1. To strengthen port integration: plan for overall international commercial port status and co-operation, and integration of port functions

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1 MOTC releases Transportation Policy White Book The Ministry of Transportation and Communications (MOTC) released its National Transportation Policy White Book on August 4 th, Within the maritime transportation section, upgrading port competitiveness and implementing an overall port development strategy is the main focus. The contents include eight policies to increase Taiwan s ports international competitiveness, and to strengthen the Taiwan-wide integration of port functions. Based on geographic location, hinterland resources, software/hardware facilities, and transportation costs, Hong Kong is Taiwan s biggest competitor as a transshipment hub in the Asia-Pacific area. Shanghai Port, however, will undoubtedly become the biggest potential competitor upon its completion of the Long River dredging in the near future. The primary eight policies are as follows: 1. To strengthen port integration: plan for overall international commercial port status and co-operation, and integration of port functions 2. To reinforce port management system: implement improved navigation and harbor operations 3. To develop global logistics center: set up a free trade port zone for developing port logistics 4. To develop obstacle-free customs: 2005 trade simplification; paperless procedures; automatic operation systems; simplification of port process; and a mechanism to link to internationalization 5. To attract transshipment cargo: provide highly efficient, low-cost, more flexible, less regulatory measures

2 6. To provide more port functions and better port services: establish sound port infrastructure, promote port development plans 7. To ensure shipping safety, and protect the ocean environment: tighten oversight of sub-standard vessels entering/leaving ports to ensure their shipping safety, as well as the ecology of our local waters. 8. To create investment opportunities: via BOT basis and better incentives to attract private investors to participate in port infrastructure and operations. Yang Ming Bidded for the second phase of the KaoPort Logistics Center Kaohsiung Harbor Bureau (KHB) has been actively planning the use of port land and facilities to develop a logistics park to provide customers with value-added operations and service. KHB and Yang Ming Group s Yes Logistics jointly constructed the first phase of the logistics center, which was opened and began operations on July 1, KHB continues to develop the three hectares of land to the rear of Terminal No3 to become the second phase of the logistics center (bidding for which commenced on Sep.20, 2004). In compliance with regulations governing customs clearance for the goods of logistics centers, participants in the bidding process for amounts up to NT$200 million must possess minimum capital of NT$300 million. The greatest logistic park in southern Taiwan, KaoPort s logistics center, in addition to driving business growth, will offer warehousing, storage, assembly, simple processing, transit and distribution services to customers. Yang Ming Corporation was successful in its bid to construct The second phase of KaoPort Logistics Center jointly with KHB. Upon confirmation of its successful bid, Yang Ming invested a further NT $400 million to build a second logistics warehouse. Given the combination of its present facilities and leasing of Wharf # 70, Yang Ming has enlarged its

3 operations base in KaoPort to raise its operational efficiency and accommodate the immense business opportunities that will accompany the establishment of KaoPort Logistics Park. Continue Growth for Kaoport The growth of containerized cargo for the port of Kaohsiung continued in the third Quarter of 2004 compared to Imports increased by 7.48 compared to last year. Exports increased by 10.53, Transshipment increased by while the total imports/export and transshipment increased by over the same period last year. The actual TEU figures for third quarter of 2004 were 600, TEU for imports, 580,415.5TEU for exports and 1289,222.5 TEU for transshipment and 2,470,321.25TEU for the total. CEPD approves the first phase of construction of Intercontinental Container Terminal In order to accommodate larger vessels, and to position Taiwan as an operational headquarters on the global supply chain, plans for the construction of Kaohsiung s Intercontinental Container Terminal were approved by the Council for Economic Planning and Development (CEPD) on Aug.5, Once success of the first phase is assured, the second phase of construction will commence. Transshipment at KaoPort accounted for 52% of container throughout, qualifying it as a hub for transshipment, while the growth in total container volume continues to increase. The Ministry of Transportation and Communications (MOTC) emphasized the importance of developing KaoPort into a hub for maritime transshipment, and thus proposed building the KaoPort Intercontinental Container Terminal as part of the Ten New Construction Projects planned by the Executive Yuan.

4 New Port Information System officially commences The new Port Information System accessible via the Internet - was initiated two years ago by Kaohsiung Harbor Bureau (KHB) and has successfully replaced the previous system with the cooperation of the shipping industry. After applying for an account number and password, customers can complete electronic application forms payment and inquiries about port business, online. Most importantly, customers can trace real-time information via the web. The new system is composed of four sub-systems: Harbor, warehousing, Shipping Equipment, and loading/unloading. In combination with the Vessels Traffic Service System (VTS), Shipping dealer and port clearance management the automatic system for vehicle entry & exit control in the Fifth Container Terminal KHB is providing customers with the most efficient service possible through state-of-the-art information technology. The 50 th Annual Marine Festival Celebration The Kaohsiung-Area celebration for the 50th Annual Marine Festival was held on July 8, 2004, and participants included more than 200 people from the shipping industry. Director-General Huang of Kaohsiung Harbor Bureau (KHB) commended shipping operators for their outstanding performance and presented special awards to those personnel working in Chi Hou lighthouse, and VTMS.

