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 Consultancy Study on Enhancing Hong Kong’s Position Final Report
as an International Maritime Centre

4.4 Hong Kong’s Relative Strength by Factors of

Contents Competitiveness 12
4.5 Hong Kong’s Relative Strength by Maritime Service
Areas 13
1 Introduction 1
4.6 Hong Kong’s Current Position 14
1.1 General Approach to the Consultancy 1
1.2 Maritime Clusters 2
1.3 Hong Kong’s Maritime Cluster and Status as an
5 Maritime Cluster Analysis 15
International Maritime Centre (IMC) 2 5.1 Human Resources 15
5.2 Environment 16

2 Background and Objectives 4 5.3 Regional Development 17

5.4 Focus Group Discussions 18
2.1 Study Rationale 4
5.5 Perceived Market Opportunities and Barriers 19
2.2 Overall Approach 4
5.6 Hong Kong’s Strengths, Weaknesses,
2.2.1 Previous Investigations 5
Opportunities and Threats (SWOT) 21
2.2.2 The Clustering Effect 5
5.7 Investment in IMC Development: Singapore 22
2.4 Timing 6

3 Hong Kong’s Maritime Cluster in a Regional 6 A Strategy for Hong Kong 24

and Global Context 7 6.1 Strategy Framework 24
6.2 Recommendation: The Vision Statement 24
3.1 The Global Shipping Industry 7
6.3 Hong Kong’s Future Positioning as an IMC 25
3.2 Contribution of the IMC to Hong Kong 9
6.3.1 Approach 25
6.3.2 The Do Nothing Scenario 26
4 IMCs and Hong Kong’s Current Positioning 11 6.3.3 Recommendation: The Target Scenario 27
4.1 Definition and Types of IMC 11 6.4 Underlying Themes 28
4.2 Selection of Benchmarks 11
4.3 Factors of Competitiveness 12

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 Consultancy Study on Enhancing Hong Kong’s Position Final Report
as an International Maritime Centre

7 Issues and Initiatives 29 8.3.3 Interaction with Government policy 41

8.4 Structure of the new body 41
7.1 Issues 29
8.5 Financial sustainability of the new body 42
7.1.1 Government Policy Issues 29
8.6 Interim Arrangement 42
7.1.2 People Issues 30
7.1.3 Marketing, Promotion & Communication
Issues 31
9 Business Case 43
7.1.4 Infrastructure, Innovation & Technology
Issues 32
7.1.5 External Issues 32
7.2 Recommended Initiatives 33
7.2.1 Government Policy (GP) 33
7.2.2 People (PE) 33
7.2.3 Marketing, Promotion & Communication
(MPC) 34
7.2.4 Infrastructure, Innovation & Technology
(IIT) 35
7.2.5 Implementation 35

8 The New Maritime Body 36

8.1 Need for New Arrangements 36
8.2 Functions of the New Body 37
8.2.1 Policy, research and development 37
8.2.2 Marketing and Promotion 38
8.2.3 Manpower and Training 38
8.2.4 Communications 38
8.3 Status and Nature of the New Body, and Interaction
with Government 38
8.3.1 Staffing 41
8.3.2 Resources 41

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 Consultancy Study on Enhancing Hong Kong’s Position Final Report
as an International Maritime Centre

List of Figures List of Tables

Figure 1.1 Overview of Study Table 4.1 Hong Kong’s Relative Strength by Maritime Service
Areas
Figure 1.2 Hong Kong’s Maritime Cluster
Table 5.1 Service Areas Rated Against Market Factors
Figure 2.1 Outline of Approach to the Study
Table 5.2 Barriers to Growth
Figure 3.1 Maritime Clusters at a Glance - On the Ship
Table 6.1 Future Positioning under Do Nothing Scenario
Figure 3.2 Maritime Clusters at a Glance - Port & Terminal
Table 8.1 How do options differ?
Figure 3.3 Maritime Clusters at a Glance - Shore Based
Figure 4.1 Hong Kong and Singapore’s Relative Strengths by
Factors of Competitiveness
Figure 4.2 Position Map List of Appendices
Figure 5.1 Critical demand / supply mismatch despite Appendix A Initiatives Undertaken by other IMCs
commendable small scale sea-going cadet
schemes and the efforts of individuals Appendix B Recommended Initiatives in Detail
Figure 5.2 Regional Infrastructure Development Plan
Figure 5.3 Cross-Border Policies
Figure 5.4 Market Factors and Barriers Growth
Figure 5.5 MPA Structure
Figure 6.1 Strategy Framework
Figure 6.2 Vision Methodology
Figure 6.3 Approach to Assessing Future Positioning
Figure 6.4 Future Positioning
Figure 6.5 Identifying Underlying Themes
Figure 7.1 Initiatives Targeting Commercial Principles
Figure 8.1 THB Structure
Figure 8.2 Where to put the new body?
Figure 8.3 New Statutory Body

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 Consultancy Study on Enhancing Hong Kong’s Position Final Report
as an International Maritime Centre

1.2 Maritime Clusters Service areas within the maritime industry are usually interlinked
and these linkages have also been taken into account when
Industries tend to “cluster”, where a cluster may be defined as “a
formulating recommendations. For example: Service Area ‘A’ could
geographical concentration of interconnected companies,
perform exponentially better with the support of Service Area ‘B’,
institutions, specialised suppliers and firms in related industries”
whereas if the development of ‘B’ is constrained, ‘A’ will perform
(Michael Porter, proponent of cluster theory).
poorly.
The maritime industry is particularly diverse, and a maritime cluster
may comprise firms directly engaged in cargo handling and vessel
operations, as well as those providing services to the shipping 1.3 Hong Kong’s Maritime Cluster and Status as an
industry. The maritime industry is also closely linked with high International Maritime Centre (IMC)
value-added services such as the financial and legal industries.
There is no universally accepted definition of an IMC. Typically an
There have been several prominent studies on maritime clusters IMC has a cluster of maritime businesses that service the global
including “European Maritime Clusters”1 and “The Future of shipping industry; the following definition has been adopted for this
London’s Maritime Services Cluster: A Call for Action”2. Central to study: a location with leading global competitiveness in two or
the study of clusters is a clearly defined geography. In this Study more components of the core maritime cluster and an
the geographical location is Hong Kong, and all maritime related3 established critical mass of supporting functions. IMCs are
businesses and institutions located in Hong Kong are reviewed. also defined by their reputation - as locations that drive maritime
Maritime clusters in other IMCs have also been reviewed for business and contribute to maritime global affairs.
comparison.
Maritime clusters vary in type and function according to historical,
geographical, social and economic circumstances. In this Study
Hong Kong’s maritime cluster has been divided into six broad
segments, containing one or more of 16 maritime service areas.

1
“European Maritime Clusters – Global Trends, Theoretical Framework, The Cases of Norway
and the Netherlands, Policy Recommendation”, Jenssen, Sodal, Wijnols, November 2003
2
“The Future of London’s Maritime Services Cluster: A Call for Action”, Fisher Associates,
August 2004
3
The maritime leisure sector, i.e. yachting, marinas etc and fishing are not commonly included
such studies, and are not included in this Study.

BMT Asia Pacific, ref: R8870/06 Issue 8, dated April 2014 Page 2
 Consultancy Study on Enhancing Hong Kong’s Position Final Report
as an International Maritime Centre

Figure 1.2 Hong Kong’s Maritime Cluster

Shipping Services
Shipowning and Operating,
Ship Management,
Shipbroking and Chartering,
Port Infrastructure and Liner / Cargo Agency Intermediate
Services Professional Services
Terminal Operation, Ship Finance,
Midstream Cargo Handling Maritime Law and Arbitration,
Marine Insurance

Hong Kong’s
Maritime Cluster
Shipping Regulators Marine Engineering
Marine Department, Shipbuilding and Repair,
Classif ication Societies Equipment Servicing and
Supply
Support Services
Maritime Education,
Industry Associations,
Commercial Ship &
Cargo Surveying

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 Consultancy Study on Enhancing Hong Kong’s Position Final Report
as an International Maritime Centre

