The shipbuilding and ship repair industry is a key component of Malaysia's maritime industry and the importance of the industry to the nation's economy should not be overlooked.
The significance of the industry is supported by the fact that 95% of Malaysia's trade is carried by seaborne transport, and the importance of offshore supply vessels to facilitate upstream activities in its oil and gas industry.
The industry features a wide range of activities including naval architecture, engineering, metallurgy, machining, corrosion control, welding and fabrication.
Given this, it should not come as a surprise that the industry has extensive links with many other industries including electrical, electronics, machineries, steel, glass, logistics, storage, bulk-breaking of goods, and services such as port, financing, insurance and marine consultancy.
As a measure of the Government's support towards the industry, it has been designated as a strategic industry based on its ability to generate economic multiplier effects and potential to transform Malaysia into becoming a fully developed nation by 2020.
To promote the growth of the industry, the Government spelled out in the Third Industrial Master Plan 2006-2020 several strategic thrusts for the industry:
1. Enhancing domestic capabilities in the building of smaller vessels, ship-repairing and maintenance activities;
2. Intensifying the upgrading of skills and engineering capabilities;
3. Strengthening the infrastructure and supporting facilities;
4. Strengthening the institutional supports;
5. Expanding activities in the fabrication of offshore structures.
In response to the changing landscape and ever evolving dynamics in the industry, in merchant shipping and in global trade, the Government has launched a blueprint for the development of the shipbuilding/ship repair industry towards the year 2020.
The blueprint, called the Malaysian Shipbuilding/Ship Repair Industry Strategic Plan 2020 was launched by Prime Minister Datuk Seri Najib Tun Razak during the Langkawi International Maritime and Aerospace Exhibition in December 2011.
MSSIP 2020 was conceived by Malaysia Industry-Government Group for High Technology an agency under the Prime Minister's Department, in collaboration with the Association of Marine Industries Malaysia. It stands testimony to the acknowledgment of the Government of the need to have a cogent plan and set of strategies to enhance the growth of the industry.
The plan lays out the national agenda for the industry in the coming decade, setting several targets for the local industry players to attain.
For shipbuilding, the target is to capture 80% of the local shipbuilding/ship repair market and 2% for the global newbuilding market. Meanwhile, the target for ship repair is to capture 3% of vessels plying the Straits of Malacca and 80% of offshore structures in South China Sea.
MSSIP 2020 also envisions Malaysia to become a major player in the building and repairing of small to medium-sized vessels.
This is a reasonable target considering Malaysian shipyards are already renowned for making quality, durable and cost competitive vessels in those categories which have generated strong demand from overseas buyers.
It is also an appropriate approach on account of countries such as South Korea, Japan and China from which Malaysian shipowners buy many of their ocean-going vessels are miles ahead in building and repairing big and sophisticated merchant vessels.
Malaysia would do well to focus on niche areas in which it is already strong than to compete with the world's largest shipbuilding nations which have huge economic clout and technical expertise and enjoy greater economies of scale.
While formidable challenges await the Malaysian shipbuilding/ship repair industry to attain these targets amid global recession, tepid demand for vessels in many shipping trades and keen competition from other countries they are certainly not insurmountable.
Based on prevailing trends and gross output, MSSIP 2020 projected that the industry would grow at the rate of 10% and would record a manpower growth of 6% in the next decade. This would result in revenue generation of RM19.09bil and creation of 55,5000 jobs.
On account of these forecasts, the industry would emerge as a significant contributor to the nation's economy by 2020 and Malaysia should climb up the ranks of major global players in the industry.
Being a technology and capital expenditure intensive industry, the shipbuilding/ship repair industry deserves strong support by the Government in terms of fiscal and non-fiscal support. Such incentives are provided in terms of soft loans and tax incentives for shipyards and promotional push for the industry.
While the incentives have proven instrumental in spurring the growth of the industry, more are needed to attract investments and take the industry to greater heights towards attaining the targets set by IMP3 and MSSIP 2020.
It is hoped that with more incentives and stronger policy push, and a strategic plan in place, the industry can boost its competitiveness, create more wealth and high income, and help transform the economy to fulfill the aspiration of making Malaysia a fully developed nation by 2020.
