THE local shipping industry, the lifeline of trade-oriented Malaysian economy, is facing one of the most severe challenges in recent decades as local shipowners reel under heavy losses and face uncertain times due to the unprecedented and prolonged downturn in the global shipping sector since late 2008.
Malaysia Shipowners Association (Masa) chairman Nordin Mat Yusoff said with five of the 10 local shipping companies listed on Bursa Malaysia either delisted or placed under PN17 in the last couple of years, the industry is appealing for government intervention to help save the industry from "extinction".
Masa is proposing a relief fund to assist financially distressed companies and a refinancing scheme to help affected shipowners.
"We would like to appeal to the government to consider a relief or rescue fund to assist financially distressed firms as well as a refinancing scheme to help companies trapped with distressed assets.
"The incentives proposed are to encourage sustainable growth and build talent, especially in seafaring men and women, enhance services level and the ability to provide competitive pricing," he said in a statement.
Nordin said the local shipping industry needs an immediate lifeline from the government to get the industry players out of the abyss as the situation is life threatening.
"It is not difficult to imagine what the dire consequences will be on trade if we allow shipping firms to fall, but one thing is certain, if we allow these firms to go under, there will be no return and the domestic shipping industry could be wiped out," he said.
Nordin said Masa had presented its concerns to the Finance Ministry in September and a memorandum earlier this year to Prime Minister Datuk Seri Najib Razak, spelling out the "life-threatening" issues the industry is facing.
He said shipping, which is the most economical and efficient form for transportation of goods, is an enabling platform for other industries to grow and if the shipping industry is rendered helpless, the collateral damage to the development of trade and economy will be extensive and potentially damaging.
From the carriage of crude and refined petroleum products, liquefied petroleum gas, vehicles, fast-moving consumer goods, cement/clinkers as well as serving the offshore oil and gas industries, local shippers have provided the vital economic link in providing competitive and stable shipping services.
"If we allow these companies to collapse because they are now being exposed to unsustainable operating and management costs arising from a host of factors like rising fuel prices; increasing manpower cost; rising financing cost; repair and maintenance costs; and depressing freight rates, we will be facing the demise of the domestic shipping industry," said Nordin.
He said shipping, which domina-ted transportation system before industrialisation, had led to the development of steam propulsion, railroads, motor trucks and airplanes.
In the last two centuries, he said the technology and economics of transportation have changed dramatically.
"The end of the cold war and the subsequent expansion of global trade, together with the worldwide adoption of containerisation, have made the final years of the 20th Century a period of rapid change," he said, adding that national policy has provided much of the dynamic for this changes.
"These developments and the political and social changes that accompanied them, generate many of the challenges that nations had to address," he noted.
Tracing back the country's maritime industry, Nordin said Malaysia adopted commercial and military policies after its independence, with the gift of two vessels by the Japanese government that formed the national shipping line, MISC Bhd in 1968.
"Besides concerns of balance of payment, the need for the nation to have maritime strength within its influence and 'control' became more evident after the withdrawal of the American troops from Vietnam in the early 1970s.
"There was a fear then, of the 'domino effect' of the fall of South Vietnam to include Thailand and ultimately Peninsular Malaysia.
"Like the United States and Europe, similar development in Asia, formation of the Association of Southeast Asian Nations (Asean), Asean Free Trade Area and improved diplomatic relations among nations of the Pacific Rim and the Indian Ocean require that Malaysia also review its current maritime policy," he said.