A well researched strategy and ‘roadmap’ is needed given the keen

2 Background and Objectives competition from other IMCs. Accordingly this Study attempts to
address a series of questions:
Where and What is this industry that Hong Kong is seeking to
2.1 Study Rationale 
promote?
Port activity in Hong Kong is vibrant. In 2012 Hong Kong Port (HKP)
 Why is it important to retain and expand?
handled 23.1 million TEUs of containers and ranked third busiest
container port in the world. However the maritime industry extends  How is this industry being developed in competing IMCs?
significantly beyond the purely physical movement of cargo at ports.
 What are the challenges and opportunities out there?
Hong Kong is home to a vibrant community of shipowners,
shipmanagers and other service providers engaged in a diverse  What are Hong Kong's advantages that other IMCs cannot
range of activities spanning the industry. They generate economic replicate?
output directly as well as supporting other sectors of the economy –  What do industry stakeholders want?
particularly import/export, wholesale and retail trades.
 What needs to be done?
Other IMCs, notably Singapore and Shanghai which both aim to
boost the development of their maritime industries, have been very  When should it be done?
aggressive in contesting for and attracting maritime related  Who should do it?
companies. The relocation of China Navigation to Singapore - a
pioneer of China trade, first established in Hong Kong in 1872 - is
an example of their recent success. Stakeholder consultation 2.2 Overall Approach
reveals that many maritime companies now consider Singapore and
The Study combined rigorous analysis with continuous stakeholder
Shanghai to be equal if not better locations for establishing their
participation to deliver appropriate and achievable
operations than Hong Kong.
recommendations. Careful attention has been paid to
The above trends must be recognised when devising a development understanding the underlying constraints and opportunities facing
strategy for Hong Kong's maritime cluster; although adopting equally Hong Kong as an IMC, both from industry and government
aggressive measures (e.g. company-specific taxation incentives) perspectives. The pros and cons of alternative delivery
may not be suitable in the context of Hong Kong. mechanisms have been considered, although detailed
implementation arrangements lie outside the scope of this Study.

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 Consultancy Study on Enhancing Hong Kong’s Position Final Report
as an International Maritime Centre

2.4 Timing
In 2014, Hong Kong will continue to face keen competition from
Opportunity:
other IMCs. Singapore has adopted a focussed and comprehensive
Time is Now!
development strategy for a number of years, and it has targeted
many sectors in the maritime industry. Shanghai is also developing
“We will build on the strengths of our existing terminal business
in a more strategic manner than ever.
to develop our international maritime services. The business
Following the global downturn many commercial organisations are environment in Hong Kong is highly globalised with a
reviewing where their opportunities for growth are located, and sophisticated financial system, robust legal system and deep
connected to this is the question of potential relocation to maximise pool of well qualified professionals. The development of
competitive advantage. affiliated maritime services in Hong Kong has been gaining
This is a window of opportunity to develop a strong IMC in Hong momentum in recent years. These include ship management,
Kong, noting that: shipping agency, ship finance, marine insurance, ship
registration and legal services. We will take account of
 Hong Kong’s role as an IMC is expressly supported in the 12th recommendations in a consultancy study to be completed later
National Five Year Plan this year as we seek to reinforce the maritime service cluster
 The maritime cluster has the support from the Chief Executive and develop high value-added maritime services. This is an
as an industry with strong comparative advantage and example of how we may "expand" our industries.”
potential for economic growth to support economic CY Leung, Policy Address 2013.
development and job creation in Hong Kong.

BMT Asia Pacific, ref: R8870/06 Issue 8, dated April 2014 Page 6
 Consultancy Study on Enhancing Hong Kong’s Position Final Report
as an International Maritime Centre

3 Hong Kong’s Maritime Cluster in a

Regional and Global Context

3.1 The Global Shipping Industry

Shipping and associated maritime activity is a global and
competitive business; without international sea transport the global “The modern nature of the shipping industry requires a global
economy could not function. The transportation of containerised perspective. Vessels can be owned by a company with shares listed
goods, bulk and liquid cargoes by ship facilitates world trade – 90% in one country with the shareholders domiciled in another. The
of the world’s cargo is transported by ship. country of beneficial ownership can also be different from the country
The core assets - the ships - operate internationally (and out to sea), of registration and the vessels themselves can be managed from yet
and the visibility of the industry to the local public is low. However, another country. The question of ownership or control of tonnage
the maritime industry employs millions globally ranging from within a maritime cluster is therefore too simple a view to take when
seafarers and port operators, to shore based roles such as lawyers assessing the strength of that cluster and there is a need for new
and financiers. terminology to reflect the current complexity of the shipping industry.
However, it is access to decision takers that is important.”
According to Mark Brownrigg, Director General of UK Chamber of
Shipping, “The modern nature of the shipping industry requires a
global perspective.” The development strategy for maritime industry - Mark Brownrigg, Director General, UK
in Hong Kong must be formulated and implemented from a global Chamber of Shipping
perspective, and by dedicated personnel who have the knowledge
and expertise in international maritime.

BMT Asia Pacific, ref: R8870/06 Issue 8, dated April 2014 Page 7
 Consultancy Study on Enhancing Hong Kong’s Position Final Report
as an International Maritime Centre

Figure 3.1 Maritime Clusters at a Glance - On the Ship4 Figure 3.2 Maritime Clusters at a Glance - Port & Terminal5

Port Welfare

4 5
Source: http://www.maritimeindustryfoundation.com/ Source: http://www.maritimeindustryfoundation.com/

BMT Asia Pacific, ref: R8870/06 Issue 8, dated April 2014 Page 8
 Consultancy Study on Enhancing Hong Kong’s Position Final Report
as an International Maritime Centre

Figure 3.3 Maritime Clusters at a Glance - Shore Based 3.2 Contribution of the IMC to Hong Kong
In Hong Kong 90% of traded cargo is seaborne and the maritime
cluster has a significant catalytic effect on trading activity. ‘Trade
and Logistics’ is one of Hong Kong’s four “Pillar Industries” and
accounts for more than 25% of Hong Kong’s GDP.
In terms of direct economic contribution, the maritime sector
contributed approximately 2.1% of Hong Kong’s GDP in 2010, with
approximately 57,0007 people engaged, or 1.6% of total employees.
Various statistics have been used in the past to convey the
importance and scale of Hong Kong’s maritime industry. A
frequently quoted measure is the ship registry which has grown
significantly and is now the world’s fourth largest flag. However, the
number of ships registered cannot, on its own, reflect the scale of
maritime activity in a flag state and the standing of an IMC also
derives from its reputation within the international maritime
community, not only quantitative measures.

6
7
Note: As this Study focuses on the development of Hong Kong as an
international maritime centre, local craft, such as fishing boats, are not
included in the economic assessment. Stakeholders estimate that an
additional 65,000 people are engaged in the operations of local craft and
related activities.
6
Source: http://www.maritimeindustryfoundation.com/

BMT Asia Pacific, ref: R8870/06 Issue 8, dated April 2014 Page 9
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 Consultancy Study on Enhancing Hong Kong’s Position Final Report
as an International Maritime Centre

Costs of living, and

5 Maritime Cluster Analysis


 The attractiveness of Hong Kong as a place to live.

In the past Hong Kong provided sea-going officer-level talent which
5.1 Human Resources later returned to shore based professions. More recently Hong
Kong ships were increasingly being crewed by overseas personnel,
A pool of skilled labour for the maritime cluster is a critical factor of
both at officer and ratings levels. To address this an industry
competitiveness. A number of issues related to the supply and
initiative to recruit and train cadets led by HKSOA in conjunction
demand for human resources in Hong Kong have been identified.
with the Maritime Professional Promotion Federation (MPPF), was
Human resource issues are complex and extend beyond the total started in the summer of 2002. In 2004 the government then
availability of trained personnel to encompass other factors, such as launched the Sea-going Training Incentive Scheme to support the
potential earnings in alternative industries and the attractiveness of industry’s efforts. The scheme has increased the number of cadets
a city as a place to work and live. As an international city Hong from virtually none ten years ago to currently more than 30 per year.
Kong has access to global markets for qualified maritime personnel The maritime cluster directly employs about 57,000 people
and can provide qualified personnel to the rest of the world, (excluding supply chain and induced employment). Of these, it is
however a range of issues affect the demand and supply of labour suggested that about one-third (circa 16,000) have seafaring
for Hong Kong’s maritime cluster, such as: qualifications. Assuming a replacement ratio of 5%, this suggests
 Language, up to 800 new seafarers are required each year, highlighting the
scale of the challenge the industry faces.
 Labour restrictions,
In general though, the young generation of Hong Kong remain
 Immigration, reluctant to follow a sea-going career, or lack awareness and
 Education, understanding of the longer-term career opportunities it can offer, i.e.
shore based professional roles as well as sea-going positions.
 Training,
 Union and other regulations,
 Competition with other industry sectors,
 Pay,
 Industry perceptions,
 Working conditions,

BMT Asia Pacific, ref: R8870/06 Issue 8, dated April 2014 Page 15
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 Consultancy Study on Enhancing Hong Kong’s Position Final Report
as an International Maritime Centre

5.3 Regional Development Figure 5.2 Regional Infrastructure Development Plan

A number of cross-border policy and infrastructure plans have been

reviewed as part of this study, including:
 12th Five Year National Plan (12th FYNP)
 Major Infrastructure Development Planned by the 12th FYNP
 Economic Cooperation Framework Agreement (ECFA)
 “Three Direct Links”, including the Cross-Strait Transport
Agreement
 China-ASEAN Free Trade Area (CAFTA)
 PRD Development Zones
 Hong Kong – Mainland Closer Economic Partnership
Arrangements (CEPA)
In general, the infrastructure being built will improve connectivity
between Hong Kong and the PRD, but will not result in any major
increase in cargo volumes through Hong Kong Port.
CAFTA and ECFA are currently of little consequence to Hong Kong
as an IMC, as they are trade agreements between Mainland China
and other regions – Hong Kong is not included.
CEPA is the most beneficial policy measure, covering trade in
services and investment facilitation. The Mainland and Hong Kong
regularly broaden the content of the Agreement though the signing
of Supplements. Some measures impacting maritime have already
been incorporated into CEPA, but there remain other opportunities
to be pursued.

