Tax breaks, incentives for shipbuilding, repair companies

MMHE is now tendering for RM5bil worth of new projects.

KUALA LUMPUR: The government has unveiled tax breaks and incentives for shipbuilding and ship repairing industry as it targets the sector to generate RM6.35bil in gross national income and provide 55,000 jobs by 2020.

New companies will either receive pioneer status with 70% of income tax exemption on statutory income for five years or Investment Tax Allowance of 60% on the qualifying capital expenditure incurred within 5 years from the date the first qualifying capital expenditure is incurred. 

For existing shipbuilding and ship repairing companies, they can enjoy Investment Tax Allowance of 60% on additional qualifying capital expenditure incurred within five years.

Minister of International Trade and Industry, Datuk Seri Mustapa Mohamed said on Tuesday these new incentives would be for all areas in Malaysia to boost the industry in line with the Malaysian Shipbuilding and  Ship Repair Industry Strategic Plan 2020 and the 11th Malaysia Plan.

Currently there are 100 registered shipyards in Malaysia, in which 39 are located in West Malaysia and 61 in East Malaysia.

Previously, the incentives for shipbuilding and ship repairing were for projects in the Eastern Corridor, Sabah, Sarawak, Perlis, Kelantan, Terengganu, Pahang and the district of Mersing in Johor. 

The companies then were eligible for Pioneer Status with income tax exemption of 100% of statutory income for five years or Investment Tax Allowance of 100% on qualifying capital expenditure incurred within five years. The incentives ended in 2010.

Mustapa urged both local and foreign investors to capitalise on these new incentives. 

“Despite the sluggish momentum in the offshore oil and gas industry which have suppressed demand for ships and offshore structures, Malaysia has the pull factor to become the leading nation in the shipbuilding and ship repairing industry. 

“The country is the right choice to invest in as it has a promising future based on its strategic location, competitive cost, skilled and talented workforce, advanced infrastructure and extensive trade agreement regionally and globally,” he said.

 In West Malaysia, the main shipyards are in Lumut (Perak), Port Klang (Selangor), Kemaman (Terengganu) and Pasir Gudang (Johor). In East Malaysia, Sibu (Sarawak) is the main shipbuilding hub with a total of 40 small to medium-sized companies.

There are six large shipyards in the country with repairing capabilities of more than 600 tons displacement. They are Malaysia Marine and Heavy Engineering (MMHE), Boustead Naval Shipyard, Sabah Shipyard, Sapura Kencana, Nam Cheong and Muhibbah Marine Engineering.