Maritime industry to rally after pandemic shockwave

KUALA LUMPUR (BERNAMA) – Global maritime trade is expected to plunge 4.1 per cent in 2020, as the health pandemic has taken a toll not only on the supply chains but also shipping networks and ports, resulting in plummeting cargo volumes, of which Malaysia was not spared.

The industry has also been dealing with the knock-on effects of growing trade protectionism and inward-looking policies, according to United Nations Conference on Trade and Development (UNCTAD) in a report last month.

Malaysia’s port operator Westport Holdings Bhd had said its container volume declined by four per cent for the first nine months of 2020 as compared to the same period last year.

It handled lesser container throughput of 7.73 million twenty-foot equivalent units (TEUs) during the first nine months of 2020 as container volume and demand were affected by various forms of lockdown imposed globally to control the spread of COVID-19.

According to Shipping Association Malaysia (SAM), container throughput for 2020 is expected to reduce by 15 per cent from 25 million TEUs in 2019 due to lower transhipment activities and container volume caused by the disruption in the supply chain.

Malaysia’s maritime sector also witnessed heated debates on the cabotage policy in Parliament in late November, which led to a change of Malaysia’s policy and sparking some industry positivism.

On November 24, Transport Minister Dr Wee Ka Siong while winding-up his debate on the Supply Bill 2021 told the Dewan Rakyat of his decision to revoke the cabotage policy exemption that allowed foreign-flagged ships to repair undersea cables in Malaysian waters.

The proposed revocation prompted former transport minister Anthony Loke Siew Fook who had granted the exemption then, to question Wee’s rationale for the decision.

Subsequently, opposition lawmakers and giant tech companies quizzed the government’s stance in welcoming investment from international companies as well as Malaysia’s aspirations as a data centre hub.

However, the Malaysia Shipowners’ Association, Malaysian Oil Support Vessels (OSV) Owners’ Association (MOSVA), and Association Of Marine Industries Of Malaysia (AMIM) welcomed the decision to revoke the cabotage policy exemption.

They see it as timely as they felt local companies should be given opportunities and consideration before any tenders for related works were awarded to foreign companies.

MOSVA President Mohamed Safwan Othman said the association supported the government’s decision and emphasised that more measures should be taken to revitalise and protect the local economy as it had heavily borne the brunt of COVID-19.

Citing other countries that are taking similar measures, he said the United States, Brazil and even Indonesia have a more stringent cabotage policy than Malaysia.

He also stressed that there were more pressing issues than cabotage, with many pseudo-Malaysian companies operating in the region.

“These companies use proxies to ‘Malaysianise’ their vessels and companies but they are actually owned by foreign companies, especially our southern neighbour.

“Based on our estimate and observations, there are as many as 100 OSVs in Malaysia with Malaysian flags operating under these pseudo-Malaysian companies,” he said.

MOSVA members own about 300 vessels. There is an addition of about 100 vessels in Malaysian waters that are owned by non-MOSVA members including those belonging to pseudo-Malaysian companies.

“That translates into around RM1 billion of charter hires per year and this is actually detrimental to our economy, as much of the money will flow out of the country.

“With the recent controversy about foreign-owned cable-laying vessels working in Malaysian waters, it is time that such cabotage policy is strictly enforced and the practice stopped as otherwise the balance of payments will be further aggravated,” Mohamed Safwan said. On COVID-19, he said the OSV segment in Malaysia was quite badly hit by low oil prices and the rise of the pandemic, with a number of delays in operations and cancellations of projects.

“Most of the contracts supporting the productions remain as usual and there is no major re-negotiation of contracts from oil majors, including Petronas. The number of projects, including drilling, has been postponed,” he said, adding, the disruptions had resulted in the laying up of about 30 per cent of MOSVA members’ fleets.

On the RM3.7 billion allocation in Budget 2021 for the Maritime Development and Logistics Scheme, he said it was timely.

“MOSVA members will definitely try to utilise the funds that will be managed by Bank Pembangunan Malaysia Bhd (BPMB) and we have had a series of discussions with BPMB on this matter.

“The bank needs to somehow relax the conditions in order for us to expand or renew our fleets during this tough economic climate,” Mohamed Safwan said.

Meanwhile, he said certain types of OSVs including fast crew boats, accommodation workboats, and anchor handling and tug supply vessels (180 tonnes and above) needed to be built to restore depleting supply.

“Most of these vessels are near the age limit of 15 years and out of specifications. That’s the reason for expanding the fleet of certain types of vessels. “The vessels that were laid up are ones that are already oversupplied in the market, including Anchor Handling and Tug Supply vessels (60 tonnes and below) and Platform Supply Vessels,” he said.