BMT Asia Pacific, ref: R8870/06 Issue 8, dated April 2014 Page 17
 Consultancy Study on Enhancing Hong Kong’s Position Final Report
as an International Maritime Centre

Figure 5.3 Cross-Border Policies Much has been said on how to take advantage of the support and
how to cooperate with the Mainland. However, research and
Mainland statements from shipping executives in both cities conclude that
Shanghai is very much a competitor to Hong Kong. Indeed, there
have been instances where Mainland authorities have attempted to
attract maritime businesses from Hong Kong to Shanghai with
Taiwan
Hong Kong
various fiscal incentives. If both maritime centres continue to
develop along the same path, focusing on the provision of the same
services, the extent of competition between them will grow.

5.4 Focus Group Discussions

A series of focus groups were convened during the Study to gain
insights on various maritime service areas, their opportunities, and
barriers to growth, as follows:
 Ship owners, operators and managers (five companies)
 Shipbrokers and charterers (five companies plus trade
association)
 Liner and cargo agencies (four companies)
The 12th FYNP and roles of Shanghai and Hong Kong
 Ship financiers (five companies)
Various sources, including the 12th FYNP and the Mainland Ministry
 Maritime law (five companies plus one academic)
of Transport, have emphasized plans for Shanghai to become an
international shipping centre equipped with the best global shipping  Terminal operators (six companies plus trade associations)
resources by the end of 2020, whilst supporting Hong Kong’s role as
 Maritime technology and R&D experts (four companies plus
an International Maritime Centre.
associations)

BMT Asia Pacific, ref: R8870/06 Issue 8, dated April 2014 Page 18
 Consultancy Study on Enhancing Hong Kong’s Position Final Report
as an International Maritime Centre

Attendees included the largest and most prominent companies in  Commercial principals and “contestable” services are very
their fields. A group facilitator chaired discussions around the sensitive to the cost of living and costs of running a business in
underlying themes of: Hong Kong.
 Government Policy,
 People; 5.5 Perceived Market Opportunities and Barriers
 Marketing, Promotion and Communication; To understand where Hong Kong has greatest potential as an IMC,
and what obstacles must be addressed to maximise that potential, a
 Infrastructure, Innovation & Technology, and
review of market opportunities and barriers has been undertaken.
 External issues.
The opportunities presented by Hong Kong’s “contestable” maritime
Many of the issues discussed affect more than one service area. service areas have been reviewed with respect to the following
Certain points were raised by multiple focus groups and the market factors:
following key messages emerged:
 Capacity in Hong Kong,
 The Government has not supported the industry through
 Demand (in Hong Kong and across the region),
funding or policy initiatives to maintain the competitiveness or
attractiveness of Hong Kong’s maritime cluster over the past  Potential growth in the region,
10-15 years.
 Competition in the region.
 Commercial principals are critical to maritime clusters and
allow the cluster to grow. Specific initiatives aimed at service
areas such as maritime lawyers, ship financiers, brokers etc.
are of less importance than attracting commercial principals.
Business goes where the clients go!
 Hong Kong has strong capabilities in services such as
maritime arbitration, but this is not widely appreciated.
 The local pool of experienced maritime talent is shrinking due
to aging or relocation. Hong Kong’s maritime cluster cannot
attract sufficient new professionals to sustain future
development, and the quality of those joining is dropping.

BMT Asia Pacific, ref: R8870/06 Issue 8, dated April 2014 Page 19
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 Consultancy Study on Enhancing Hong Kong’s Position Final Report
as an International Maritime Centre

Strengths Weakness 5.7 Investment in IMC Development: Singapore

- Strategic location - High land and office cost Interviewees in Hong Kong and abroad cited many reasons why
- Ties with the Mainland - Strong policy initiatives for Hong Kong is lagging behind Singapore as an IMC, such as: visits
- Highly educated population manpower development / by high-level officials in Singapore to find out what maritime
- Traditional banking capital of retention for maritime industry businesses need; high-level officials and MPA staff visiting overseas
Asia yet to be in place businesses to entice them to locate in Singapore; foreign maritime
- Low and simple tax system - Industry-specific perspective talent enjoying door-to-door relocation services - including
- Free flow of capital and (institutional arrangement and subsidised housing and international schooling; and the growth of
information policy initiatives) in supporting
the local talent pool supported by a coordinated and expansive
- Stable currency peg to US$ the complex maritime industry
9 educational curriculum.
- Reliable judicial system yet to be introduced
Singapore has identified the maritime industry as an important part
Opportunities Threats of the economy, and devoted money, time and resources to grow
the cluster. Singapore’s Maritime and Port Authority (MPA) has
- Support of 12th Five Year Plan - Intense competition from other over 500 staff. Excluding technical/operational/support staff there
for Hong Kong as an IMC IMCs (particularly those in Asia) are over 200 professional staff, including a specialist IMC division of
- Growing shipping demand and - Comparatively less land 29 full-time staff.
activities in Mainland presents resources to devote to shipping
immense business opportunities and port business In 2002 MPA established the Maritime Cluster Fund of S$80 million
to Hong Kong - More emerging gateways to (approx. HK$500 million) to promote and strengthen the maritime
- Available channels for Hong China in respect of cargo sector in Singapore through various promotional events and
Kong maritime companies to tap movement scholarships over a five-year period.
into the Mainland Market (e.g. - Not enough positive drive/
CEPA) perception of the maritime By comparison expenditure in Hong Kong since 2003 on various
- Global economy shifting industry and career prospects to port and maritime initiatives (primarily promotion) totals HK$36
eastward; international attract new blood million, whilst around HK$58 million has been spent on various MIC
companies seeking a new base scholarship/incentive schemes.

9
The maritime industry is currently under the purview of the Transport and Housing Bureau
which oversees land, air and sea transport as well as housing matters.

BMT Asia Pacific, ref: R8870/06 Issue 8, dated April 2014 Page 22
 Consultancy Study on Enhancing Hong Kong’s Position Final Report
as an International Maritime Centre

Figure 5.5 MPA Structure

“Moving to Singapore from home country has been easy. The work visa took just two weeks… staff from MPA even picked my
family and I from the airport when we arrived.”

Singapore-based executive from a leading shipping line

BMT Asia Pacific, ref: R8870/06 Issue 8, dated April 2014 Page 23
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 Consultancy Study on Enhancing Hong Kong’s Position Final Report
as an International Maritime Centre

the development of Hong Kong as an IMC. For example, the

7 Issues and Initiatives industry is frustrated with the progress on double taxation
agreements (DTAs). While there has been progress and the
negotiation of DTAs is regularly reported, the industry at large
7.1 Issues considers the mechanism of communication and feedback
The issues identified from the workshops, focus groups, interviews could be improved.
and benchmarking studies are summarised as follows:  The overwhelming level of commitment, expertise and
resources that Singapore has invested to become a leading
7.1.1 Government Policy Issues
IMC cannot be overstated. Included are a range of incentives
 The industry perceives very little Government support or such as subsidies on property, paying for relocation, and
recognition of the importance of the maritime cluster to Hong guaranteed staff.
Kong. Furthermore, the complex and global nature of the
industry requires dedicated personnel with expertise in  Proximity to and a unique relationship with the Mainland is one
maritime affairs for the formulation of policy, which the existing of Hong Kong’s comparative advantages. Initiatives to further
Government organisation lacks. Effective Government support CEPA and other agreements to promote maritime issues
requires focused and dedicated people who know about or are should be pursued.
part of the industry.  Environmental issues such as vessel emissions may open up
 THB oversees a wide range of policy areas from land to air new business opportunities such as pricing services for carbon
transport, to housing matters. The existing structure of THB emissions and marine engineering.
cannot provide the level of support, dedication, and  There are concerns regarding the incoming competition policy;
representation required. Advisory bodies such as the Maritime and the future quality of the Shipping Registry given the
Industry Council have limited executive functions. recruitment difficulties faced by Marine Department.
 Locally the maritime industry is expecting more support from
Government. One imminent need is an effective
communication mechanism for the industry to better
understand what support the Government currentlyoffers.
 Government’s approach needs to recognise that the maritime
cluster is competing in a global marketplace.
 Government progress on certain policies is not conducive to

