Strategies to enhance SAR’s status as shipping center
Since Hong Kong’s quarantine requirements for inbound travelers were adjusted to “0+3”, i.e., no compulsory quarantine required, Hong Kong has resumed its normality, and a series of international activities in Hong Kong have returned in full swing. The sixth Hong Kong Maritime Week (Nov 20-26) was one such activity recently held to better present the good side of Hong Kong to the world. During maritime week, more than 40 online and physical events were held, covering different topics such as ship management and operation, shipping finance, maritime insurance, shipping law and arbitration, shipping technology and green development, and shipping industry training and employment. Stakeholders in the Hong Kong shipping industry generally anticipated that maritime week would help enhance Hong Kong’s image as an international shipping center, and showcase the vitality of Hong Kong’s shipping industry cluster to the global shipping market. My colleagues at the International Chamber of Shipping (ICS), including its secretary-general and deputy secretary-general, also attended those events in person for the first time since their last visit three years ago.
As expressly stated in the work report to the 20th National Congress of the Communist Party of China, in President Xi Jinping’s speech marking the Hong Kong Special Administrative Region’s 25th anniversary on July 1, and in the speeches by Vice-Premier Han Zheng and Minister of Commerce Wang Wentao during the Hong Kong Belt and Road Summit held in September, the central government has thrown its weight behind Hong Kong’s drive to consolidate its position as an international shipping center. The central government’s support for Hong Kong in this regard has been consistent; it has also been made clear in the national 14th Five-Year Plan (2021-25) and the Outline Development Plan for the Guangdong-Hong KongMacao Greater Bay Area.
In fact, Hong Kong’s name in Chinese originated from “sea port”, and its prosperity was largely related to the sea. One may have thought the sea is far away from the lives of ordinary citizens, but in fact, the shipping industry is closely related to all walks of life in Hong Kong: 80 to 90 percent of the goods in global trade are transported by sea, and Hong Kong plays a very significant role in this sector. Financing and insurance are both important components of Hong Kong’s international financial center. With the introduction of tax incentives for ship leasing and maritime insurance businesses by the HKSAR government in 2020, Hong Kong can play a bigger role in the field of shipping finance.
In 2020, the Baltic and International Maritime
Council (BIMCO), a renowned international institution that creates and promote standardized maritime contracts, announced the inclusion of Hong Kong as one of the four designated arbitration venues in the new BIMCO Law and Arbitration Clause. This strengthened Hong Kong’s position as a center for legal services and dispute resolution. In addition, in 2019, the ICS established its first overseas office (the China Liaison Office) in Hong Kong (of which the author is the current principal representative). This highlights the great recognition and strong confidence of global shipowners and ship managers in Hong Kong’s “one country, two systems”, its common law system, and Hong Kong’s leadership role in international shipping. In addition, in July this year, the HKSAR government introduced new tax incentives for ship agents, ship managers and shipbrokers, creating a favorable tax environment for the maritime industry chain cluster.
However, we should face the fact squarely that Hong Kong’s ranking in international shipping in recent years has been far from satisfactory. In the “Leading Maritime Cities of the World 2022” report, published in January, Hong Kong fell to sixth place among the top maritime cities of the world, whereas it was previously ranked fourth in the 2019 report. In the “2021 Xinhua-Baltic International Shipping Centre Development Index Report”, released in 2021, Hong Kong’s ranking declined from second place in 2018 and 2019 to fourth in 2020 and 2021. Various factors have been at play in the decline of Hong Kong’s ranking, but in my opinion, the most important are two problems: the lack of long-term planning, and the lack of enterprises and talents.
Singapore’s recent development in the financial sector is unparalleled, for which Hong Kong’s financial secretary expressed his admiration in a recent blog article, highlighting the urgency for Hong Kong to put in more effort to maintain its competitiveness as an international financial center. In fact, Singapore has been the “first-mover” in building itself as the world’s leading shipping hub.
The shipping industry mainly serves the international trade of goods. As such, 20 years ago, Singapore began to focus on the bulkcommodity industry. To date, it has become one of the world’s three major refining centers, the world’s most important oil trading center, the world’s most important supplier of marine fuel oil, and the price-setting center for Asian oil and petroleum products; and it has a say in the metal, mineral, agricultural and other bulk commodity markets. As shippers gradually select Singapore as their respective headquarters in the Asia-Pacific region, it naturally entices global shipping enterprises, including those from Hong Kong and the Chinese mainland, to move to Singapore. Once the business clients reach the scale effect, high-end shipping service providers will naturally gather in Singapore. Singapore’s achievements so far are mainly due to its government’s long-term and comprehensive planning for shipping development.
In contrast, although the previous HKSAR government proposed in its 2017 Policy Address working with the maritime industry to formulate a long-term plan for its development, such a long-term plan is still in the making. As mentioned above, shipping development is a large and complicated project. From bulk cargo transactions and the core of the marine industry cluster of traditional shipping and port businesses to the high-end shipping service industry, it requires systematic, comprehensive and long-term planning and coordination to achieve. At the same time, in order to attract shipping-related enterprises to Hong Kong, and then “build nests” to attract overseas talents and train local talents, the industry also needs to know the overall strategic framework of the HKSAR government for the long-term development of the industry.
The new HKSAR government advocates a “results-oriented approach”. Various strategies that aim to attract investment and talents have been proposed in its maiden Policy Address.
As the shipping industry is one of the industries that is closely linked to the GuangdongHong Kong-Macao Greater Bay Area development, the Belt and Road Initiative and other major national policies, it is important for the Hong Kong shipping industry to strive its best to prosper and contribute to national development. The shipping industry truly hopes that the HKSAR government will soon map out a blueprint to enable the local shipping industry to regain its past glory and achieve the economic and political mission of consolidating and upgrading Hong Kong’s international shippingcenter status.