KUALA LUMPUR: Malaysia's shipping industry is in urgent need of financial help to maintain capacity, expand fleet, service loans and meet overhead expenses amid the drop in cargo volumes.
Maritime Institute of Malaysia (MIMA) senior fellow, Nazery Khalid, said the industry, despite playing a crucial role in the country’s trade exceeding RM1tril, faced the most challenging business time now.
"The 'triple whammy' effects, such as low cargo demand, overcapacity in the major shipping trade and high cost of operation stemming from high fuel prices are also expected to continue to weigh down on the shipping companies in the next several years," he told Bernama.
Nazery said Malaysia needed to draw up a roadmap for the maritime industry to be developed in a coherent and long-term manner.
"The roadmap will help it avoid the kind of devastating impact wrought by the ongoing global economic slowdown to the shipping sector. What the local shipping firms in distress urgently need is a 'lifeline' to prevent them plunging into deeper financial woes," he said.
According to Nazery, several shipping companies had exited the business due to the cash crunch as they were unable to raise funds from local banks.
"As their businesses fall, freight rates remain depressed and overhead costs rise, they find it difficult to convince local banks to lend and to attract investment into their companies.
"The 'painful suffering' endured by local shipping companies underscores the need for a roadmap for the maritime industry," he said.
Nazery said the roadmap could help address their needs such as providing financial support or tax incentives to enable them to expand their fleet and stay afloat during tough business conditions.
"The local shipping companies are 'desperately' seeking the government's help to stave off bankruptcy, meet expenses and retain their tonnage to remain in business. "The roadmap would underline the government's commitment to boost Malaysia's competitiveness as a maritime nation," he said. – Bernama