TNAG-2346-FCO40-3415-Political-relations-between-Hong-Kong--Japan-and-China-1991 — Page 27

Airport

5.

Since the Memorandum of Understanding was initialled on

30 June and particularly since signature on 4 September work has proceeded rapidly. By June 1992 most of the main

infrastructural contracts will have been awarded or the

tendering lists will have closed. The Japanese are in a very strong position for almost every major contract. main British prospects include:

The

(a) Lantau Fixed Crossing (Tsing Ma Bridge) Contract (Value

tenders due in on 16 December) Trafalgar

£600 m

-

House/Costain are part of the Anglo-Japanese Consortium

(AJC) with Mitsui which is competing against an all-Japanese

consortium and European and Korean groups.

(b) Airport Site Preparation (Value about £750 m tender

documents have issued, to be returned in February 1992).

Trafalgar House/Costain, Balfour Beatty and Mowlem are represented in three separate groups of the six to have pre-qualified.

groups.

The Japanese are represented in all six

6.

ECGD cover will be vital to UK companies' chances of maximising success. There are also wider political implications. However the Treasury has been concerned about the potential implications for ECGD's finances of taking on further large-scale commitments in Hong Kong. ECGD already

has exposure and commitments of £2.1 billion in Hong Kong.

The Prime Minister has now decided that ECGD should indicate in respect of Trafalgar House's bid for the Lantau Fixed Crossing. We do not want to publicise this decision prematurely, but in due course it is likely to have a positive impact on the Japanese Eximbank, who have been hesitant about post-1997 risk generally. (The Americans

have also been hesitant: the French and Canadians have

not).

1.

British companies have done reasonably well so far,

UK1AAN/2