Hong Kong is set to fight against its rival Singapore in the hope of reclaiming its place among the world’s top four container ports. The city’s leader is expected to announce new measures in her policy address. Hong Kong is the world’s fifth-largest port in terms of total containers shipped, down from fourth in 2014. Therefore, it lags Singapore and three mainland Chinese ports: Shanghai, Shenzhen and Ningbo-Zhoushan.
Officials are considering tax sweeteners to lure back big firms, among other incentives, a source said.
Although the city has more registered ships than Singapore, more fleets in the Lion City are locally owned. According to a report by the Financial Services Development Council, Singaporean companies owned 48 per cent of the tonnage registered in their city. In contrast, in Hong Kong, locals owned just 24 per cent.
“It is a bit late to take action now. A lot of business opportunities have gone to Singapore,” the source said. “Yet, the city should still find ways to enhance its competitiveness.”
Another hint of plans in the pipeline came when Chief Executive Carrie Lam Cheng Yuet-ngor told an international maritime forum that industry insiders should “watch out for” measures in her October 10 address to boost the city’s shipping services.
A list of recommendations
The source said the government was considering a list of recommendations. These are from the Financial Services Development Council, made in the May report.
The report said the “more critical element for Hong Kong” was attracting major companies to set up shop in the city, rather than just boosting tonnage.
The council recommended the government cut profits tax for firms in ship leasing management and support services by half. This means a concessionary tax rate of no higher than 8.25 per cent for those companies.
It also urged the government to negotiate more double-tax agreements with major shipping jurisdictions like Australia and Brazil.
Without the agreements, cargo carried on Hong Kong-registered vessels may be subject to freight taxes abroad. And Hong Kong companies doing business in other jurisdictions could be subject to a withholding tax on profits or interest remitted from the other jurisdictions.
It recommended setting up a financial institution to offer insurance for long-term shipping loans. Also, it recommended upgrading the Maritime and Port Board, or making a centralised office to oversee and coordinate shipping policies.
Hong Kong has in recent years suffered from the loss of some giant shipping companies. They used to have headquarters in the city.
In 2009, China Navigation, whose parent company is the Swire group, moved its headquarters from Hong Kong to Singapore.
And last year one of Japan’s biggest shipping companies, Mitsui OSK Lines, moved to Singapore. This was after it was renamed Ocean Network Express in a merger.
Never too late
Sabrina Chao, executive chairwoman of Wah Kwong Maritime Transport and a former chairwoman of the Hong Kong Shipowners Association, said: “The government should understand we need a level playing field in order to attract and retain shipping companies.
“With the inaction over the past few decades, a lot of shipping companies and supporting companies offering maritime insurance and shipping management services have already moved to Singapore.”
She added: “It’s never too late [to roll out measures], as Hong Kong has strong financing and legal services, which are a perfect match with shipping businesses. Hong Kong started its history as a port. It has a solid foundation.”
Credit: South China Morning Post