PUTRAJAYA: A 10-year income tax exemption for Malaysian shipping companies will provide greater certainty for long-term investments and encourage more vessels to be registered under the Malaysian flag, says Transport Minister Anthony Loke.
He said the exemption, which runs from 2027 to 2036, would encourage shipping companies to register their vessels and invest in assets in Malaysia.
Previously, companies had to apply to the Finance Ministry to renew the exemption every two years, creating uncertainty over whether the incentive would continue.
“This made it difficult for them to plan long-term investments, including buying new ships.
“This prompted some companies to register their vessels in other countries, including neighbouring nations, offering better tax incentives,” he said at a special press conference on Budget 2027 yesterday.
The government has also introduced fixed stamp duty rates on loans to purchase or construct Malaysian vessels, at RM2,000 for loans of up to RM100mil and RM5,000 for loans exceeding RM100mil.
Loke said the move would reduce financing costs and encourage investment in new vessels.
Association of Marine Industries president Adren Siow said extending the full income tax exemption for qualifying Malaysian shipping companies until 2036 would give the industry greater certainty for long-term planning.
“For maritime micro, small and medium enterprises, this creates a path to becoming larger, more resilient businesses capable of serving both Malaysian and international customers.
“We believe a stronger Malaysian shipowning sector can provide the steady demand that local shipbuilders, repair yards and marine service providers need to grow,” he said.
Malaysia Shipowners’ Association chairman Mohamed Safwan Othman said the exemption would enable Malaysian shipowners to build or purchase vessels locally, register them under the Malaysian flag and transport cargo domestically.
He said much of Malaysia’s strategic cargo, including palm oil, oil and gas, and coal imported for electricity generation, was still transported by foreign-flagged vessels.
The extended exemption would encourage local shipowners to expand their fleets and help Malaysia capture a larger share of the shipping business, he added.
“Shipping investments require a long-term commitment, as it takes more than five to 10 years to recover the initial investment.
“Therefore, this exemption will greatly benefit Malaysia’s shipping industry and stimulate the economy.
“With developments in the Strait of Hormuz making the Strait of Malacca busier, Malaysia is also well positioned to benefit from the commercial opportunities and wider economic spillover,” he said.
