KLANG: Malaysia’s shipping ecosystem could require more than RM15 billion in investment to strengthen capacity and address fleet and strategic-tonnage gaps, according to the Malaysia Shipowners’ Association (Masa).
Masa chairman Mohamed Safwan Othman said the association’s maritime financing gap analysis identified an RM8 billion to RM10 billion financing requirement for offshore support vessels and domestic shipping over the next five to seven years, while the broader requirement for the country’s shipping ecosystem could exceed RM15 billion.
“If you look at the whole total ecosystem, we probably need in excess of RM15 billion. Between RM8 billion to RM10 billion, as mentioned by the report, should be sufficient for us to at least close the gap,” Mohamed Safwan told SunBiz in an interview.
The RM8 billion to RM10 billion identified in the financing study would be sufficient to replace and modernise parts of the existing fleet and address gaps in Malaysian-flagged tonnage, he said.
The financing gap analysis was presented to the government last December, and it was still too early to determine how much of the requirement had been funded, he added.
However, there have been movements involving the Ministry of Transport, Bank Negara Malaysia, the Ministry of Finance and the Ministry of Economy, with some banks already approaching Masa members to offer financing.
“The gap’s still there. We hope that we can close the gap in the next three years,” Mohamed Safwan said.
He added that the scale of the requirement reflected the capital-intensive nature of shipping, where vessel investments require substantial upfront expenditure and long investment horizons.
Mohamed Safwan said the financing requirement had to be viewed against Malaysia’s wider balance-of-payments position, which he noted currently had a deficit of almost RM40 billion, with a significant portion contributed by the services sector, including shipping.
Increasing Malaysian participation in shipping would help retain more of the value generated from the movement of Malaysian cargo within the country, he added.
Mohamed Safwan said the newly established Malaysia Shipping Development Fund could eventually support fleet renewal, although its initial size would not be sufficient to materially change shipowners’ investment decisions.
The fund would initially be supported by tonnage-fee collections, but could subsequently be expanded through other sources, including contributions from the industry.
The fund, Mohamed Safwan said, would not be large enough initially to materially change shipowners’ investment decisions but could eventually support newbuilds and other fleet investments, while one of its more immediate uses could be vessel retrofits.
These could include installing batteries, dual-fuel systems, solar panels and vessel fuel-monitoring systems.
The fund could also be used for capacity building and seafarer training through institutions such as Akademi Laut Malaysia, polytechnics and other higher-learning institutions.
Mohamed Safwan said another potential use was to promote the shipping industry and raise awareness of its importance to Malaysia.
“Shipping only gets the attention during crisis,” he said, referring to the Strait of Hormuz disruption.
Malaysia’s position at the Strait of Malacca meant shipping should receive greater recognition as a strategic industry alongside sectors such as semiconductors, oil and gas and tourism, he said.
Mohamed Safwan also called for greater certainty over tax incentives for shipowners, saying the periodic renewal of tax exemptions made long-term vessel investment more difficult.
Ship investments can run into millions of ringgit and typically require returns over more than 10 years, and in some cases more than 15 years, he said.
He noted that the industry’s current tax exemption under Section 54A expires on Dec 31, 2026, and Masa had advised the government that the next exemption should not be limited to a short fixed period.
“The availability of predictable policy is very important. Longer-term certainty would give shipowners greater visibility to plan investments and encourage more vessels to be registered under the Malaysian flag,” he said.