In her first Policy Address Chief Executive Carrie Lam Cheng
Yuet-ngor did not deal with development of the maritime industry at
great length. However, she set out the blueprint for the industry's
future development by singling out high value-added maritime services.
Those include marine insurance, legal and arbitration services, as well
as shipping finance, management and registration.
In particular, marine insurance - protection of international
shipping operations - provides essential support to risk allocation in
the maritime industry. Its market size and service level is always an
important factor in evaluating the competitiveness of a maritime hub.
For instance, London, one of the world's top maritime centers, manages
more than 30 percent of all types of marine insurance in the world.
Thus, I believe the special administrative region government's vision
to facilitate marine insurance industry development is a right step to
As a leading international maritime hub Hong Kong certainly has a
strong foundation in the sector. Since Hong Kong's return to China on
July 1, 1997, gross registered tonnage (GRT) in the Hong Kong Ship
Register has continually increased. There were more than 2,500
registered vessels with 112 million GRT as of September.
In terms of deadweight tonnage, almost 10 percent of vessels in the
world are owned or managed by Hong Kong shipowners or operators. In
terms of third-party liability insurance, among the 13 protection and
indemnity (P&I) insurance clubs under the International Group of
P&I Clubs, 12 have set up subsidiaries or offices in Hong Kong.
Moreover, China Shipowners Mutual Assurance Association which represents
many shipping enterprises on the Chinese mainland has also set up its
subsidiary in the city. The total insurance amount contracted in respect
of vessels and marine cargos exceeded HK$2.7 billion last year.
However, it is necessary to realize that amount accounts for only 1
percent of marine insurance contracted globally. Accordingly, either
relative to the size of the fleet owned by Hong Kong or its position as
an international maritime center, the marine insurance market is
disproportionally small. This unfavorable reality calls for urgent
It is widely believed the ambitious Belt and Road Initiative
spearheaded by the nation could become a new engine for Hong Kong's
economic development. As the global initiative is taken forward, trade
in goods and infrastructure construction in over 60 countries or regions
can be more extensively developed. Demand for transport of massive
goods and construction cargoes will definitely bring vast business
opportunities to marine insurance companies. From the perspective of
Hong Kong, if the government can ink more bi-party or multi-party free
trade agreements with the aforementioned countries and regions, it would
certainly facilitate stronger cooperation between Hong Kong and those
Currently, offshore reinsurance and self-insurance companies are
required to pay just half the 16.5 percent standard profits tax rate for
the first HK$2 million of profits, thanks to newly announced measures
to provide tax relief to small and medium-sized enterprises. However, it
is not sufficiently attractive to operators in the marine insurance
industry relative to tax incentives offered by competitors in the
region. For example, in Singapore, a 10 percent special profits tax rate
is applied to hull, machinery insurance and P&I insurance.
Thus it is necessary for the Hong Kong government to conduct relevant
studies and introduce further tax incentives to attract more marine
insurers, reinsurers, P&I clubs and insurance agents to set up or
expand operations in Hong Kong.
Moreover, an industry's sustainable development is founded on a
stable supply of talent. It is particularly true for a highly
specialized industry such as marine insurance. However, currently local
universities offer no training courses on marine insurance.
Hence, the government needs to work with maritime industry players
such as the Hong Kong Shipowners Association and Hong Kong Federation of
Insurers to seek cooperation opportunities with local educational
institutions and mainland maritime schools to provide related courses.
The government should also implement a long-term plan to promote the
maritime industry among local young people and attract maritime
insurance talents from all over the country and overseas to work in Hong