TNAG-1514-FCO40-2072-Shipping-in-Hong-Kong-1986 — Page 80

CONFIDENTIAL

GRS 650

CONFIDENTIAL

FM HONG KONG

TO DESKBY 13100OZ FCO

TELNO 117

OF 13064OZ JANUARY 86

INFO DESKBY 13100OZ DTP

FCO FOR EHRMAN

DTP FOR O'SHEA

YOUR TELNO 75 OF 10 JANUARY

+Kic 175/1

RECEIVED IN REGISTRY

13 JAN1986

TOP COPY

DESK OFFICER

INDEX

FAVVISTRY

PA

Action Taken

HONG KONG REGISTER OF SHIPPING: PROPOSAL PAPER

MANY THANKS YOU HELPFUL COMMENTS. WE ARE SEEKING EXCO'S

ENDORSEMENT FOR THE PROPOSAL PAPER (AS NOW AMENDED · PARA 3 OF

MYTEL SHIP 2 -) TO BE AGREED QUOTE AS THE BASIS OF A FORMAL

SUBMISSION TO HMG UNQUOTE. INT THESE TERMS WE WILL ISSUE IT TO

MEMBERS AT THE LATEST ON FRIDAY 17 JANUARY FOR DISCUSSION ON 28 JANUARY. IRRESPECTIVE OF OUR VIEWS NOW, AND ANY INPUT WE MAY RECEIVE FROM EXCO, IT IS ONLY REALISTIC TO ACCEPT THAT AMENDMENTS MIGHT BE NECESSARY IN THE LIGHT OF CHINESE COMMENTS.

2. AS TO DTP'S POINTS OF DIFFICULTY, WE HAVE THE FOLLOWING COMMENTS. FIRST, THE PRINCIPAL PLACE OF BUSINESS CONCEPT IS

ATTRACTIVE ONLY TO THE EXTENT THAT IT REPRESENTS NO CHANGE AND

IS THUS PROPERLY DEFENSIBLE ON THAT BASIS. THE DISADVANTAGE

IS THAT WHATEVER ELSE MAY BE SAID IT WILL LIMIT THE COMMERCIAL

BASE OF THE CORPORATE OWNER TO HONG KONG AS AGAINST THE EXISTING

WIDER BASE OF ANYWHERE WITHIN BRITAIN OR ITS DEPENDENCIES. THIS

VERY LIMITED BASE WILL FACILITATE COMPARATIVELY SIMPLE SUPERVISION

OF THE CONCEPT. INDEED SUPERVISION WOULD BECOME ALL THE MORE IMPORTANT BECAUSE WE PROPOSE NO MANNING LINK. THE EASE WITH WHICH IT CAN NOW BE CIRCUMVENTED WOULD THUS BE LOST AND THE COPPORATE OWNER WISHING TO REGISTER HIS SHIPS IN HONG KONG WOULD HAVE TO MOVE HIS PRINCIPAL PLACE OF BUSINESS TO HONG KONG. THIS HE MAY WELL BE

UNABLE OR RELUCTANT TO DO FOR REASONS OTHER THAN TAX.

3. THE EFFECT OF THE PRINCIPAL PLACE OF BUSINESS CONCEPT WOULD THUS BE TO DEBAR FUTURE REGISTRATION TO WELL-FOUNDED, WELL MANAGED AND PERFECTLY RESPECTABLE SHIPS OWNED BY SUCH CORPORATE OWNERS WHO MAY HAVE HAD CLOSE LINKS WITH HONG KONG FOR GENERATIONS. THE SEVERING OF SUCH TIES CANNOT BE IN HONG KONG'S INTERESTS IN TERMS OF BUSINESS CONFIDENCE AND INVESTMENT AND ALL THAT THAT MEAMS. EVEN THOUGH WE PROPOSE TO RETAIN GRANDFATHER RIGHTS THE SPEED WITH WHICH INDIVIDUAL SHIPS CHANGE OWNERSHIP COULD EFFECTIVELY KILL OFF ANY TEMPORARY STABILISATION IN THE SIZE OF THE REGISTER. IN PRACTICAL TERMS FUTURE ACCESS TO THE REGISTER COULD WELL BE DENIED TO BRITISH COMPANIES SUCH AS SWIRES AND ALSO TO ALL OWNERS BASED IN CHINA.

4. SPECIFIC ANSWERS TO THE POINTS RAISED BY. QTP ARE AS FOLLOWS:-

CONFIDENTIAL

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