BMT Asia Pacific, ref: R8870/06 Issue 8, dated April 2014 Page 29
 Consultancy Study on Enhancing Hong Kong’s Position Final Report
as an International Maritime Centre

Objectives for recommended initiatives:  Hong Kong’s educational institutions struggle to support
manpower training for the industry under current funding
 At policy level Government should recognise the importance of
arrangements. At present only one University Grant
the maritime cluster, and demonstrate commitment to further
Committee-funded undergraduate programme and a few self-
developing Hong Kong as an IMC.
financed masters programmes are related to maritime. In
 To be focused and incorporate industry expertise, international mainstream disciplines such as law, finance, insurance and
talent and dedication in the policy making process for the business administration, maritime elements or maritime-related
maritime industry. electives are scarce.
 To provide sufficient and dedicated staff and resources to  The nature and prospects of a career in the maritime industry
implement strategy initiatives and ongoing measures to are not well understood by the general public and are regarded
facilitate the development of the maritime industry amid the as unattractive to young people. Many positions in the
keen competition from other IMCs. maritime industry can be extremely well remunerated, exciting,
 To remove ambiguity and uncertainty in specific government challenging, and provide international exposure. There is a
policies - particularly on taxation and immigration - which need for more positive projection of the industry’s image.
impede the growth of the maritime cluster.  Marine Department has encountered difficulty in recruiting
 To explore and bring about policy changes, especially in the sufficient local talent in recent years.
context of Hong Kong's relationship with Mainland China,  The growing expertise in maritime law at CityU is one of Hong
which confer comparative advantage to Hong Kong over other Kong’s strengths.
IMCs.
 Where there is a potential gap in the market opportunities exist,
for example ongoing distance learning for cadets; which would
also be attractive to those outside Hong Kong.
7.1.2 People Issues
 There is a shortage of officer grades and other skilled maritime  There is a need to engage dedicated personnel in the
personnel in Hong Kong. Hong Kong’s Maritime Services Government to oversee the manpower situation of the industry.
Training Institute (MSTI) produced 38 cadets in 2011, while
estimated annual demand is several hundred allowing for
‘leakage’ and an aging workforce.

BMT Asia Pacific, ref: R8870/06 Issue 8, dated April 2014 Page 30
 Consultancy Study on Enhancing Hong Kong’s Position Final Report
as an International Maritime Centre

Objectives of recommended initiatives:  Perception, both locally and internationally, is one of the
biggest hurdles for the further development of Hong Kong's
 To improve the transparency of career opportunities available
Maritime Cluster. Hong Kong has the software and hardware
in the maritime industry.
in place to deliver the highest quality services, but who knows
 To develop effective strategies to promote public awareness of about it?
the importance of and economic contribution made by Hong
 The Singaporean government devotes a lot of resources and is
Kong's maritime cluster, and improve public perception of
very determined to attract commercial principals and maritime
maritime careers.
service providers to Singapore.
 To attract and retain more seafaring personnel who at a later
 Existing promotion by the Hong Kong Government is relatively
stage of their career may work in shore-based maritime
passive and generic, carried out by a limited staff who also
services by supporting their career path through placements
attend to other duties. As an international activity the maritime
and job opportunities.
industry is very sensitive to the external business environment.
 To strengthen training for personnel at professional level to When many Greek shipowners considered relocating their
support the further development of intermediary services such businesses to Asia, Singapore responded to the opportunity.
as maritime law and arbitration, ship finance and maritime Hong Kong should strengthen manpower with expertise in
insurance. global business climate and the maritime industry to focus on
 To address the inadequacy of resources to support manpower marketing and promotionstrategies for the industry.
training for the industry.
Objectives of recommended initiatives:
 To devise effective marketing and promotionstrategies to
7.1.3 Marketing, Promotion & Communication Issues
promote Hong Kong’s strengths as an IMC to the worldwide
 Hong Kong has the technical expertise and commercial maritime community, particularly in the Mainland.
excellence from many of the world’s leading ship managers,
owners, lawyers and financiers. Many of these capabilities  Marketing and promotion that is not restrained by
exceed those available in Shanghai, and in some cases Government’s internal procedures.
Singapore. However, maritime executives in London, Oslo and
Rotterdam do not see Hong Kong as a leading IMC.
Internationally, many only see Hong Kong as being a port
hub – not a maritime (activity & service) centre.

BMT Asia Pacific, ref: R8870/06 Issue 8, dated April 2014 Page 31
 Consultancy Study on Enhancing Hong Kong’s Position Final Report
as an International Maritime Centre

 The use of dedicated personnel with expertise in marketing Objectives of recommended initiatives:
and public relations, and good understanding of the maritime
 To provide funding or incentives to encourage R&D or
industry and global business climate, to undertake marketing
innovation activities within the maritime cluster.
and promotion.
 To foster R&D and innovation relevant to the strengths of Hong
 Marketing and promotion work supported by both Government
Kong, e.g. service related developments, such as marine
and industry in terms of funding and participation.
insurance products denominated in RMB, achieving greater
 To establish an effective and convenient one-stop synergy among IMCs in China etc., rather than engineering
communication window between the Government and the focussed research.
industry.

7.1.5 External Issues

7.1.4 Infrastructure, Innovation & Technology Issues The general business environment in Hong Kong is also crucial for
 Maritime R&D covers a very wide range of activities and growing the maritime cluster, issues including:
initiatives from vessel design and energy efficient plant to
 Many issues that affect Hong Kong’s business environment
vessel operations and safety systems. It is driven primarily by
are important for the maritime industry, particularly for
regulatory requirements, both in respect of safety and the
“contestable” services that can locate wherever the business
environment, but also by cost considerations in order to
environment best suits them.
achieve greater efficiencies in materials, manpower and
operating costs.  As with many other industries, talent is sometimes sourced
from outside Hong Kong, particularly for more senior roles.
 Hong Kong, like other developed economies, is becoming a
The high cost of residential space is a major drawback for
knowledge-based economy. R&D and innovation are part of
expatriates.
this global trend but these activities are lacking in Hong Kong’s
maritime cluster.  The high cost of office space is severely diminishing margins,
and is one reason shipping firms leave.
 To promote industrial diversification the Government is striving
to expand six sectors where Hong Kong enjoys clear  For those with families, international schooling places and a
advantages – one of these six is innovation and technology. safe and healthy environment are high on the list of
requirements when considering relocation. Unfortunately,
Hong Kong is well known for relatively high levels of air
pollution, high costs of housing, and difficulty in getting

BMT Asia Pacific, ref: R8870/06 Issue 8, dated April 2014 Page 32
 Consultancy Study on Enhancing Hong Kong’s Position Final Report
as an International Maritime Centre

international school places. maritime development, and champion the trade’s

interests in Government’s policy-making.
 Some stakeholders consider the new Competition Ordinance
brings major uncertainty to seafreight businesses, and that a GP 5 Actively pursue trade and investment facilitation
comprehensive assessment to measure the impacts to the supplements under CEPA on behalf of the maritime
shipping sector is needed, preferably with the assistance of the cluster.
Government.
GP 6 Enhance the feedback mechanism between the
Government and the industry on the progress and priority
of negotiation of double taxation agreements and Free
7.2 Recommended Initiatives
Trade Agreements, as well as closer cooperation in
According to the four themes of relevant issues, the Consultants lobbying work.
identified four sets of initiatives that align with the Vision statement,
GP 7 Develop policies to promote Hong Kong’s maritime
the target positioning, and the objectives defined under each theme:
industry as environmentally-conscious and sustainable.

