LONDON: Local shipbuilding companies should consider consolidation to achieve better economies of scale amid a challenging environment that has resulted in mega-mergers and alliances among the super powers in the sector globally, Minister of Transport Anthony Loke Siew Fook said.
“Domestic players should take the cue from the larger trend globally.”
However, such a move would be purely an industry decision and not the government’s, he stressed.
“Merger and acquisition are supposed to happen naturally, we (the government) are not taking steps or any decision to force it on them. We are taking a hands-off approach,” he told Bernama in an interview recently.
Loke believes that the industry players are savvy enough, especially in considering the commercial aspects of such decisions.
The Minister was responding to the agreement signed between Labuan Corporation and Singapore-listed Nam Cheong Ltd’s subsidiary, Nam Cheong Dockyard Sdn Bhd, which is headquartered in Kuala Lumpur and would move its existing fabrication and shipbuilding-related activities in Batam, Indonesia, and China to Labuan beginning January 1 next year.
Loke went on to say that Malaysia, as an open economy, welcomes foreign investments.
From Malaysia’s perspective, the government and industry would have to ensure that the companies remain competitive.
“You have to accept the fact that there will always be competition in the market. We can’t run away from it. There are policies in place in terms of protecting local interests and in terms of stake holding, licensing, and I think (there’s) enough safeguards in terms of survival of the companies,” he opined.
Commenting on the Malaysia Shipping Master Plan, Loke said the blueprint as well as the setting-up of the National Shipping and Port Council (NSPC) are ongoing efforts and a platform for the government to formulate better action plans and to take stock of issues in the industry.
“It is also a platform for all stakeholders in the maritime sector to give input to the government, and we are in this for the long term and you cannot expect changes to be done in a short-term basis,” he said, stressing that the government needed feedback from the industry players in order to propel the industry.
He explained that the government is ready to provide more incentives to spur the industry, however, the administration needed more information on the incentives required by the industry.
“By receiving more inputs, then we can discuss further on how to increase Malaysia-flagged vessels, how to improve our fleet size. It is not something that we can force upon and government is only playing a facilitating role, so we have to come out with better incentives and policies. Having NSPC is only the beginning and we have only met twice or three times before,” he explained.
The Malaysian shipping industry tonnage had grown significantly to 12 million deadweight tonnage (DWT) in 2011 from 1.87 million DWT. The development took about 30 years, taking into account all the challenges faced by the Malaysian shipping industry.
Currently, the shipping industry tonnage has shrunk to about nine million DWT due to the challenges such as low freight rates in maritime business.
On the public transport fund managed by Bank Pembangunan Malaysia Bhd, Loke said that there was a lack of application for the shipping portion, hence the government is actively communicating with the bank to see the challenges faced by the applicants.
“We are in constant communication with Bank Pembangunan to see whether there is enough information to the public or market or too much bureaucracy that applicants cannot fulfill or conditions that cannot be met by them. So those are the issues that we need to review from time to time and of course, we do work together with Bank Pembangunan to see that…it is in line with our policies.
“We have NSPC’s sub-committee on financing for shipping. These are the issues discussed at the sub-committee level and we hoped the council members, which are the industry players, would disseminate information about the fund. We have Malaysia Shipowners’ Association on the board, it is very much for them to react,” he said. — Bernama