit-1991 — Page 251

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14 AUG 1991

SK OFFICEF

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1. We have traced, eventually, the paper we think Mr Burns may be referring to attached. This dates from May 1990, so para 4 of the draft minute will need slight adjustment. You also asked whether I had any observations.

2. I think that Mr Burns' minute generally sets the right tone. We clearly need to keep reminding the Hong Kong Government that we are watching the process with interest without trying overtly to dictate it. In this context I am a little puzzled as to how the line taken in the minute (para 9) - with which I agree - fits in with the line submitted to No 10 on the Prime Minister's visit to Hong Kong: which seems to suggest that the Prime Minister should speak to the Governor privately about our aims. This would seem premature to say the least.

3.

I am not sure that we have a very good case to argue about contracts already let. We did very well in the consultancies - both in numbers and value - although we did not get the most influential contracts. And we can hardly expect HKG to push contracts our wayif our bids come in at twice the lowest tender - as was the case in one of the reclamation contracts.

4.

ECGD cover is crucial: one cannot expect our bids to come even close if there is not adequate ECGD cover. And the Hong Kong and China markets continue to grow as a percentage of ECGD's exposure, instead of dropping as the Treasury want. With the Black Point power station in Hong Kong and the numerous projects China is currently throwing our way, it will be very difficult to prise further cover out of ECGD.

Ms.

M V Stone

13 August 1991

CODE 18-77

RODAGX

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