Tax cuts on cross-strait shipping should not hurt HK, experts say
Experts said recent tax cuts by the central government on cross-strait shipping would not significantly hurt Hong Kong shipping, despite a significant jump in Taiwan-mainland shipping since the cuts took effect.
With effect from December 15 last year, the Ministry of Finance in Beijing waived business taxes and corporate income taxes on Taiwan shipping firms' revenues obtained from the mainland.
Container throughput in Kaohsiung, Taiwan's biggest port, rose 7 per cent in December to 653,000 20-foot equivalent units (teu) from the previous month, after an 18.6 per cent drop in November from October, according to official statistics from Taiwan.
The container throughput of Taiwan's ports, including Kaohsiung, was notably higher in the last two weeks of December than the first two weeks.
'The big rise in shipping volume at Kaohsiung in the last two weeks of December may have been partly driven by the tax cuts,' said Charles de Trenck, an analyst with Transport Trackers, a Hong Kong-based transport consultancy.
Direct cross-strait shipping reduced costs by 15 to 30 per cent and cut transit times, the Kaohsiung Harbour Bureau said on its website.
Nonetheless, the tax cuts would have relatively little impact on Hong Kong shipping, Mr de Trenck said.
The Hong Kong-mainland-Taiwan trade was an important part of Hong Kong shipping about 10 years ago, but it has shrunk over the years, he said.
Over the past five to seven years, Hong Kong had lost about 5 per cent of its container trade to the Taiwan-China shipping trade, he estimated.
After a freeze that started in 1949, cross-strait shipping revived in January 2001, when the Taiwan government authorised limited direct shipping links with the mainland. Since then, restrictions have been loosened and shipping volumes have grown.
'The global trade slowdown has a bigger impact than direct cross-strait links now. With the poor figures in the fourth quarter US gross domestic product announced last week, trade growth to the US could be even weaker than expected,' Mr de Trenck said.
Willy Lin Sun-mo, chairman of the Hong Kong Shippers' Council, said: 'There will be little impact from the tax cuts on Hong Kong shipping, as there is already lots of trade between Taiwan and China.'
On shipping routes between Taiwan and the mainland, many ships normally call at several ports along the way, including Hong Kong, so the city should not suffer, he said.
Container throughput in Kaohsiung grew from November to December by: 7%