THURSDAY, NOVEMBER 16, 1972
The text of a speech by Mr Y. K. Pao, Managing Director of World-Wide Shipping Ltd, given at a luncheon held in the Foreign Correspondents Club yesterday.
Autonomous HK
registry for shipping urged
Hongkong has become today
a marítime power.
This description may sound a bit inflated when said by a shipowner, but it is based on hard facts.
In another three years, tonnage owned or controlled by Hongkong shipping interests is estimated to be over 20 million tons deadweight, which is about half of all British-owned tonnage. about five per cent of the world's total, and exceeding the tonnage of some of the so-called traditional maritime countries.
The catch, however, is that even though this spectacular tonnage "belongs"
to
Hongkong, most of it is not identifiable as such, but gives added weight to other countries' tonnage statistics, because the large majority of vessels are not flying the British flag of Hongkong registry.
The reasons therefore are relatively simple to state, often discussed. and more often misunderstood.
.
Hongkong, because of the international legal position it occupies, has been dependent on British legislation in many areas, including prominently shipping.
Although there is a local statute. the Merchant Shipping Ordinance, 1953, which lays down standards of manning for British vessels leaving Hongkong, the Director of Marine derives his powers as Registrar of Ships from the provisions of the U.K. Merchant Shipping Acts and is subject to the jurisdiction of the Registrar General of the United Kingdom.
Provisions
Under statutory provisions, a ship flying the Hongkong British flag must have British certificated officers, and in addition, the senior officers (master, chief officer, chief engineer, second engineer and also the radio officer) must be British or Commonwealth; country nationals and this is? where the first difficulty lies.
Promising young officers of non-British origin who are fully qualified, cannot attain a senior officer position without a Bri- tish passport and some of you may know how long it can take to acquire one.
On the other hand, there simply are not a sufficient number of British nationals around to meet the existing demand for their services.
I must add that the Hongkong Director of Marine has exemption powers, but they are designed for a case by case emergency basis for ships leaving Hongkong and thus provide no suitable remedy.
Liberia and Panama, which are generally referred to as "flag-of-convenience countries" - although to many international shipowners a more appropriate designation may well be "flag of necessity" - have no such restrictions as to nationality.
On
The second problems is that British-registered vessels
some essential equipment has to be British-certified, and the accommodations and certain other parts of a vessel have to be built to British standards as laid down by the Department of Trade and Industry.
These standards are designed primarily with the comfort and convenience of European crews in mind, and do not necessarily always provide an optimum arrangement for Asian crews.
Inspection and certification of equipment, especially of safety equipment, is of course essential for every ship, but certification should not necessarily emphasise British- manufactured equipment, but should include equipment produced elsewhere which has proven to be of equal, if not of superior quality and reliability.
It is understood that conscious efforts are being made to lengthen the list of accepted items for British- registered vessels which are produced in other countries but the process is slow because of manpower shortage too slow to comfort a shipowner who has to operate in a highly competitive environment.
On the other hand, the move to a flag-of-necessity country clearly does not automatically mean a towering of standards of quality, reliability, and safety for vessels and their crews.
I certainly make sure personally that our ships, under whatever flag they are registered, bave the best equipment installed that is available on the market and are manned by people who know their jobs, to ensure efficiency, case, and maximum obtainable reliability in operation.
After all, we want to satisfy our charterers who are only and primarily interested
in
getting their cargoes moved
from one port to another on tine.
A fourth argument one hears about the choice of flags of necessity or convenience, is the one people everywhere think they understand best (but in fact don't), namely tax avoidance.
On this point let me just say that the flag alone is not the only factor for tax liability, or for its absence, and to get the true picture for an owner's tax position, is necessary analyse in some depth the way his organisation is structured and managed, how and where his charters are arranged, and so forth.
to
To believe that registration in Liberia and Panama necessarily means the complete freedom from all taxes is rather wishful thinking.
Also, expenses for initial registration and annual tonnage dues are normally higher in those countries than in some countries of conventional flags, and any governmental subsidies for shipping which might be available in the latter are of course totally absent the former.
Attacks are also made against flag-of-conconvenience countries for their reported benigh neglect of what happens to the ships after they have been registered.
Here again one should not make superficial assumptions or indulge in generalisation but look at the facts.
While it is true that for very practical reasons these coun tries cannot offer diplomatic or military protection on the same scale as bigger nations, many them do participate in international bodies deli- berating on new forms for standards of training, navigational safety, control of pollution hazards, and so forth. and make an effort to implement them.
But what has all this to do with Hongkong? Simply that it would appear to make a lot of sense for Hongkong to drop its present dependent state and become the second biggest Far Eastern shipping centre (after Japan) by taking appropriate measures to establish its own autonomous registry.
