Maritime board needs fresh focus to drive industry forward
Since its establishment in April 2016, the Hong Kong Maritime and Port Board (HKMPB) has borne fruit, especially in promoting close cooperation between the government and shipping industry, as well as coordination among industry stakeholders. Through the annual Hong Kong Marine Week over the past two years and visits to other major ports and shipping cities on the Chinese mainland and overseas, HKMPB has given the impression the government attaches great importance to further shipping industry development. Through close cooperation with the government, the shipping industry has promoted their ideas all around the world.
During this process, both the government and industry have realized the potential and advantages of Hong Kong in developing a high-end shipping services industry. At the same time, they also have a more objective understanding of the competition and difficulties Hong Kong faces in consolidating its position as an international shipping center. One of the major problems is that shipping services providers outnumber service receivers in the city. The Hong Kong Ship Register ranks fourth in the world in terms of tonnage but the number of companies that actually manage and operate these ships in Hong Kong offices has been declining. The Hong Kong Shipowners Association register list has just 68 ordinary members (shipowners, ship managers and operators) but 135 associated members (shipping service providers including ship brokers, maritime insurers and maritime lawyers). What’s more, not every regular member has a physically operating company in Hong Kong.
“A thing cannot exist without its basis.” If the number of shipowners, ship managers and operators continue to decline, the shortage of customers will inevitably force some providers of high-end shipping services to leave Hong Kong. This will harm Hong Kong’s drive to expand the shipping industry and choke the high-end shipping services sector’s growth. Therefore, upon the expiration of the first two-year term of the HKMPB, it is imperative for the agency to review its responsibilities and terms of reference and formulate a comprehensive strategy for development of the shipping industry and high value-added shipping services.
Sustainable development of an industry has much to do with the availability of talent. In 2014, the government launched the Maritime and Aviation Training Fund, with a budget of HK$100 million designated to provide scholarships for training of talents in navigation, marine maintenance and maritime laws. So far an academy on aviation has been established, which provides all-round training for the aviation sector. But no specialized academy has been set up for the maritime sector. It is suggested that the government and the HKMPB consider designating a fund specifically for training talents for the maritime sector.
The HKMPB is tasked to promote development of diversified maritime transport services. But in the absence of necessary supporting policies, the HKMPB has often felt helpless in carrying out this task. As we all know, the most effective way to attract investment is to provide tax incentives. However, low tax rates have already been a competitive advantage of Hong Kong. And the Hong Kong government introduced a twotiered profits tax rate regime last year. Hence, it is unrealistic to ask the government to provide more tax-related incentives specifically for attracting overseas shipping companies to invest or expand their businesses here.
Some tax experts have estimated that the fiscal surplus of the government could reach as much as HK$168 billion in the current fiscal year. With a strong fiscal position, the government may consider authorizing the HKMPB to introduce some non-tax fiscal measures to attract investment in the shipping industry, such as providing subsidies or allowances on office rents, office supplies expenses, etc. The Maritime Port Authority may also consider providing financial rewards to qualified shipping enterprises to encourage them to pursue long-term development in Hong Kong. Evaluation criteria for financial rewards may include the number and tonnage of registered vessels contributed, the amount of profits tax paid and duration of operations in Hong Kong.
Furthermore, HKMPB should also take effective measures to encourage more shipping and port enterprises to actively use innovative technologies to improve efficiency. For example, if companies deploy or develop high-tech products to optimize business and working processes, or conduct research and development on shipping-related products, the HKMPB may provide financial support to cover eligible expenses. Eligible expenses may include spending on software licensing, software optimization (including system integration or forecasting analysis), professional services (including research and consultancy and end-user training), specialized software (including shipborne sonar, marine automation systems), R&D team members’ salaries as well as product authentication fees.
For the sustainable development of Hong Kong’s shipping industry, talent training, enterprise development and industrial optimization are the three aspects that complement each other. Only if more enterprises invest or expand their business in Hong Kong will more talents be attracted here. Only with abundant human resources and a well-developed training and education system will more local and overseas enterprises adopt long-term business plans for operations in Hong Kong. Only if shipping and port enterprises continuously improve their operating efficiency by adopting new technology and innovation, can it attract more talents to join the industry. Acting as “facilitator” and “promoter”, the Hong Kong government can achieve more in developing the shipping industry through the HKMPB, contributing to the consolidation of the city’s position as a diversified international shipping center.
For the sustainable development of the shipping industry, talent training, enterprise development and industrial optimization are the three aspects that complement each other.