Distinguished guests, ladies and gentlemen,

Good evening. First of all, I would like to extend a warm welcome to all of you to this dinner hosted by the Hong Kong Maritime Industry Council. As Chairman of the Maritime Industry Council and the Port Development Council, I would like to thank the members of both Councils, as well as our shipowners, our maritime services providers and all those of you who attended today's seminar for their contribution and support for the Hong Kong shipping industry. Of course, I must thank BIMCO for jointly organizing this successful seminar.

For centuries, Hong Kong's deep-water harbour has offered both shelter and trading opportunities to mariners. We have made good use of this natural advantage. Today, Hong Kong is one of the world's busiest container ports, as well as a leading shipping and logistics centre. Our strategic location at the doorstep of southern China and in the heart of Asia makes us an ideal entrepot for the Mainland market, and offers unparalleled maritime services and access to Southeast and East Asia, the Asia-Pacific, North America and Europe. We have also played a crucial role in the development of what is now one of the world's most important manufacturing centres and supply chains, the Pearl River Delta (PRD).

Economic relations between Hong Kong and the PRD have grown rapidly since the opening up of China's economy. In 2005, flows of goods, services, people and capital between Hong Kong and Guangdong amounted to US$90 billion ¡V which is over three times the equivalent value of a decade ago - accounting for 21% of Guangdong's total external trade.

Hong Kong's prime location has been instrumental in inter-model connectivity throughout the PRD, and we have successfully positioned ourselves as the world's busiest international air cargo centre, a leading container port and logistics hub for the region, as well as an international maritime, financial and business centre.

Under the principle of 'One Country, Two Systems', we in Hong Kong maintain our own legal and judicial systems. Hong Kong remains a separate customs territory and we keep our own shipping register and negotiate our own air services agreements. Our strong emphasis on the rule of law, clean government, free flow of information and a simple, low-tax system has won Hong Kong the title of the freest and most business-friendly economy in the world, a title awarded by the Heritage Foundation to Hong Kong for 13 consecutive years.

Hong Kong's strengths make us a natural haven for shipping and maritime services. The rapid growth of the Mainland has resulted in an ever-increasing demand for maritime and shipping services in Hong Kong. We are eagerly riding this wave of maritime expansion. In 2006, the deadweight of ships built on the Mainland reached a record high of over 14.5 million tonnes. Ship building output is expected to continue to grow in the coming year. This provides ready clients for ship chartering, ship financing, insurance and other services. The seminar on ship charters has therefore come at a most opportune time, as well as in the most appropriate location.

Despite the many opportunities open to Hong Kong, we cannot afford to be complacent. Rapid expansion of the mainland shipping sector has also brought competitive challenges to Hong Kong. We have therefore been implementing a series of measures to enhance our competitiveness, measures such as lowering our port charges and light dues for ocean going vessels, as well as a six-month annual tonnage charge reduction for continuous ship registration under our Shipping Register. To showcase the port and maritime services available in Hong Kong, we organise regular shipping missions to the major port cities in Mainland, e.g. we visited Shanghai, Tsingdao and Tianjin last year.

As regards human resources, we have done a lot to ensure the supply of maritime professionals to sustain and further develop our maritime industry. In 2004, we introduced a Sea-going Training Incentive Scheme to attract young people to pursue a career in the shipping and maritime sector, and in 2006 we put in place the Ship Repair Training Incentive Scheme to address the manpower shortage in the ship repair industry. We will also launch a Maritime Scholarship in the next few months to attract local and Mainland residents to take up a post-graduate programme in Hong Kong, with a view to encouraging talented graduates to enter our shipping and maritime industry.

Ladies and gentlemen, Hong Kong has worked extremely hard to become the pre-eminent maritime and logistics centre in Asia. Our success is due in no small measure to the contributions of our shipowners and members of the maritime industry. In the national 11th Five-Year Plan, the Central Government has made clear its full support for the further development of Hong Kong's logistics industry and our continued role as an international maritime centre. We will seek closer co-operation with the local and international shipping industry to realise our advantages as a leading international maritime centre and logistics hub.

In closing, I would like to take this opportunity to invite those of you from overseas to find time to do a bit of sightseeing and shopping in Hong Kong. I am sure you will find good value for your money. I wish you all a rewarding and enjoyable stay in Hong Kong and the best of everything in the Year of the Pig.

Thank you.

Economic Development Branch
Economic Development and Labour Bureau
February 2007