7.2.1 Government Policy (GP)

7.2.2 People (PE)
Desired outcome: Efficient organisations and effective policies and
Desired outcome: An adequate pool of maritime skills and
systems that facilitate competitiveness, innovation and best practice
experience available locally and a destination of choice for
in maritime services.
international maritime talent.
GP 1 Continued support for Hong Kong as an IMC at the local
PE 1 Develop Hong Kong as a centre of excellence for
Government policy level.
maritime education and enhance the quality of maritime-
GP 2 Continued support for Hong Kong as an IMC at the related courses / programmes at local institutions.
national level.
PE 2 Maintain a central registry of the maritime-related
GP 3 Cooperate with Shanghai in terms of maritime programmes and courses on offer in Hong Kong.
development by exploring pilot schemes employing the
strengths of the two IMCs.
GP 4 Establish a new institutional body set up by the
Government (“the new maritime body”) to conduct
policy research, propose policy measures that drive

BMT Asia Pacific, ref: R8870/06 Issue 8, dated April 2014 Page 33
 Consultancy Study on Enhancing Hong Kong’s Position Final Report
as an International Maritime Centre

PE 3 Keep in view the need for continued operation for the 7.2.3 Marketing, Promotion & Communication (MPC)
Maritime and Aviation Training Fund beyond the current 5-
Desired outcome: International recognition of Hong Kong as a
year timeframe.
premier IMC and a positive shift in attitude/perception by the local
PE 4 Set up an electronic platform to enhance the transparency community.
of career opportunities in the maritime industry.
MPC 1 Empower the new maritime body to devise effective
PE 5 Empower the new maritime body to oversee the strategies and to market and promote initiatives to
manpower situation of the industry, and implement enhance Hong Kong’s status as an IMC, to attract
initiatives to support training for the industry in Hong commercial principals and raise awareness of Hong
Kong. Kong’s strengths in providing quality maritime
services.
PE 6 Review and enhance the supply of courses offered by
MSTI and their related arrangements. MPC 2 Devote resources for marketing and promotion for the
purpose of attracting commercial principals from all
PE 7 Explore distance learning for maritime industry
around the world and in particular those from the
practitioners to increase flexibility.
Mainland to establish operations in Hong Kong.
PE 8 Enhance exposure of local youngsters to the maritime
MPC 3 Attract, support, and assist the organisation of
industry.
international and regional maritime-related conferences /
PE 9 Employ non-traditional promotion strategies to update the events.
concept and image of careers in the “maritime industry”.
MPC 4 Creation of a One-Stop-Window for information and
PE 10 Explore measures whereby the immigration regime can communication to be managed by the new maritime body.
facilitate the recruitment of overseas talent for Hong
Kong's maritime industry.
PE 11 If and when there is consensus among the industry to
create an all-encompassing body of maritime
professionals, the Government to facilitate and assist the
industry in the establishment of such body.

BMT Asia Pacific, ref: R8870/06 Issue 8, dated April 2014 Page 34
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 Consultancy Study on Enhancing Hong Kong’s Position Final Report
as an International Maritime Centre

MIC (Hong Kong Maritime Industry Council) advises

8 The New Maritime Body


Government on formulating maritime policy. It collaborates

with THB in carrying out promotional visits and initiatives.
While MIC has a role to play in the Government’s policy
8.1 Need for New Arrangements making process, it is largely an advisory body with no
The Consultants have concluded, based on consultations with the executive arm, and its members are not dedicated personnel;
industry and examination of the development of Hong Kong and  THB (Transport and Housing Bureau - organizational structure
other IMCs, that the industry needs a maritime champion (be it a shown in Figure 8.1) oversees a wide range of policy areas
person or a body) who can represent the diverse professions and including maritime. Although from time to time THB
interests of the industry, and be dedicated to strengthening the collaborates with the MIC to take forward initiatives that would
competitiveness of the maritime cluster. benefit the industry, THB remains primarily a “policy bureau”
Initiatives GP 4, PE 5, MPC 1 and IIT 1 all have the same goal: but not an executive agency with dedicated staff and resources
calling for a new institutional set-up. The Consultants recommend to deliver full support to the industry; and
the establishment of a new body outside existing Government  HKSOA, (Hong Kong Shipowners Association) a widely
departments that combines all related roles and functions. representative industry association. Although it welcomes
The international maritime community can readily identify prominent associate membership of service providers, its focus is the
entities dedicated to driving maritime development in London and shipowning sector. HKSOA is a major industry association;
Singapore such as Maritime London and the Maritime and Port completely independent of Government.
Authority of Singapore. The constitution (governmental, quasi- The Consultants recommend restructuring the existing institutional
governmental, or non-governmental) and functions of these entities support for the maritime industry. While policy-making functions
differs to suit the needs and institutional contexts of their respective should continue to sit within Government, establishment of a new
IMCs. body with dedicated staff and resources to deliver its functions is
In Hong Kong there are three primary entities each with their own greatly needed.
functions as well as constraints:

BMT Asia Pacific, ref: R8870/06 Issue 8, dated April 2014 Page 36
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 Consultancy Study on Enhancing Hong Kong’s Position Final Report
as an International Maritime Centre

8.2.2 Marketing and Promotion 8.2.4 Communications

 Represent and champion Hong Kong’s interests in the  Locally, to facilitate communication between the Government
international maritime landscape, e.g. speaking at international and the industry; and
conferences, receiving overseas delegations on behalf of the
 Internationally, to create and maintain a one-stop
maritime industry and the Government, and lobbying in
communication window between the local and international
international maritime affairs for the benefit of Hong Kong as
maritime communities.
an IMC;
 Organise / collaborate in and attend international events in
Hong Kong or elsewhere that promote Hong Kong’s status as 8.3 Status and Nature of the New Body, and Interaction
an IMC; with Government
 Undertake promotional and marketing initiatives (overseas In considering where to put this new body, the Consultants have
visits, participation in trade shows / exhibitions) to promote examined different options as illustrated in the following diagram.
Hong Kong’s status as an IMC;

8.2.3 Manpower and Training

 Monitor manpower supply and demand for different sectors in
the maritime industry;
 Maintain a central registry of maritime-related programmes /
courses on offer in Hong Kong
 Coordinate and administer initiatives that support the
manpower training of the industry;
 Launch programmes for promoting awareness of career
prospects in the maritime industry and attracting new blood to
the industry;

BMT Asia Pacific, ref: R8870/06 Issue 8, dated April 2014 Page 38
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 Consultancy Study on Enhancing Hong Kong’s Position Final Report
as an International Maritime Centre

Table 8.1 How do options differ?

2. Under Commerce &

1. Under Transport 3. Under the Financial 4. Under the Chief
Options Economic Development 5. Independent Authority
Housing Bureau Secretary Executive
Bureau

Independent of Bureaux Independent of Bureaux

Location and status of team Within THB Within CEDB Independent agency
framework – framework –
Secretary for Commerce
Reporting Level within Secretary for Transport and Overseen by a policy
and Economic Direct to FS Direct to CE
Government Hierarchy Housing bureau
Development
Industry participation in Direct industry participation
Revamped MIC Advisory Revamped MIC Advisory
decision making and Small Advisory Board to FS Small Advisory Board to CE in the Board and influence
Board Board
strategy on its actions
Civil Servant / Secondment Civil Servant / Secondment Private sector /
Maritime Champion Civil Servant Civil Servant
from private sector from private sector professionals
Private sector /
Staff Civil Servants Civil Servants Civil Servants Civil Servants
professionals

BMT Asia Pacific, ref: R8870/06 Issue 8, dated April 2014 Page 40
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 Consultancy Study on Enhancing Hong Kong’s Position Final Report
as an International Maritime Centre

8.5 Financial sustainability of the new body

Considering the functions proposed in Section 8.2, and that the new
body will be outside Government, it is unlikely to be able to sustain
its own operations. The Government should devise a sustainable
financial proposal for the new statutory body.
One option the Government may consider is to transfer the revenue
generated by the Hong Kong Shipping Register (HKSR) to the new
statutory body, and possibly the management function if appropriate.
This will incentivise the new body to assist in the promotion of the
Register, expansion of which will generate more income for the
statutory body.

8.6 Interim Arrangement

Setting up a new statutory body in Hong Kong, including the time
required for legislation, will normally take around three to five years.
During this time Hong Kong must not stand still, but continue to
drive the further development of the maritime industry.
As an interim arrangement the Consultant recommends the
Government devote more resources to supporting the development
of the industry. The Government should also start taking forward at
least some of the initiatives.
The Government may consider extending the remit of the MIC and
strengthen its resources as means of doing so. MIC can then
engage staff and/or external consultants to initiate focussed
programmes to address the recommendations made in this Study.