I am fairly confident that this would be possible to achieve, if the interest to do so is present. even though I have no illusions about the inherent difficulties of solving the jurisdictional and practical problems before the path is cleared, I understand that both the U.K. and Hongkong governments are now seriously interested in examining these difficulties.
The benefits for Hongkong of being able to take full advantage of a situation which geographical and historical factors have practically thrust upon it would indeed seem to outweigh easily the extra efforts involved in making a "shipping centre" out of it.
After all, with a population of over four million, Hongkong is bigger than, say, Norway which has nevertheless achieved considerable pro- minence in the shipping world.
I have mentioned in some detail the more important factors that have led shipowners to choose a flag of convenience or necessity.
the
However, the gaps between requirements of conventional flags and those of the more prominent flags of convenience are being continuously narrowed by the force of commercial necessities and further approximations can likely be expected.
As regards an autonomous Hongkong registry, it would of course have to continue to observe the rules of international conventions, and my point is that by being autonomous (and not just an adjunct of another jurisdiction). participation in the formulation and implementation of such conventions could probably be more direct, active and effective.
The twenty-odd million tons of ships would not be as silent as now by being without a common identity, but could, and presumably would, speak with a fairly loud voice in the international forum.
to
An autonomous registry would probably also encourage a greater uniformity of interests of both Hongkong owners and Hongkong crews, and the development of better organisational structures combine efforts and pursue goals of mutual benefit.
Stimulation and growth of local shipping-related and service industries would no doubt be a further predicatble result, providing additional job opportunities for many local residents.
I know that the road to achievement of this state of affairs will be an arduous one
and will require hard work on all fronts.
In view particularly of the legal implications of a move to a separate Hongkong registry, one would assume that both governments must take the first steps to provide a statutory basis.
Government must also take the initiative in allocating the manpower required 10 implement the rules, and staff requirements will certainly be substantially greater than what is presently available to serve basically only Hongkong's port needs.
The funds to cover the cost of this additional force of technical and administrative staffs will necessarily have to come partly from the revenue of a fee structure that will need revision from the present low levels.
Government will probably also have to provide for in close liaison with the industry a wider range of educationsi facilities than what we have in Hongkong now.
While we are proud of our colleges and universities, Hongkong does have a significantly large number of graduates in the arts and social sciences than graduates of local institutions which teach essen- tially applied technical skills, the Technical College and the emerging Polytechnic must be mentioned.
But they alone are probably inadequate in the long run to satisfy the industry's hunger for well trained navigators, engineers and skilled sailors.
Hongkong also seems to lack sufficient facilities for concentrated commercial studies at the under-graduate and graduate levels, and studies abroad are not always the
answer.
I believe the creation of a "Hongkong fleet" would be a great incentive also in this respect, and perhaps make a career at sea again a desirable goal for more young people, not only because of pecuniary gains but because the sophistication of advanced technical systems aboard modern ships.
And the intricate problems of modern management are not only fully understood, but car be fully mastered and provide challenge and job satisfaction.
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One other issue is important when considering the creation if autonomous Hongkong registry and that is the question of qualification. Who should be allowed to have ships register- ed in Hongkong?
Conditions
Should access be free to whoever саа meet the conditions impose on vessel specifications and officer qualifications within a modified framework mentioned earlier or not?
Considering not only the difficulties of an attempt to erect effective legal barriers to exclude certain categories of owners eager to bring their vessels under A future Hongkong registry which is realistic {M design and pragmatic in the formulation and application of its rules and conditions, but keeping in mind the objectives of Hongkong as a whole, it would appear that the best course to follow is the avoidance of restrictions (on the basis of origin, affillation, residence of an owner) governing the accessibility to an autonomous Hongkong registry.
While the point could be made that $ more flexible Hongkong registry should be reserved Lo bona fide Hongkong owners, and not be used to others to escape more stringent requirements at home, I do believe that on balance, an "open-door policy" is healthier and more realistic, assuming, as I said before, no opportunities are provided to give undesirable elements a shelter otherwise unavailable.
An open-door policy would also be more in the traditions of Hongkong as a free port and as 4 neutral place providing opportunities for contact and productive competition.
If a new system can be built that is sound and attractive. then there seems to be no reason why it should be prevented from serving everybody in a position to use it.
I hope these brief remarks have been able to give you a clearer picture of what issues are hidden behind the slogans used today.
a
I indicated that the people in position to bring about possible changes are already working on them and I am confident results will become obvious in due course, but good things take their time and we must have patience.
I hope I have not strained yours too much today,
No comments yet.
Private notes are available after approval.