Decisive moves needed to revitalize shipping industry

Edward Liu points out that shipping business has weighed anchor and sailed to other ports, attracted by incentives from regional rivals

Hong Kong's traditional role as a "bridge" between the Chinese mainland and rest of the world has undeniably been diminishing. The city is still seen as an international shipping and trading center but relevant industries have declined steadily as ports in the Pearl River Delta have risen, and the mainland's manufacturing industry has transformed.

An unfavorable external environment was one reason behind Hong Kong's decline. Governments of neighboring countries and cities offer strong support to their shipping industries. Thus the SAR Government must take action to reverse the trend.

While on the campaign trail, Chief Executive Carrie Lam Cheng Yuet-ngor vowed to devise policies to add value to the shipping and logistics industries, strengthen Hong Kong's global competitiveness in shipping and promote sustainable development of shipping.

This followed the central government's statement in the 13th Five-year Plan (2016-20) issued in March last year that Hong Kong should "continue to consolidate and develop" its role as an international financial, shipping and trade center.

The new SAR government should explore substantial measures to revitalize the sector.

The shipping industry welcomed establishment of the Hong Kong Maritime and Port Board (HKMPB) last year which has, to a certain extent, an effect on promoting Hong Kong's high-end shipping services and facilitated development of the industry.

However, the board is not a statutory body and has no independent fund source which may sway its effectiveness in tackling the sector's development problems.

In the long term, the government should transform the HKMPB into an independent statutory body and let it recruit talents extensively. By upholding the principle of meritocracy, the board should be able to attract more talents to join in its management and day-to-day operations, making itself represent different professional sectors within Hong Kong's shipping industry.

Meanwhile, taking into account the highly competitive nature of the global shipping industry, the government needs to split the Transport and Housing Bureau into two.

Of course, the revamp takes time. A statutory HKMPB should work with industry associations, such as the Hong Kong Shipowners Association, to truly be the "organizer, promoter and facilitator" of Hong Kong's port and high-end shipping service industries.

Moreover, ship registration has always been a major advantage and highlight of Hong Kong's shipping industry. Since 1997, the number of ships registered in Hong Kong has increased from about 400 to more than 2,500 and the gross tonnage of all registered ships has reached 110 million tons. Hong Kong is the fourth-largest ship registering domain in the world.

With the rapid growth of registered ships, the treasury collected an increasing amount of registration fees. However, the money has not been allocated directly to the Marine Department and the Shipping Registry. Obviously, if these authorities did not have enough financial support, the quality of global services for the registered ships will be adversely affected. Eventually, ship owners would "vote with their feet" and choose other places.

Therefore, it is necessary for the government to put the revenue taken from shipping back into the sector. This includes direct distribution of revenue from levies such as ship registration fees and port charges, increasing manpower to relevant authorities and reforming management practices. Besides, given a continual downturn in the international shipping market, if the government could strategically provide local shipping enterprises with timely assistance through a preferential tax policy, it would undoubtedly ease their operational difficulties and enhance international competitiveness.

The government should also focus on the future, attract and encourage local and foreign ship owners and ship operators to establish regional headquarters or operation centers in Hong Kong.

Talent is the foundation of an industry. A serious bottleneck in the development of Hong Kong's shipping industry is a shortage of human resources.

The government had set up a HK$100 million Maritime and Aviation Training Fund in 2014 to modify the existing training and scholarship programs for professional and technical talents.

This is a good start. But there is still room for improvement in terms of enhancing the shipping industry's "soft power".

The government should actively consider introducing concessionary policies to create a favorable environment to attract global talents from the high-end shipping services sector to work in Hong Kong. It should also pay attention to nurturing local shipping talents and formulate policies to encourage local youth to join the industry.

Such policies may include strengthening promotion of the industry in secondary schools to let more students have a better understanding of the function and contribution of the shipping, logistics, ports and high-end shipping services to the economy and trades. In the meantime, through policy guidance and capital investment, the government should enhance the teaching standards of existing high schools and vocational schools.

While the government should carry on the good policies, it should also formulate a long-term plan for overall development of the shipping industry as soon as possible and actively play its role in leading the industry to consolidate Hong Kong's status as an international shipping center.

(HK Edition 07/24/2017 page8)