Carrie Lam gave her final policy address of her first term as chief executive of Hong Kong in October. As Lam’s first term comes to an end with it looking likely she will seek reelection again in March, it is clear that she has done more than most leaders post-reunification to listen to the maritime community and enact legislation to encourage maritime development. Arguably her greatest maritime legacy will be in strengthening the city as a preeminent base for ship leasing via generous tax perks. Similar favourable tax treatment has been dished out to marine insurers with shipmanagers, shipbrokers and ship agents all likely to get lower bills from the taxman too in the coming 12 months.
“The government is committed to enhancing the competitiveness and vibrancy of the Hong Kong economy,” insists Benjamin Wong, head of the maritime cluster at Invest Hong Kong, the government department responsible for attracting and facilitating foreign investment. “We will strive to maintain our competitive advantages, and at the same time step up investment in infrastructure, and innovation and technology in order to add growth impetus to our development.”
Nevertheless, there is a huge amount the local maritime community would like the government to do in order to grow the Special Administrative Region (SAR) as an international maritime centre.
It is worth noting that while Hong Kong has surpassed Shanghai in terms of the number of shipmanagement companies, the number of branches of top 100 container companies and bulk cargo companies are significantly outnumbered by Singapore’s and Shanghai’s.
To truly create a thriving marine cluster, the government needs to engage everyone
“The Hong Kong government should follow in the Singaporean government’s footsteps and implement incentive policies to create favourable conditions for attracting shipping resources into the region, and launch practical initiatives to facilitate the future development of maritime and port services,” urges Damien Laracy from law firm Hill Dickinson.
Angad Banga, chief operating officer at the Caravel Group, says it is vital that every strand of the maritime ecosystem is marketed to by Hong Kong authorities.
“To truly create a thriving marine cluster, the government needs to engage everyone from the cargo owners to the shipowners, service providers, financiers, and so on, and extend their support and investment in a holistic way given the interdependent relationships within the ecosystem,” Banga says.
Firoze Mirza, managing director of BSM Hong Kong, part of the Bernhard Schulte Shipmanagement empire, stresses that while certain changes are welcome it will be vital that the Hong Kong retains its laissez-faire attitude to the economy for shipping companies to prosper.
Nevertheless, according to Martin Chen, business development director for Hong Kong and Taiwan for class society DNV, the government should be more proactive in coming up with long-term maritime strategies rather than just responding to other actions taken by rival shipping hubs.
Shipping as a standalone body in government
There is one request heard repeatedly while Splash canvassed shipping executives in compiling this magazine – and it is a demand that has fallen on deaf ears for more than 20 years – the creation of a more dedicated shipping body within government. Currently shipping falls within the bloated remit of the Transport and Housing Bureau (THB). The Marine Department, meanwhile, is tasked with predominantly administrative matters. Lam did hint that the strange transport and housing joined government body would be split as she winds up her first term in office, but no timeframe or idea of what will replace it has been revealed yet.
Sanjeev Verma, managing director of Landbridge Ship Management, is one of many calling for the disbanding of the THB in order for important local industries such as maritime and aviation to have greater focus and leadership. The same plea is made by Hing Chao, the chairman of shipowner Wah Kwong, whose father fought the same battle with government 20 years ago.
Whether this new entity is a statutory body or not it does not really matter, argues Rosita Lau, a partner at Ince and Co and member of the Hong Kong Maritime and Port Board, so long as it is headed and run by people who know shipping well, and know what is happening in the international maritime arena and have international vision.
“The new body must formulate and implement maritime polices in a well co-ordinated way, and connect Hong Kong even closer to the international shipping world and to make Hong Kong an even more visible and active player in the planning of international maritime policies and strategies,” Lau urges.
For as long as the current draconian quarantine restrictions remain in place, Hong Kong cannot develop further
Having a separate government body to focus on the shipping industry would certainly be a help, but general policies like easing restrictions on the granting of work permits to overseas employees are essential to encourage companies to relocate , says Tim Huxley, chairman of Mandarin Shipping. A more immediate concern that the government must remedy, Huxley says, are today’s Covid quarantine restrictions, currently amongst the strictest globally.
“For as long as the current draconian quarantine restrictions remain in place, Hong Kong cannot develop further,” Huxley warns.
Maritime education
Any maritime centre with long-term aspirations of continued success needs a pipeline of local talent and this is something else high up on the shipping community’s wish list. Granted, the Lam administration has made maritime education funds available but more could be done.
“The government should devote time to develop the Hong Kong maritime education sector,” says Landbridge’s Verma, suggesting local tertiary education institutions tie up with leading maritime universities around the world, with the likes of Dalian and Shanghai’s maritime universities being a good starting point.
In her final policy address, Lam, whose tenure in charge of Hong Kong has been mired by creeping national security regulations from Beijing, said that 96% of the 900 initiatives set out in her past four policy addresses have been fulfilled. Were she to be able to fulfil the checklist carried on these pages she’d prove to be massively popular within the local shipping community.
This article is part of Splash’s Hong Kong Market Report 2021, publishing to coincide with the city’s maritime week, which started on Sunday. Splash readers can access the full magazine for free by clicking here.
In many ways I think much of the HK maritime fraternity is delusional.
Over the last 20 years Singapore has smashed it and HK has faded. The HKSO is a mere shadow of what it was when I first moved to HK in the 1990’s. It seems pretty clear that the “Greater Bay” will dominate and HK will be a bit player in the structure.
The greater China strategy is also clear, with the COVID clear policy focused on being open to China and screw the rest of the world. Pleas for an open policy have fallen on deaf ears, and these have been from banks and as well other industries so why does shipping think it will be different.
Shipping is a bit part in the Housing Department and despite pleas for something different there is really no change in the direction.
The comment on ship management being more than Shanghai means little. Ship management is a service business, the real shipping is where the owners and charterers are… Shanghai, Singapore etc.. AESM and Fleet dominate the HK ship management landscape, but look to Singapore and you will find many large ship managers with hundreds of ships each.
HK is fun place and its great to live there in the semi China, semi expat bubble, but lets be serious the environment has changed, the freedoms have changed and the policies are crippling the ability for HK to stand out alone.
The puppet regime, the COVID restrictions, the security dictatorship … the sun has set on the British Empire and the sun is now setting on HK as an independent vibrant entity. Maybe the Bronx of New York is a comparison to HK of the Greater Bay. We know where it is but it wont matter.
Of course I don’t expect everyone to agree but reality is a tough pill to swallow when faced with the gradual decline of the place that once was. One just hopes that the Foreign Correspondents Club will survive because all is lost if that is removed from the landscape.