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LCQ4: Maritime industry
     Following is a question by the Hon Holden Chow and a written reply by the Acting Secretary for Transport and Housing, Mr Yau Shing-mu, in the Legislative Council today (May 10):
     In recent years, the Government has committed to developing a high value-added maritime services sector, including the allocation of $100 million to set up the Maritime and Aviation Training Fund (the Fund) in April 2014, the establishment of the Hong Kong Maritime and Port Board (HKMPB) in April last year, and the introduction of a bill into this Council in March this year to amend the Inland Revenue Ordinance (Cap. 112) to offer tax concessions to attract companies to develop aircraft leasing business in Hong Kong. In this connection, will the Government inform this Council:
(1) of the number of companies providing maritime services (e.g. ship management, ship broking and chartering, marine insurance, ship finance as well as maritime law and arbitration) in each of the past three years, with a breakdown by type of business;
(2) whether it has examined taking further measures to attract more big maritime services companies to develop business in Hong Kong; if so, of the outcome and whether the relevant measures will include the offer of tax concessions; if it is not included, of the reasons for that;
(3) of the directions and strategies put forward by the Maritime and Port Development Committee under HKMPB for developing high value-added maritime services in Hong Kong and facilitating the maritime sector's development and doing business; of the outcome of the Committee's deliberations and the implementation timetable for the relevant new arrangements in respect of the following business facilitation measures for maritime enterprises: (i) lifting the time limit imposed on barges holding multiple entry permits for their stay in Hong Kong waters, (ii) arrangements to further facilitate overseas contract seafarers entering Hong Kong for ship-boarding, and (iii) entering into agreements with more countries on avoidance of double taxation;
(4) whether it has examined taking measures to attract international maritime bodies (e.g. the International Maritime Organization) to set up offices in Hong Kong to further enhance Hong Kong’s status as an international maritime services centre; if so, of the outcome; if not, the reasons for that;
(5) of the respective numbers of students, maritime practitioners and aviation practitioners who have benefited from the Fund to date, as well as the amount of funds involved, together with a tabulated breakdown by type of relevant programmes; whether it has compiled statistics on the respective numbers and proportions of those beneficiaries who have stayed in/joined the maritime/aviation industry after completing the relevant programmes; if so, of the relevant figures;
(6) of the latest balance and financial position of the Fund, and whether the authorities will consider further injecting funds into the Fund;
(7) whether it has evaluated the efficiency of (i) Hong Kong's ship registration services, and (ii) the emergency support services provided by the authorities for ships flying the flag of the Hong Kong Special Administrative Region (HKSAR Flag) during their stay at places outside Hong Kong; if so, of the outcome and how the efficiency of Hong Kong in respect of such services compares with that of other countries/regions; and
(8) of the details of the round-the-clock services provided by the Marine Department for ships flying the HKSAR Flag; whether the authorities will make reference to the practice of setting up offices in 20 maritime and financial centres around the world by the Republic of the Marshall Islands, and provide more efficient and comprehensive round-the-clock services for merchant ships flying the HKSAR Flag; if so, of the details; given that the Marine Department will introduce an online vessel certificate verification service to enable instant verification of the validity of the relevant certificates by shipowners and overseas harbour authorities, of the progress and timetable of this project?
     The Government attaches huge importance to the development of Hong Kong maritime industry. In addition to the $100 million Maritime and Aviation Training Fund (MATF) established in April 2014, the Government set up the Hong Kong Maritime and Port Board (HKMPB) in April 2016. Chaired by the Secretary for Transport and Housing, HKMPB is a high level platform for the Government and industry to work closely to provide recommendation on relevant policies and strategies, so as to reinforce Hong Kong's status as an international maritime centre and to promote our maritime sector and high value-added maritime services to the Mainland and overseas regions, particularly the countries and cities with a vibrant maritime cluster.
     Our reply to the various parts of the question raised by the Hon Holden Chow is as follows:
(1)  At present, there are more than 800 shipping-related companies in Hong Kong offering a wide range of maritime services, including shipping agency and ship management, ship broking, marine insurance, ship finance, as well as maritime law and arbitration, etc. According to the Quarterly Survey of Employment and Vacancies conducted by the Census and Statistics Department last year, there were about 280 companies providing shipping agency and ship management services in Hong Kong in 2016, while another 70 companies providing ship broking services. Besides, according to the information provided by the Office of the Commissioner of Insurance, there are at present 88 insurance companies providing marine insurance services in Hong Kong. Also, 12 out of the 13 members of the International Group of Protection and Indemnity Clubs have presence in Hong Kong, which is the largest cluster of representatives outside London.
