13
Hong Kong Department,
HKK 21/6
14 October, 1970.
I would be very grateful for your advice on a point which came up recently in a discussion between Mr. Royle and Mr. Y. K. Pao of World-Wide Shipping Limited.
Mr. Pao said that many of his ships were registered under foreign flags because the UK Merchant Shipping Act, as applied to Hong Kong, did not permit the appointment of anybody other than a person of British nationality as an officer of a ship registered in Hong Kong. He went on to say that, in fact, all his Masters were British but that he could not find persons of British nationality for other appointments (e.g. the Chief Engineer, Second Engineer); and he indicated that if this clause in the Merchant Shipping Act could be amended to permit the employment of foreigners in certain named appointments, he would be able to register his ships in Hong Kong. Mr. Royle thought that it would be a good thing if Mr. Pao's fleet could be registered in Hong Kong and he asked me to look into the matter. He may indeed have mentioned this to you during his recent visit.
I had a preliminary word with the people in the Shipping Policy Division of the Board of Trade some days ago about this and, without going into detail they were of the view that flags of convenience were adopted because of the wider taxation advantages to be gained. They also confirmed that what Er. Pao had said about the nationality of Masters and officers on ships registered in Hong Kong was correct they had to be British. Recently, however, my attention has been drawn to your Kerchant Shipping (Aliens Employment) Ordinance the proviso to Section 2(1) of which seems to permit the employment of an alien provided he holds a valid certificate of exemption granted by the Governor. If you can confirm that an alien can in fact act as the Master, Chief Engineer, or Chief Officer of a British ship registered in the Colony, we can tell Mr. Fao and see what he then says. I doubt whether any prohibition against the employment of foreign nationals as senior officers of British ships is the main reason for ship owners prefering to register under flags of convenience, but I would be glad of your views on this point also.
BU t'minth.
ARGI DREKIN
(E. 0. Laird)
Bir H. Norman-walker, KCMG, OBE,
Colonial Secretary,
HONG KONG.
now Leve
(19)