5 Director-General Huang of KHB pointed out that the combined efforts of the shipping industry and all the personnel of KHB have contributed to the steady growth of business at KaoPort. Moreover, the resettlement Plan for Hung Mau Kong will be finished by next year. The four berths at Terminal No.Six are expected to be completed within two and half years. To date, Evergreen, Yang Ming, and Maersk Sealand have all signed Letters of Intent based on BOT. Eleven firms have signed Letters of Intent governing operations in the Free Port Zone, which will commence next year. KHB has continued to expand the scope of its business. For instance, it has opened warehouses with a low utility rate to meet the demands of local government and the general public, such as Kaohsiung fisherman s wharf, which will provide the public with more recreational space. Brand-new environmental protection patrol boat In order to enforce the ban on environmental pollution and maintain environment quality in the port areas, Kaohsiung Harbor Bureau (KHB) purchased a brand-new environmental protection patrol boat, which was delivered on Aug.13, The new patrol boat, built by Lung-Ten Shipbuilding Co. Ltd, is 17.3 meters in length, 5.3 meters in breadth, 2.5 meters in depth, and 1.05 meters in draft. It has a total weight

6 of tons, two main engines with 552 BHP engine rating, and one generator. Its cruising speed is knots and is able to reach knots at maximum speed. Furthermore, being equipped with radar, GPS, magnetic compass, wireless telephone, SART, EPIRB and depth gauges enables the new boat to enforce environmental regulations in offshore anchorage areas. The oil skimmer and oil dispersant spray on the boat are available to control small-scale oil contaminations. KaoPort fire-fighting turrets commence operations At Wharf No s 57 & 58 for Hazardous products, Chi Mei Storage Co,Ltd, Lee Chang Yung Chemical Industrial Cooperation. and Trans Pacific Chemical Co. Ltd. undergo a great deal of loading/unloading and storage of petrochemicals through underground pipes buried beneath the wharves. In order to ensure the safety of petrochemical operations in the port, Kaohsiung Harbor Bureau (KHB) has recently constructed six fixed fire turrets and one generator room. In addition to these new fire-fighting facilities, frequent practices and drills are essential to secure safety in the port areas.

7 Iran Yasooj s maiden voyage to Kaoport The Iran Yasooj, represented by Chifong Shipping Corporation, made its first call at Kaohsiung Port on July 28, 2004, from Pusan Port in Korea. Director-General Huang of Kaohsiung Harbor Bureau (KHB) presented a commemorative plaque as a warm welcome while it was docked at Wharf # 75. The Iran Yasooj, belonging to the fleet of the Islamic Republic National Shipping Company, is 25,391 tons in total weight, meters in length, meters in width, 11.4 meters in draft and is capable of carrying 2500 TEU.

8 VForeigner Delegation visites KaoPort Delegates from Foreign Embassies and Consulates in Taiwan, led by Dr. Chen Tan San (Minister of Foreign Affairs) called in at Kaoport on Aug. 19, Mr. Hung Kao Ying (Harbor Master) on behalf of Kaohsiung Harbor Bureau (KHB) warmly welcomed their arrival at Berth No.3 and took them on a tour of port facilities. Invited delegates included representatives from Costa Rica, El Salvador, Nicaragua, Guatemala, Chad, Gambia, Senegal, Paraguay, Malawi, Palau, Burkina Faso, Haiti, Swaziland, Sao Tome and Principe. Vice-Premier of Saint Vincent and the Grenadines visits KaoPort The Hon. Louis Hilton Straker Deputy Prime Minister and Minister of Foreign Affairs, Commerce and Trade and Madame Lynda Straker, accompanied by Counselor Ramon Chen of Foreign Affairs, called at Kaohsiung Harbor Bureau (KHB). Director-General Huang of KHB received them personally and

9 gave a briefing on the current situation prior to a tour of KaoPort. Secretary General of IAPH visits Kaohsiung Port The secretary general, Dr. Stoshi Inoue of the International Association of Ports and Harbors (IAPH) paid a visit to Kaohsiung Harbor Bureau (KHB) on Aug.26, Dr. Stoshi Inoue attended the 91 st Annual Conference of the Association of Pacific Ports (APP) held in Taichung on Aug.24, After viewing Kaoport s facilities and VTMS, Dr. Stoshi Inoue arranged to visit the Yang Ming Maritime Corporation. He also visited and exchanged views with three other Associate members (Keelung Port, Taichung Port, and Hualien Ports)