     Hong Kong maritime services have been performing well. Take the example of marine insurance, the total gross premium of insurance on ships in Hong Kong surged by 10.3 per cent yearly on average in the past decade, which is higher than the annual average growth of 7.1 per cent for the other general insurance business. In 2016, insurance companies in Hong Kong underwrote a total gross premium of over $2.5 billion for insurance on ships. As for maritime arbitration, the Hong Kong International Arbitration Centre handled 402 maritime-related arbitration cases in total from 2011 to 2015. In addition, Hong Kong is a top-ranked international financial centre and also a prominent international ship finance centre in Asia. As at December 2016, the loans and advances for the shipping industry in Hong Kong amounted to around $101.3 billion, accounting for 2 per cent of total loans and advances in Hong Kong.
(2)  To attract world-renowned overseas and Mainland maritime enterprises to operate in Hong Kong, the HKMPB is committed to promoting the strengths of Hong Kong as a regional premier maritime services hub to the maritime sectors overseas and in the Mainland. In this connection, the Government has allocated $3.1 million to Invest Hong Kong in 2017-18 financial year to strengthen its support to the promotion work of the HKMPB to identify overseas enterprises that have potential to extend their business to Hong Kong, promote Hong Kong as the preferred base for their Asian-Pacific operations, and attract them to set up in Hong Kong.
     As for tax concessions, the Government introduced tax concession for corporate treasury centres in 2016 to attract overseas large and reputable enterprises (including maritime enterprises) to invest and set up in Hong Kong.
     In addition, the HKMPB will continue to actively explore various encouraging incentives and offer recommendations to the Government, with a view to attracting more overseas maritime enterprises to choose Hong Kong as their base for business operation.
(3)  The Maritime and Port Development Committee (MPDC) under the HKMPB considers that Hong Kong should develop its maritime industry along three major directions, including (i) to reinforce the development of Hong Kong Port and the shipping market, as well as enhance the function of Hong Kong Port as a hub port in the region, so as to create synergy in developing the maritime services; (ii) to attract renowned overseas and Mainland maritime enterprises to operate in Hong Kong, thereby further expanding our maritime cluster and boosting the demand for the high value-added maritime services; (iii) to create a business-friendly environment for the industry with a view to enhancing the competitiveness of our maritime services cluster.
     The lifting of maximum hours of stay for feeders holding a multiple entry permit will increase the transshipment volume of Hong Kong Port, which will in turn facilitate the development of local transshipment and river trade business. After consulting the MPDC under the HKMPB and the Local Vessels Advisory Committee under the Marine Department (MD), the proposal has been implemented by MD since February 2017.
     Regarding the entry arrangement of non-local contract seamen entering Hong Kong for ship-boarding, according to the existing Immigration Regulations (Cap.115A), non-local contract seamen who come to join a ship in Hong Kong shall not remain in Hong Kong after the departure of the specified ship or later than 14 days after the date of entry, whichever is earlier. The Transport and Housing Bureau and relevant policy bureaux and departments are now considering possible measures to facilitate non-local contract seamen who have to remain in Hong Kong for more than 14 days due to unforeseeable circumstances to continue their stay in Hong Kong through applying for relevant employment visa or entry permit.
     As for the avoidance of double taxation agreement, Hong Kong has signed shipping-related avoidance of double taxation agreement with 44 tax jurisdictions. Among them, Hong Kong has signed the comprehensive avoidance of double taxation agreements (CDTA) with 37 tax jurisdictions and the limited avoidance of double taxation agreements on shipping income with six tax jurisdictions, as well as established reciprocal exemption arrangement on shipping income with a tax jurisdiction. Moreover, Hong Kong is now pursuing CDTA negotiations with 13 tax jurisdictions, including Bahrain, Bangladesh, Cyprus, Finland, Germany, India, Israel, Macau Special Administrative Region, the Republic of Macedonia, Mauritius, Nigeria, Saudi Arabia and Turkey. The Hong Kong Special Administrative Region (HKSAR) Government will continue to commence negotiations with other trading partners for signing relevant agreements, so as to establish a more comprehensive network to foster bilateral trade and avoidance of double taxation.
(4)  Promoting Hong Kong's maritime cluster and high value-added maritime services is a key development direction of the HKMPB. Since its establishment last year, HKMPB has been actively participating in large-scale international maritime exhibitions, organising events and delegation visits to overseas cities to promote Hong Kong's maritime industry. These include the visit to Athens, Greece in June 2016 to participate in the biennial international maritime exhibition "Posidonia"; and the visit to London, the United Kingdom and Hamburg, Germany earlier this year to meet with various local maritime enterprises and international organisations (such as the International Chamber of Shipping, the International Association of Dry Cargo Shipowners, the International Association of Independent Tanker Owners and the International Union of Marine Insurance (IUMI), etc.) to promote the strengths of Hong Kong and explore the possibility for them to set up in Hong Kong. In October last year, IUMI announced the setting up of its Asian Hub in Hong Kong, which is the Union's first offshoot outside its headquarters in Germany.
