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Following is the speech by the Chief Executive, Mr Donald Tsang, at the opening ceremony of the International Maritime Organization (IMO) diplomatic conference on ship recycling at the Hong Kong Convention and Exhibition Centre this morning (May 11):
Secretary-General Mitropoulos, Commissioner Lu, Vice-minister Xu, distinguished delegates, ladies and gentlemen,
Good morning. I am delighted to join you for the opening of this Diplomatic Conference. We have some 500 delegates from around the world – a warm welcome to Hong Kong to you all.
This Conference on Ship Recycling is the first event of its kind for the International Maritime Organization (IMO) in this part of the world. We are particularly pleased to be the host. We are also grateful for the support and assistance of the Central People's Government in bringing this event to our city. Not only is it a huge vote of confidence in Hong Kong as an international maritime centre, but also as a prime location for mega international events such as this one. I am confident that delegates will find Hong Kong to be a modern, efficient and welcoming port-of-call.
First and foremost, I congratulate the IMO on formulating this event to adopt the text of the proposed Convention on ship recycling. This represents a milestone achievement of your joint commitment to ensuring a sustainable shipping industry.
Allow me to first talk about the significance of the maritime sector to Hong Kong.
Hong Kong has long and strong historical ties to the maritime trade. We have been an associate member of the IMO for more than 40 years and we are one of the world's busiest container ports.
With our spectacular natural deep-water harbour, Hong Kong has prospered on the growth of sea-borne cargo on the East-West trade route over the last century. We also have a low tax rate and simple tax regime, efficient customs, independent judiciary, free flow of capital and information and high quality workforce. All this has proved to be a potent combination for the maritime industry.
Today, Hong Kong is served by some 100 international shipping lines with about 450 sailings per week to over 500 destinations worldwide. Our Shipping Register has recently crossed the 40 million gross tonnage mark. This represents a six-fold growth in the past 12 years, since Hong Kong became a Special Administrative Region. It is now one of the top five registers in the world. Our shipowners own, manage or operate more than 1 500 vessels, representing over nine per cent of the world's merchant fleet in terms of deadweight tonnage.
We are also opening up new opportunities for shipping through closer collaboration within the Pearl River Delta region, or PRD. Earlier this year, the Central Government in Beijing announced a framework to establish the PRD as one of the most competitive regions in the world by 2020. This framework supports closer co-operation between ports in the region. Our aim is to improve the efficiency and quality of maritime services in the region. Naturally, we also hope it will bring even more business to this part of the world.
At the heart of our shipping industry is a vibrant maritime cluster with a dedicated maritime community. We already have a range of comprehensive and high quality professional services. These include ship financing, law and arbitration, management, insurance, brokerage, surveying and repairing. Last year, about 36 000 ocean-going vessels called at Hong Kong. And some 750 shipping companies have set up shop in our city.
As an international maritime centre, Hong Kong has witnessed the ebb and flow of global shipping. And in recent months we have seen fresh peaks and new toughs. As an indicator, the Baltic Drybulk Index, or BDI, reached an all-time high of over 11 000 points in May last year. New ships built in China last year totalled some 29 million deadweight tonnage, accounting for about a third of the world total.
However, the financial crisis has dramatically re-shaped the landscape of the shipping industry and world economy. Within a few months, the BDI went from a record high to a record low of just over 660 points last December. Orders were being cancelled and ships were being laid up.
In parallel, the financial crisis combined with market conditions for shipping has led to a resurgence in recycling activity. Let me now say a few words about the importance of this trend.
The ship recycling industry itself employs hundreds of thousands of workers. Apart from the core recycling activities it has also provided indirect employment to downstream industries. These include maritime services, the steel industry, re-rolling mills and furnace plants. In the mainland of China alone, ship recycling and related activities provide about 100 000 jobs.
At the same time, the industry also provides a good source of raw materials for infrastructure and capital projects in many countries. Ships used in marine transport are normally designed with an average life span of some 20 to 30 years. Hundreds of ships reach the end of their service life every year.
Many of the materials or equipment found in these ships can be effectively recycled. Recycling steel is particularly cost effective. At the same time, the shipping industry is now facing unprecedented challenges with surplus tonnage in many sectors.
Recycling those ships at the end, or near the end of their lifespan is a more environmentally-friendly way to alleviate the supply-demand imbalances. Also, new guidelines on ship recycling will alter the design, construction, operation and preparation of ships to facilitate safer and more environmentally sound recycling. The two processes are therefore inter-active and complementary.
The International Convention for the Safe and Environmentally Sound Recycling of Ships serves two key purposes. First, it helps protect the health of workers in recycling yards. Second, it reduces damage to the environment. These will also have a direct bearing on the sustainable growth of the shipping industry in future.
Under your leadership, Mr Secretary-General, the IMO came up with a set of Guidelines on Ship Recycling at the end of 2003. It was the first step towards minimising the negative impact of ship-breaking activities. After years of hard work, I am glad to see that Member States are now close to reaching an agreement on the Convention. With the traditional spirit of co-operation among the maritime community, I am confident that your hard work will soon reach a fruitful conclusion.
The conclusion of the Convention, will mark a new beginning for safe and environmentally sound recycling of ships. However, other complementary measures and services would be required to implement the Convention.
A number of developing economies rely on the ship-breaking industry. These countries will require new investment and expertise to re-engineer their work process to meet the requirements of the new convention. The present economic turmoil may make it more difficult to adapt to the new rules in the near future. But if there is one lesson to be learnt from the current financial crisis, it is that no economy can be spared from the problems of its neighbours. Marine transport together with the environment, are two areas that know no boundary. The action – or inaction – of one Member State has the potential to impact on all Member States. In this connection, I am pleased that an International Ship Recycling Trust Fund has been established to help with the implementation. We look forward to more international collaboration in this area.
Ladies and gentlemen, it would take some time for the new convention to come into force, and for the relevant parties to be in compliance with the conditions. Global concern for the environment demands early voluntary implementation of the measures and requirements in the new convention. I can assure you that Hong Kong will play its part.
Mr Secretary-General, I congratulate the IMO and all its Member States on their work on reducing risk and improving the efficiency of marine transport over the years. The Convention is another major step forward in a collective effort to make the shipping industry safer and more environmentally sound.
I wish you all a successful Diplomatic Conference. In Hong Kong, you will find everything required for the smooth and efficient running of this event. I also hope you find some time to enjoy our lively and welcoming city, indulge in our world famous cuisine and experience our unique culture.
Thank you.
Ends/Monday, May 11, 2009
Issued at HKT 12:18
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