PRIORITISE DOMESTIC SHIPPING TO BOOST GREEN INITIATIVES, SUPPORT LOCAL VESSEL USAGE, SAYS MASA

By Harizah Hanim Mohamed

KUALA LUMPUR, Dec 1 (Bernama) – The government must prioritise the domestic shipping industry to advance green shipping and simultaneously develop a new national shipping policy to address long-standing gaps in the sector, said a shipping industry association.

Malaysia Shipowners' Association (MASA) chairman Mohamed Safwan Othman emphasised that capital expenditure for green shipping is 30 per cent higher than that for traditional vessels.

“Our industry is capital-intensive and the financing rates for shipping in Malaysia are not competitive compared to neighbouring countries like Singapore and Hong Kong. While we have green initiatives in Malaysia, they are relatively small in scale, especially when compared to our neighbours. Moreover, private equity here is not as developed as in those countries,” he told Bernama after a session discussing shipping funding issues and market trends.

The session was held in conjunction with the two-day Asian Maritime Law and Business Conference and was moderated by Malaysia OSV Owners’ Association (MOSVA) president Jamalludin Obeng.

Addressing the challenges faced by the local shipping sector, Mohamed Safwan highlighted the importance of a comprehensive national shipping policy to tackle these concerns.

“We are actively involved in drafting the new shipping policy, and hopefully, by early next year, a draft will be ready. More importantly, we need dedicated shipping funding, not only from Bank Pembangunan Malaysia Bhd but also from commercial banks,” he said.

In Budget 2025, Prime Minister Datuk Seri Anwar Ibrahim announced that Bank Pembangunan Malaysia would provide RM6.4 billion in financing to support infrastructure development, digitalisation, tourism, logistics, transportation, renewable energy and the energy transition.

“The shipping industry is included in at least three facets covered by the budget. This creates uncertainties regarding the availability of funds as they will be shared across several industries… there will be a lot of competition as the allocated funds will not be sufficient,” he added.

He also noted that the industry significantly contributes to Malaysia’s negative balance of payments, a situation that could be mitigated if local vessels were utilised for transporting key commodities like palm oil.

“We export crude palm oil worldwide, yet it is almost entirely carried by foreign vessels. We should have more ships to carry our own cargoes,” he said.

Additionally, Mohamed Safwan pointed out that while shipowners are ready to invest in and acquire new ships, Malaysia’s alternative fuel bunkering facilities remain inadequate to support the industry’s growth.

Mohamed Safwan also urged that maritime affairs be put under the National Economic Action Council to ensure that the sector receives the attention it deserves.

Sharing the perspective of shipping finance from the banking industry, Standard Chartered Bank director of transportation finance Steve Ji highlighted that the shipping industry is navigating a phase of increasing uncertainties while progressing toward net-zero emissions. It faces ongoing challenges with high interest rates and geopolitical uncertainties, particularly with the potential impact of the US elections.

“Despite the challenges, banks remain cautiously optimistic about the sector’s resilience. However, shipping finance volumes have declined to US$310 billion from US$350 billion in 2008, representing 15 per cent of the world’s fleet value. This drop reflects a shift in market dynamics, with some major players exiting, signalling a cautious outlook, though new entrants continue to emerge,” he said.

He also pointed out that the pathway to net-zero emissions has gained critical importance in recent years, building on the 2016 Paris Agreement’s goal and initiatives like the Poseidon Principles, launched by 11 banks and now adopted by 34 banks representing 80 per cent of global shipping financiers.

This underscores the commitment to sustainable shipping finance.

“Shipowners must align with these principles as banks collectively support the net-zero transition. Looking ahead, regulatory measures continue to tighten.

“Additional regulations on maritime fuels will arrive in 2025, and by 2026, stricter carbon intensity and energy efficiency indices will further drive the industry's push toward sustainability,” he added.

-- BERNAMA