TNAG-2932-FCO40-4207-Future-of-Hong-Kong-nationality-British-National-(Overseas)-1993 — Page 6

CONFIDENTIAL

XCC(92)187

FINANCIAL AND STAFFING IMPLICATIONS

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Implementation will generate additional work for the Immigration Department over the next four years. The Director of Immigration estimates that he will need some 190 additional posts from mid-1993 to 1995-96 costing some $58 million. And, in 1996-97, he will need a further 242 posts costing about $30 million. Appropriate resources will be allocated for this purpose.

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Assuming that 70% of those eligible for BN(O) status apply for BN(O) passports, we estimate that the increase in applications will generate additional revenue of about $263 million over four years.

PUBLIC CONSULTATION

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Because the issue is sensitive, we consider that prior public consultation would not be appropriate.

CHINA ANGLE

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The proposals should not surprise the Chinese. When negotiating the British memorandum, we argued strongly for a grace period after 1 July 1997 in which we could clear the backlog of applications received before 30 June. The Chinese rejected this. Our eventual acquiescence was on the basis that we would have to impose cut-off dates before 30 June 1997 in order to process applications by that date. There is therefore no need to consult the Chinese further. In the present circumstances, it is unlikely that they would respond positively, if at all. But, in order to avoid unnecessary suspicion, we will explain our plans and the background to the Chinese before there is any publicity.

PUBLIC REACTION

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Public reaction is expected to be mixed. While many will see the proposals as sensible, some will criticise them as troublesome and unnecessary. Those who may see the BN(O) passport as inferior to the BDTC passport are likely to urge us to secure equal international acceptance for the two documents. Depending on Chinese reaction, there is a slight possibility that people unhappy with the exercise will find it convenient to link it with the theory that the exercise aims at "planting British influence in Hong Kong after 1997".