}
·2·
inevitable that if anticipated transfers are to take place, the Hong Kong Director of Marine will have to accept something quite different from what has until now been acceptable to the DTI. Thus, apart from anything else, unless there is a fundamental change in U.K. practice, Hong Kong owners will be at a considerable advantage over British owners when it comes to acquiring tonnage originally designed for service under another flag. This is no small consideration.
(b) We believe that the factors which attract genuine Hong
Kong owners will also encourage many other owners of flag of convenience tonnage to put their vessels on the Hong Kong Register. (Indeed, to the extent that this is not so, the scheme is bound to fail in its main purpose, since we are convinced that considerations of local patriotism will be of no more than marginal significance when weighed against the more tangible considerations of dollars and cents which in such matters are decisive.) Any existing flag of convenience owner will be able to avail himself of the Hong Kong Register by forming a company with its principal place of business in Hong Kong wherever the reality of ownership lies. These non-Hong Kong elements will be difficult to control; you may recall the reaction some years ago in the United States and in Australia to the persistent trading with Hanoi by certain Hong Kong ships, mostly beneficially owned in Communist China.
··(c) We do not think that it will prove possible to restrict
the Hong Kong Register to genuine Hong Kong owners, that is to companies registered in Hong Kong and having a genuine beneficial ownership of the company as well as the equity interest in the ships in the hands of Hong Kong citizens domiciled in Hong Kong. Yet any wider definition such as that proposed in the consultative document would open the Hong Kong register not only to existing flag of convenience owners, but also to others from virtually any part of the world. By virtue of Section 482 of the Income and Corporation Taxes Act of 1970, U.K. owners will be prevented from transferring their ships to companies with a principal place of business in Hong Kong, but we believe that there is no such restriction on shipowners from other Common Market countries. Indeed, Dutch and German owners, who are in difficulties due to high national operating costs arising mainly from the revaluation of their currencies, are already under considerable economic pressure to transfer vessels away from their national flags and have been doing so to Singapore and the Netherlands Antilles. From these sources, as well as from the flags of convenience owners, one could expect a considerable transfer of tonnage to the Hong Kong Register. All of this would place U.K. owners uniquely at a disadvantage.
(a) You have indicated that it is not your intention to permit
.vessels on the Hong Kong Register to sail without a British Master, and from the point of view of maintaining standards we believe this to be a most wise decision. However, the flood of tonnage to, the Hong Kong Register which may take place is likely to create a demand for several hundred new