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In a competitive global industry Hong Kong has been facing keen

9 Business Case competition from other IMCs in the region, which have aggressively
attracted maritime and related companies, devoting dedicated staff
Key findings of this study are:
and resources to marketing and promotion, enhancing their status to
 The maritime industry is global and competitive; the international maritime community.
 Although the shipping industry is going through tough times, The recommended Strategy to enhance Hong Kong’s position as an
the market potential in Asia is promising; IMC is not to replicate or adapt the Singaporean model of mass
 There is a strong clustering effect for shipping and associated incentives, but to maximise Hong Kong’s existing comparative
activities, since service providers want to be physically located advantage. This approach is sustainable, and does not attempt to
where the decision makers are; resist market forces but to minimise barriers to growth. This should
be achieved through effective governance, policies, marketing, and
 Commercial principals of shipping and trading companies drive creation of an attractive business environment for the maritime
the decisions on where business is conducted; industry.
 The maritime sector in Hong Kong makes a significant Just as a struggling business must examine its fundamentals,
economic contribution, especially when considering the review assets and look forward; this Study has examined the
positive indirect / catalytic impact to the economy; underlying causes, considered the strengths of Hong Kong as an
 Hong Kong has a long standing maritime cluster and some IMC, then defined a vision and prioritised initiatives. A business
unique competitive advantages, particularly its connection with develops a corporate plan to make the most of comparative
the Mainland; advantages.

 Hong Kong has world class strength in shipowning and The Study results propose a series of initiatives and new
operation, and ship management, and is rated strongly in liner governance arrangements to maximise Hong Kong's comparative
/ cargo agency services, industry associations and port advantage. The outcome is value for money, improved
infrastructure. competitiveness, jobs, prosperity and support for Hong Kong’s
heritage.
 Perception plays an important role in enhancing a city’s status
as an IMC. Making the most of the asset that is Hong Kong’s maritime heritage,
its unique advantages and the growth prospects in Asia, makes
good business sense.

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 Consultancy Study on Enhancing Hong Kong’s Position Final Report
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Appendix A

Initiatives Undertaken by other IMCs

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 Consultancy Study on Enhancing Hong Kong’s Position Final Report
as an International Maritime Centre

Initiatives Undertaken Elsewhere

Initiative Purpose Actual Impact Perceived Pros and Cons Lessons for Hong Kong

SINGAPORE

The money has been used to

promote Singapore aggressively.
MPA officers are pro-active and Whilst the Fund has been
The amount of funding is enormous.
make visits to the offices of maritime successfully utilised to promote
Since 2003, Hong Kong’s MIC has
businesses abroad to encourage Singapore, many consultees believe
In 2002, the MPA established the spent HK$90 million on promotional
them to set up their business in Singapore may have “over-
Maritime Cluster Fund (MCF) with visits and scholarships, just a fifth of
Singapore; significant resources are marketed” themselves, and the
S$80 million set aside over five Singapore’s spending but over twice
Maritime Cluster Fund poured into Singapore Maritime phrase “smoke and mirrors” has
years to promote and strengthen the the time period.
Week; the column inches in maritime been mentioned. However, that is
maritime sector in Singapore through Singapore’s marketing has worked -
publications for Singapore is not to say that Singapore is not a
various promotional events. the global maritime community
impressive. Marketing and promotion good IMC. Rather, the gap with
widely consider Singapore to be the
has reinforced the global maritime Hong Kong is not as large as
premier IMC of Asia.
community’s perception of Singapore has led people to believe.
Singapore being a powerful IMC with
no peers in Asia.
Since the establishment of
MaritimeONE (2006), the MPA,
In 2008, MPA created a one-stop job The site promotes maritime careers
Singapore Maritime Foundation and No similar programme exists in Hong
portal Maritimecareers.com.sg as an and education, brings prospective
other industry players award Kong, but there should be such a
initiative under MaritimeONE to cater employers and employees together,
students with scholarships and programme. Educational institutions
to the growing interest among youth and features jobs spanning the
MaritimeONE sponsorships that total to millions of cannot be relied upon to coordinate
in the maritime sector, and the major maritime groups of shore-
Singaporean dollars. 40+ students amongst themselves. The
industry's need for quality manpower based maritime services, offshore
are awarded annually to pursue Government must assist in the
to fuel the rapid growth of Singapore and marine engineering, and
studies that will prepare them for a process.
as an IMC. seafaring.
career in Singapore's maritime
sector.

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Initiative Purpose Actual Impact Perceived Pros and Cons Lessons for Hong Kong

SINGAPORE

Not only raises the profile of

The MPA organises an annual The coordination and cooperation at
Singapore abroad, but many
Singapore Maritime Week (SMW) SMW by Singapore's associations
activities during the week were
with a wide spectrum of and Government was impressive,
targeted at local citizens. The
Singapore Maritime Week conferences, forums and business Large, though difficult to measure. and is a must for a similar type event
Consultants attended SMW and
networking events revolving around in HK. Equal efforts should be made
noticed many attendees were from
timely strategies for the current between promoting HK to the
local firms – difficult to determine its
economic situation. overseas and local communities.
impact on attracting foreign firms.
The leading green shipping initiative
the “Fair Winds Charter” was
initiated and funded by industry
MPA pledges up to $100 million over
following frustration with
5 years. To date: 28 Singapore-
Government’s inaction. After seeing
flagged ships pay reduced
the efforts of industry, the
registration fees and tonnage tax if
Government launched in 2012 a Port
they go beyond the requirements of
Launched by MPA during SMW Facilities and Light Dues Incentive
the IMO EEDI; 369 vessels receive Comprehensive coverage with three
2011 to reduce the environmental Scheme for Ocean-Going Vessels
Maritime Singapore Green 15% concessions on ports dues by programmes – Green Ship
impact of shipping and related Using Cleaner Fuel. The
Initiative adhering to certain environmental Programme, Green Port Programme
activities and to promote clean and Government also plans to mandate
terms; and 10 projects from nine and Green Technology Programme.
green shipping in Singapore. all ocean-going vessels in Hong
maritime companies have received a
Kong waters to switch to cleaner fuel
total of $7.7 million from the Maritime
while at berth since 2015.
Innovation and Technology (MINT)
Furthermore, the Government has
Fund for developing green
stated its intention of gaining the
technologies.
cooperation of Mainland
counterparts to create a PRD-wide
Emission Control Area

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Initiative Purpose Actual Impact Perceived Pros and Cons Lessons for Hong Kong

SINGAPORE

Singapore is establishing itself as an

Evidence suggests that the SSF has
arbitration hub for the region as most
not been very successful thus far.
recently evidenced by the setting up
Singapore will increasingly work with
An alternative form that would cater of Maxwell Chambers in the heart of
BIMCO in the near future, including
to their needs, in view of increasing Specially tailored to cater to the Singapore’s business district to
the updating of the commonly used
maritime activities and maritime Asian market, up-to-date with provide one-stop, best of class
NYPE time charter form to be
Singapore Ship Sale Form arbitration cases in Asia. A key changes in maritime and banking facilities and services for the conduct
published in 2014 (also in
aspect of the SSF is the inclusion of regulations, easy to use. In practice of alternative dispute resolution
collaboration with the Association of
SCMA arbitration in the default however, too early to tell. activities in Singapore. Close
Ship Brokers and Agents of the US
arbitration clause of the form. collaboration from reputable
(ASBA)), which will have the default
international maritime organisations
arbitration venues as New York,
and associations, such as BIMCO,
London and Singapore, in that order.
would also bring benefits.

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 Consultancy Study on Enhancing Hong Kong’s Position Final Report
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Initiative Purpose Actual Impact Perceived Pros and Cons Lessons for Hong Kong

EU

Positive: Implementation of the

strategy has produced a high
standard of performance by Member
To provide a framework for action State Maritime Safety
A strategic plan along these lines
and funding decisions by the Administrations and a European-
The Strategy has been positively can be considered by the Hong
European Commission and a set of wide vessel traffic monitoring system
received by the shipping industry Kong government. It has been
Strategic goals and priorities for action by Member using a single window for all
and maritime technology companies. produced after economic research
recommendations for the EU’s States, their Universities, research maritime related purposes (ports,
Maritime Safety Administrations by the EC and extensive
maritime transport policy until 2018 institutions and companies, in order customs, port state control, waste
have sometimes struggled under its consultation with maritime
to achieve the strategic goals with reception etc.). The strategy has
requirements. stakeholders. It provides the basis
regard to European maritime also focused on R&D and allowed
for action and resource allocation.
transport. European funding to flow to maritime
research. The strategy has also
confirmed the policy position on tax
systems used as state aid.

