TNAG-2266-FCO40-3263-Richard-Allen--Chief-Executive-of-the-Hong-Kong-Provisional--1991 — Page 13

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CALL BY MR RICHARD ALLEN, CHIEF EXECUTIVE OF THE HONG KONG PROVISIONAL AIRPORT AUTHORITY, 17 SEPTEMBER

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1.

Mr Allen said that he had just returned from a trip to Japan, led by the Chief Secretary, the principal purpose of which had been to stimulate interest in the airport. The mission had been a success. The Japanese were keen to participate but capital was scarce. Japanese banks were having difficulty adjusting to new BIS capital ratios. Support from official agencies, be they government, export credit departments or international financial institutions would be essential. Given the size of the project's capital requirement international syndication of debt would be necessary. Mr Allen remarked that ironically London was one of the most difficult financial centres in which to raise interest and confidence in Hong Kong because of the ambiguous relationship between Hong Kong and the UK. This was worrying because Europe was

the main source of capital at present. For this reason he had advised the Chief Secretary to consider a further mission to Europe and the US.

2.

Mr Allen said that it would be important to make clear the independence of the Airport Authority from the HKG. Relations were good (he regularly saw the Governor, Chief Secretary, Financial Secretary, Mrs Chan) but he wanted to keep his distance. Discussion with the HKG had begun on the Hong Kong $13.8 billion equity injection that would be required. The Hong Kong Government was also in the process of drawing up the airport Ordinance. Other issues that needed

to be addressed included the scope for raising debt without government guarantees (Mr Allen thought that the MOU was ambiguous about whether the Hong Kong $5 billion limit covered government guaranteed debt) and the corporatisation of Kai Tak.

3.

Mr Allen said that his remarks following the agreement on the MOU that consortia bidding for contracts might consider inviting Chinese companies to join them had been misrepresented. There could be no question of giving preference in the award of contracts to Chinese, or indeed British, companies. The playing field had to be absolutely level. It was important that the HKG and HMG should speak with one voice on this. He was nevertheless pleased to see

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