Sarawak Marine Industries Association lauds 5-year tax exemption but wants more to assist shipbuilders

Sarawak Association of Maritime Industries (SAMIN) logo.

SIBU, Feb 28: Sarawak Association of Marine Industries (SAMIN) has proposed that the Malaysian Federal government help lower production costs for local shipyards apart from the five-year tax incentive extension.

SAMIN president Dr Renco Yong was referring to the recently announced Budget 2023 where the government has extended tax incentive for companies undertaking ship building and ship repairing (SBSR) activities in Malaysia to five years or until Dec 31, 2027.

This, he said, would grant the SBSR industry to continue to enjoy pioneer status and Investment Tax Allowance (ITA).

However, he stressed that greater and more incentives are needed so that local shipyards can compete against more established shipyards in the region and bid for bigger international projects to boost their revenues.

He explained that the increase in the prices of raw materials, components and equipment imported by local shipyards and the cost of automating and developing highly skilled human capital have long been a bane to local shipyards to compete with foreign yards which enjoy various attractive incentives offered by their respective governments.

He cited examples of Korea, China and Japan who have emerged as the top three shipbuilding nations, where the governments provided all-out support and attractive tax incentives to boost market share and competitiveness of local shipyards.

“China, which has emerged as the largest shipbuilding nation in terms of orderbook thanks to a wide range of incentives and very strong government support, the government took various measures to prop the SBSR industry which was severely affected by the strict lockdown during the pandemic. These include easing restrictions for foreign crews of ships to enable them to send their ships to Chinese shipyards for repairs and to remove impediments along supply chains to facilitate smooth shipbuilding projects,” he said in a statement today.

Following this, Yong mentioned that Malaysia also has what it takes to become more competitive in this industry but the local shipyards could do with further help from the government in the form of greater incentives to lower their cost of production and enhance their overall competitiveness.

“To this end, SAMIN would like to propose the government to consider extending the tax incentives provided to the SBSR industry for another five years.

“This should apply to applications received by Malaysian Investment Development Authority (MIDA) from Jan 1, 2023 until Dec 31, 2027,” he suggested. — DayakDaily