An integrated policy has the benefit

This is a further step to the creation of identifying objectives and the
EU Programme to support the To build on previous EU projects in None seen so far. The regulations
of a common maritime policy in the resources needed to achieve them
further development of an Integrated the areas of policy, governance, were only introduced in November
EU encompassing all maritime and also setting up procedures for
Maritime Policy sustainability and surveillance 2011.
activities, not just maritime transport dealing with conflicting demands on
maritime resources.

To provide a framework for marine

Positive. It has provided a context Only in as much as strategic plans
and maritime research projects that
EU Strategy for Marine and Maritime for research and knowledge have value in identifying goals and
can be funded by EU instruments for None so far
Research development by universities and the resources required to achieve
research funding – principally the
other institutions. them
Framework Programme

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 Consultancy Study on Enhancing Hong Kong’s Position Final Report
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Initiative Purpose Actual Impact Perceived Pros and Cons Lessons for Hong Kong

EU

EU 7th Framework Programme for To fund, on a matching basis, Major benefits accrue to universities The maritime industry, particularly The Framework Programme is a
Research primary and applied research in the and the research community. the maritime technology sector, is major contributor to the knowledge
European Union in line with Tangible outcomes are difficult to very supportive of the programme. economy and can serve as an
specified “thematic areas”. The 7th measure. Its operation does vary between example of a means for government
Framework Programme has 10 Member States. In the UK 80% of to support the knowledge and
“thematic areas”, 6 of which have a the funding goes to universities with technology sectors as a means of
maritime context. A specific their bias toward “pure” research. In economic development.
objective of the European Germany much more goes to
Commission is to fund research into companies and into applied
a ‘greener’ and ‘smarter’ pan- research.
European transport system,
supported by a research budget
within the Framework Programme of
€4.16 billion over seven years. (Not
all of this going to maritime
transport)

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 Consultancy Study on Enhancing Hong Kong’s Position Final Report
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Appendix B

Recommended Initiatives in Detail

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 Consultancy Study on Enhancing Hong Kong’s Position Final Report
as an International Maritime Centre

Table B.1 Government Policy “GP” Initiatives

Initiative Priority Elaboration

GP 1 – Continued support for Hong Kong as an IMC at the local 1  Support at policy level is critical.
Government policy level
 Maritime is not a standalone “pillar industry”. Featuring maritime development in the Policy
Address will enhance the status and weight of the maritime industry in the Government’s policy-
To feature maritime development in future Policy Addresses and making process.
accord importance to the maritime industry in the Government’s policy-  Help raise public awareness of the industry and its economic contribution.
making process.
GP 2 – Continued support for Hong Kong as an IMC at the 1  The recommended future positioning for Hong Kong is to take advantage of its ties with the
national level Mainland, and to become the destination of choice for commercial principals from the Mainland
sourcing intermediary services. Express support in the 13th Five Year Plan will provide a basis
for Hong Kong to pursue these objectives.
To lobby for Central Authorities to continue to indicate their support for
Hong Kong as an IMC in the 13th Five Year Plan and / or other policy  There are other growing maritime centres in the Mainland (e.g. Qianhai, Nansha). Support in
documents. the 13th Five Year Plan will help re-affirm Hong Kong’s position as an IMC at the national level.

GP 3 – Cooperate with Shanghai in terms of maritime 3  Shanghai and Hong Kong are currently the two most significant IMCs of China, and as detailed
development by exploring pilot schemes employing the strengths in this study they are quite different from each other. Shanghai is stronger in respect of terminal
of the two IMCs operation, ship building / repair and equipment supplies, while Hong Kong is stronger in ship
management, ship broking / chartering, liner / cargo agency and some intermediary services.
To explore areas for cooperation with Shanghai for the mutual benefit  It should be explored whether there is potential synergy with Shanghai, and complementary
of both IMCs. Potential areas for cooperation may include: policy features among the two IMCs according to their respective strengths. This may help avoid direct
alignment, complementary development, and manpower training. competition between the two, both nationally and internationally.
 Shanghai Maritime University (SMU) is the cradle of China’s shipping talent. It is worth
exploring collaboration with SMU to enhance maritime training for Hong Kong.
 Cooperation between the two IMCs may assist both to compete with foreign IMCs such as
Singapore and London.
GP 4 – Establish a new institutional body set up by the 1  Refer to Section 8 for details.
Government (“the new maritime body”) to conduct policy
research, propose policy measures that drive maritime
development, and champion the trade’s interests in Government’s
policy-making
GP 5 – Actively pursue trade and investment facilitation 2  The recommended future positioning of Hong Kong is to focus on the Mainland market, and
supplements under CEPA on behalf of the maritime cluster CEPA is an existing platform through which Hong Kong's service sectors may acquire a
To pursue new initiatives under CEPA to facilitate Hong Kong's competitive edge.
maritime service sectors to serve the commercial principals in the  Enabling Hong Kong's maritime service sector to serve the commercial principals in the
Mainland, e.g. allowing Hong Kong ship management companies to Mainland will generate demand and propel the development of Hong Kong's maritime cluster.
manage Mainland-registered ships.

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 Consultancy Study on Enhancing Hong Kong’s Position Final Report
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Initiative Priority Elaboration

GP 6 – Enhance the feedback mechanism between the 3  Presently the Government reports regularly to the Hong Kong Maritime Industry Council on the
Government and the industry on the progress and priority of progress of Double Taxation Agreements (DTAs), and consults the industry on the priority
negotiation of double taxation agreements and Free Trade economies for DTA negotiation. However there is room to improve the feedback mechanism,
Agreements, as well as closer cooperation in lobbying work which at present takes place only once or twice a year. The Government should do the same
for reporting the progress of negotiation of Free Trade Agreements (FTAs).

GP 7 – Develop policies to promote Hong Kong’s maritime 3  In addition to the environmental benefit, this initiative aims to make Hong Kong a recognised
industry as environmentally-conscious and sustainable regional leader in minimizing maritime air pollution. Any pioneering environmental measures
will also catch the attention of the international maritime community, which is increasingly
concerned about pollution. It will also help raise international perception of Hong Kong as an
IMC.
 Hong Kong already has experience in pioneering marine emission control measures, such as:
the Fair Winds Charter, incentivizing and mandating fuel switching at berth; and tightening the
local standards on marine diesel (a 0.05% sulphur cap being the tightest in Asia). Hong Kong
will also seek to designate the Pearl River Delta waters an Emission Control Area in the longer-
term; install onshore power supply facilities in Kai Tak Cruise Terminal, and explore the
feasibility of introducing other control measures where appropriate.
 The public in Hong Kong perceive the shipping industry as “dirty” and polluting. Environmental
measures may help over turn this perception and improve the public image of the industry.
 Effective environmental measures would contribute to improving the quality of living in Hong
Kong, making it a more attractive location for international maritime talent and commercial
principals.

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Table B.2 People “PE” Initiatives

Initiative Priority Elaboration

PE 1 – Develop Hong Kong as a centre of excellence for maritime 3  The local education system needs more emphasis on “maritime”. While there are very few
education and enhance the quality of maritime-related courses / maritime-related programmes in Hong Kong, the general disciplines such as business
programmes at local institutions administration, law and finance feature none, or very limited, maritime elements. This is
needed to support the long-term manpower development for the industry.
While designating a university as the “maritime university” could be a  Maritime business executives say graduates of maritime-related programmes from local
long-term initiative, a more pragmatic option is to encourage the institutions should be well-equipped for employment – the quality of the maritime programmes
universities to adopt a multidisciplinary approach (e.g. drawing should be enhanced to be on par with those from abroad.
professors from different disciplines and overseas to teach a maritime
course / programme), and to encourage the offering of more maritime
electives in the general disciplines such as business administration,
law, finance, etc.

PE 2 – Maintain a central registry of the maritime-related 2  The registry will help give an overview of the manpower training opportunities in Hong Kong,
programmes and courses on offer in Hong Kong and facilitate the deliberation of possible measures to support manpower training for the
industry.

PE 3 – Keep in view the need for continued operation for the 3  The $100-million Maritime and Aviation Training Fund will operate for about 5 years. The
Maritime and Aviation Training Fund beyond the current 5-year Government should review the situation and usage from time to time and consider how best to
timeframe support manpower development of these industries in the light of feedback from relevant
stakeholders and institutions, including the need for additional funding to support the continued
operation of the fund.

PE 4 – Set up an electronic platform to enhance the transparency 2  Although the maritime industry offers many quality career opportunities the public is generally
of career opportunities in the maritime industry unaware of them. This adversely affects the public image of the industry and its ability to
attract new recruits. An industry-wide employment portal that pulls together all vacancies in
the industry would help improve the manpower situation in a sustainable manner.
 It may be merged with the portal recommended in initiative MPC 4, or set up by industry
association(s).

