Local banks urged to complement government’s efforts to help shipping sector

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KUALA LUMPUR: The Maritime Institute of Malaysia (MIMA) has urged local banks to complement the government’s efforts in helping the shipping sector by providing financing to deserving companies within it.

In October last year, the government announced the establishment of a RM3 billion maritime development fund aimed at providing soft loans to industry players, especially those hit by the slump in seaborne trade and the global economic downturn.

MIMA senior fellow Nazery Khalid told Bernama that through the local public-private banks partnership, more funds can be made available to the “capital expenditure (capex) hungry” shipping sector to help players amid a very challenging operations landscape.

“Without the shipping industry’s ports, the country’s economy will be paralysed.

“As such, deserving players in the maritime supply chain should be given assistance, given this strategic importance of the industry to the nation’s economic well-being,” he added.

He reiterated the need for the government to lend stronger support to the shipping sector, drawing attention to the fact that it helps facilitate 95 per cent of Malaysia’s trade and 80 per cent of global trade.

Against such a backdrop, having a roadmap for the maritime industry can help create what Nazery termed as, a “complete maritime industry ecosystem” like in neighbouring Singapore.

“Local shipping companies should look beyond just carrying cargo and focus greater attention to providing value-added services to customers.

“They must be prepared to compete internationally and explore untapped areas across the maritime supply chain and within global trade to create differentiation in services,” he said.

He called upon financiers and other stakeholders to view shipping using a “long term lens” to appreciate its growth potential.

“The shipping sector is among the first economic sectors to be affected when there is a recession. But it also among the first to recover when the economy rebounds and trade volumes pick up.

“This accentuates the need for the government to have a strategic plan to help shipping companies grow and face the challenges of their volatile and ultra competitive operating environment,” he said.

Since the world was hit by an economic crisis, brought on by the sub-prime crisis emanating from Wall Street in 2008, the shipping sector has borne the brunt of the slump in global demand for goods and raw materials, alongside a drop in business and industrial activities.

“As a result, shipping companies worldwide faced losses and difficulties in raising substantial capital to maintain capacity, pay overheads and stay profitable from seaborne operations,” said Nazery.

Amid the prevailing challenging scenario, the country’s maritime industry has been doing well as evidenced by the growing volume of cargo handled at the main ports, namely Port Klang and Port of Tanjung Pelepas.

Both are listed among the top 20 busiest container ports in terms of throughput handled. — Bernama