Annex
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MR FAO'S SHIPPING ACTIVITIES
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1. Over the last 20 years Mr Pao has built up the World Wide Shipping group's fleet to over 10 million tons deadweight (about 5 million gross tons): in December 1974 the fleet comprised 75 dry cargo ships, 10 combination carriers and 35 (7 million tons dw) tankers. The group's structure is highly complex, but World Wide (Shipping) Ltd manages the group's fleets and takes fees based on profits. fir Pao visits the UK fairly frequently and seems keen to make high level contacts here. lie has recently had meetings with the Chancellor and with the Minister of State at the foreign and Commonwealth Office.
2. The World Wide fleet has largely been built up through a series of block orders from Japanese yards: the group has in the past obtained preferential berths, prices and terms and has been able to put together charter packages with associated Japanese trading houses. World Wide's policy has been to arrange some firm prospect of employment before finalising orders so that ordering, financing and negotiation of medium to long term charters have been approached as a single operation.
3. It is thought that World Wide have so far been able to deal with the problems of cost-inflation and the down turn in the tanker market more successfully than most of their competitors: they Lave avoided the volatile short-term charter market and have relied fairly extensively on bareboat charters which shield the shipowner from the effects of inflation on operational expenses. Their other ships are time chartered, usually for periods of three to five years, with staggered expiry dates.
A HONG KONG REGISTER OF SHIPPING
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Mr Pao has been a leading advocate of the proposal to establish a separate register of shipping for Hong Kong. present Hong Kong is a port of British registry and the conditions applying to ships registered there are essentially
above 2nd Officer the same as for ships registered in the UK: and 2nd Engineer level, all officers must be British subjects. The Hong Kong Government and shipowners would like their own register (under the Red Ensign) with standards broadly equivalent to those attached to the UK register but with greater flexi- bility because of the different situation in Hong Kong in respect of the availability of British certificated officers and of ships' equipment. Such an arrangement, it was clained,. could be expected to result in Hong Kong shipowners who currently register virtually all their ships under flags of convenience, registering a much greater proportion of their tonnage in dong Hong. It was also claimed that a separate register would bring significant revenue to the Colony.
5. Discussions on the proposal have taken place between the UK and Hong Kong Governments for nearly three years and a Department of Trade study team spent two months in Hong Kong,
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