PE 5 – Empower the new maritime body to oversee the manpower 1  Refer to Section 8 for details.
situation of the industry, and implement initiatives to support
training for the industry in Hong Kong

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PE 6 – Review and enhance the supply of courses offered by 5  MSTI is the only dedicated maritime education institution in Hong Kong (though not at tertiary
MSTI and their related arrangements education level). The courses it offers are pre-requisites for becoming seafaring personnel on
international and local ships. The industry has expressed concern that the intake of these
courses cannot satisfy demand for seafaring personnel and considers this a major hurdle, and
urges the Government to review the supply of these courses.
 The MSTI is located in Tai Lam Chung which is very far from urban districts. It takes hours for
students to travel to and from the campus. This discourages young people who are interested
in taking the courses of MSTI. Taking into account the utilization of the existing campus as well
as its cost-effectiveness, the Government should explore whether an in-town location could be
provided for the courses of MSTI.

PE 7 – Explore distance learning for maritime industry 4  This initiative supports manpower training for in-service cadets or other seafaring personnel.
practitioners to increase flexibility Seafaring personnel need to acquire a certain amount of time at sea as well as the necessary
qualifications before they can progress to the next level. For instance, a sea-going cadet
would need about 18 months of sea time as well as taking a number of courses before they
could attend the examination for the Sea-going Class III (Deck Officer) Certificate of
Competency.
 A distance learning option would help seafarers speed up their career progression by enabling
them to undertake courses while at sea. By reducing the time required for cadets to become
deck officers, the supply of deck officers for the maritime industry can be improved.

PE 8 – Enhance exposure of local youngsters to the maritime 2  Allowing youngsters to have early exposure to the maritime industry would help make a
industry difference in their later career choices. The current promotion strategy of the Government (e.g.
Possible measures include targeted promotion of the maritime industry Career Expo) focuses on school leavers. The Consultant recommends that the targets should
to students in their early school years (in addition to school leavers), include younger children such as early secondary school students. The Maritime Museum is a
internship and placement programmes for students to get a taste of good vehicle to do this.
working in the industry, and support to the Maritime Museum to launch  In addition to “awareness” of students, the Government should also help students to get a taste
outreach programmes and activities. The Government should also of working in the maritime industry. An internship scheme would be worth considering.
consider launching events similar to the Hong Kong Maritime
Awareness Week on a regular basis.
PE 9 – Employ non-traditional promotion strategies to update the 4  The poor public image of “maritime” and “shipping” is a major hurdle to recruiting. The
concept and image of careers in the “maritime industry” Government has been undertaking traditional promotion initiatives but these strategies are not
Launch non-traditional media campaigns such as soft-marketing on effective in reversing deeply rooted concepts and images.
social media, viral internet marketing etc. to overturn the poor image of  Non-traditional promotion strategies employ soft-marketing in influencing of the fundamental
the career opportunities offered by the maritime industry understanding of what “maritime” means and what kind of people are “maritime people”.

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PE 10 – Explore measures whereby the immigration regime can 4  Despite efforts in training local people for the maritime industry, “maritime” is an international
facilitate the recruitment of overseas talent for Hong Kong's business and Hong Kong’s maritime cluster needs a certain number of international
maritime industry practitioners to remain competitive. Their presence is also an important feature of IMCs and
improves the interface with international maritime commerce.
 The existing immigration regime allows 14 days for crews to join ships in Hong Kong and allows
the employment of foreign professionals under the Supplementary Labour Scheme. The
industry calls for changes to bring about greater convenience and to facilitate making Hong
Kong a ship arrest centre and to gather a more vibrant international workforce.

PE 11 – If and when there is consensus among the industry to 5  Discussion with professionals involved in the recruitment of young talent to the maritime
create an all-encompassing body of maritime professionals, the industry identified that young people are very keen to i) interact with other young professionals
Government to facilitate and assist the industry in the in the industry and ii) achieve a recognised status, e.g. joining an institute and through other
establishment of such body structured goals in their career path.
 Creation of a unified association will enhance the visibility and profile of Hong Kong’s maritime
cluster. Successful examples from other IMCs include Maritime London, Shipping Professional
Network in London, Maritime by Holland, Oslo Maritime Network, Maritime Forum (Norway),
and the Singapore Shipping Association.
 Status amongst their peers /family and recognition of a profession is an important incentive for
young recruits. This initiative aims to address this issue.

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Table B.3 Marketing, Promotion and Communication “MPC” Initiatives

Initiative Priority Elaboration

MPC 1 – Empower the new maritime body to devise effective 1  Refer to Section 8 for details.
strategies and to market and promote initiatives to enhance
Hong Kong’s status as an IMC, to attract commercial principals
and raise awareness of Hong Kong’s strengths in providing
quality maritime services

MPC 2 – Devote resources for marketing and promotion for the 1  Almost all industry stakeholders agree that service providers go where the commercial
purpose of attracting commercial principals from all around the principals are. To tie-in with the recommended positioning as a major centre for maritime
world and in particular those from the Mainland to establish service providers, Hong Kong needs to make sure there is enough demand for such services;
operations in Hong Kong and commercial principals are the key. The current marketing and promotion strategy adopted
by the Government does not have a specific target in the global maritime community, although
the MIC has been conducting promotional visits around the world.
 Hong Kong should maximize the effectiveness of the marketing and promotion strategy by
focusing on commercial principals from the Mainland.
 This has to be carried out together with policy support by the central authorities (see GP 2).

MPC 3 – Attract, support, and assist the organization of 3  This will attract different players from the international maritime community to gather in Hong
international and regional maritime-related conferences / events Kong, and help promote Hong Kong’s status as an IMC.
 The existing Asian Logistics and Maritime Conference is a good event, although it is only
regional in focus.
 The Government should show support for these events to be held in Hong Kong, e.g. sending
senior officials to officiate at these conferences / events.

MPC 4 – Creation of a One-Stop-Window for information and 2  The proposed revamp of the portal will serve as the communication platform between the
communication to be managed by the new maritime body. Government and the industry.
To completely revamp the presentation and content of the current  The portal will be managed and maintained by the new maritime body (see Section 8) so
portal http://www.hkmaritimenet.gov.hk/en/index.htm to include : enquiries can be dealt with quicker than the current communication channels and information
o Annual updates on the contribution of the maritime cluster to can be shared in a more aggressive manner (selling Hong Kong as an IMC) in comparison to
Hong Kong (% of GDP); the Government’s more conservative tone.
o Annual updates on expenditure on maritime affairs  It will be the window for international players to understand Hong Kong as an IMC.
o Annual reports available online and disseminated through  It will, with proper promotion of the portal, be a means for local public to understand the
maritime-related associations maritime industry of Hong Kong and its career opportunities.
o Statistical reports (including historical data stretching back at

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least 10 years)
o Frequent updates on what’s happening in the maritime industry
in Hong Kong, including reports of government activities,
maritime companies entering Hong Kong, and upcoming
maritime events
o A section for young people or those new to the industry who
would like to learn more about Hong Kong as an IMC and each
related service area
o A maritime company and organization directory
o Information on how to set up a maritime company in Hong Kong,
including promotional information on why Hong Kong is the ideal
location
o Sound bites from maritime executives based in Hong Kong
o A section on employment opportunities, career paths, maritime-
related courses and programmes, etc.

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Table B.4 Infrastructure, Innovation & Technology “IIT” Initiatives

Initiative Priority Elaboration

IIT 1 – Empower the new maritime body to drive and coordinate 1  Refer to Section 8 for details.
research and development activities in the industry that are
relevant to Hong Kong

IIT 2 – The Government to support and encourage research and 3  Each of the benchmarked IMCs conducts considerable R&D activities. The EU, Shanghai and
development by the industry / academia in aspects such as Singapore all boast funding schemes for maritime specific R&D activities. These funds attract
maritime policy, services, infrastructure, innovation and firms to conduct prominent R&D projects which benefit the host country’s maritime cluster and
technology that will drive the further development of Hong not just the firm.
Kong as an IMC
 R&D activities will not always produce successful results. The focus of such activities should
be relevant to the context of the IMC so that research findings benefit the maritime cluster. It
also ties in with the transition of Hong Kong to a knowledge economy.
 The institutional and financial support offered by Shanghai and Singapore has encouraged
firms, even those based in Hong Kong, to put their technical expertise into those IMCs.
 There are funds set up by the Government to encourage research and development, e.g. the
Information and Technology Fund. These funds should support the research and development
of maritime policy, infrastructure, innovation and technology that may help drive the further
development of Hong Kong as an IMC.

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