     HKMPB will actively liaise and cooperate with the local maritime sector and related organisations (including the Hong Kong Shipowners Association) to step up our promotion efforts towards the overseas and Mainland maritime enterprises and international organisations and attract them to set up in Hong Kong.
(5) and (6) As at March 2017, MATF has benefitted 1 168 students, 1 282 in-service maritime practitioners and 631 in-service aviation practitioners. Brief description, number of beneficiaries and funding provided for various schemes under MATF are set out at Annex.
     The Government does not have statistics on the number and proportion of the above beneficiaries who have joined the maritime or aviation industries after completing respective training programmes. Nevertheless, some MATF schemes are applicable for in-service practitioners of the maritime and aviation industries only. Besides, students who are awarded scholarships to pursue maritime or aviation-related bachelor or master degree programmes are subject to relevant conditions, which include the requirement of serving in the maritime or aviation industries for one year after graduation. According to the surveys conducted by relevant tertiary institutions, in 2016, about 55 per cent of the beneficiaries continued to serve in the maritime or aviation industries in Hong Kong after completing the one-year mandatory service period.
     As at end-March 2017, the cumulative expenditure for various incentive and scholarship schemes under MATF is $26.47 million, with a balance of $73.53 million. The current fiscal position of MATF is healthy, and there is no need for funding injection at present. The Government will suitably review the usage of MATF, its overall development and effectiveness, as well as the need for manpower development in the maritime and aviation sectors before considering to further inject funds to MATF.
(7) The Hong Kong Shipping Register (HKSR) ranks fourth in the world in terms of total registered gross tonnage. As at end-March 2017, 2 536 ships with a total gross tonnage of 109.2 million were registered with the HKSR. Hong Kong registered ships are among the best performers in the world. Hong Kong registered vessels has a detention rate of 0.84 per cent, which is much lower than the world's average of 3.57 per cent. Through its Customer Relations Group comprising representatives from ship owners, ship managers, maritime law and marine insurance practitioners, etc., MD has from time to time reviewed and enhanced the services of HKSR to put forward and implement a number of effective measures, with a view to keeping abreast of the latest development of the international shipping industry.
     In line with the characteristics of the global operation of the shipping industry, MD provides 24-hour, all-year-round emergency support services for ships registered in Hong Kong and their management companies, including provision of technical support for registered ships, answering enquires with regard to the requirements of respective international conventions and flag States, assisting the ship owners to handle technical problems arising from port State control inspection and ship detention, identifying practical alternatives for damaged ship structures or malfunctioned electrical and mechanical equipment and navigation equipment which are difficult to repair within short period of time, and issuance of exemption certificates or dispensation for a ship without compromising the ship's seaworthiness and the safety of crew. In general, upon receipt of an emergency request from ship master or shipping company, MD will arrange issuance of the exemption certificate as soon as practicable to facilitate the timely departure of the ship to avoid delay of schedule.
     Given that the nature and complexity of each and every case seeking emergency support services from MD vary, and that the issues concerning respective cases may involve foreign port authorities, it is difficult for us to formulate performance indicators to monitor the provision of emergency support services. In fact, other flag States also do not have performance pledges or relevant efficiency data on the provision of emergency support services.
(8)  As mentioned above, the ship registration services of MD operate around the clock every day. Services provided include registration of ship's title documents, ship mortgage and inspection of records of the ships on the shipping register, etc. MD also provides one-stop shop service in a single office to handle all registration-related matters (such as application for maritime radio communication station licence, issuance of minimum safe manning certificate, etc.).
     To ensure a more efficient and wider coverage of service area for registered vessels, ship registration services will also be provided by the Marine Adviser of MD based in the Hong Kong Economic and Trade Office (ETO) in London to ship owners in Europe. MD is exploring the use of some overseas ETOs of the HKSAR Government to issue Certificate of Registry (CoR) for new vessels registered with HKSR in order to facilitate their immediate operation. As to whether we should make reference to the practice of other flag States to open up overseas registration offices, having regard to the rather complicated issues involving resources, regulation, legal matters, etc., more comprehensive and in-depth assessment and analysis are required. We therefore do not have any plan to set up overseas ship registration office for the time being.
     MD has been providing instant online authentication services to validate the "Certificates of Competency", the "Certificate of Insurance or Other Financial Security in respect of Civil Liability for Oil Pollution Damage" and the "Certificate of Insurance or Other Financial Security in respect of Civil Liability for Bunker Oil Pollution Damage" issued by the Department. To further enhance the provision of ship registration services, MD will extend the instant online authentication services to cover CoR, which is expected to be implemented in the first quarter of 2018.
Ends/Wednesday, May 10, 2017
Issued at HKT 18:30
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