State welcomes announcement of tax incentives for shipyards

SIBU: The state government welcomes the recent announcement by the Ministry of International Trade and Industry ( MITI) to give tax incentives to shipyards in the country.

Second Minister of Resource Planning and Environment Datuk Amar Awang Tengah Ali Hasan said shipyards needed support in many forms to stay afloat especially in this time of economic downturn in the shipping and offshore oil and gas industries.

More incentives should be given especially to smaller shipbuilders. In Sarawak most of them are small shipbuilders who also play an important role in the expansion of the shipbuilding industry. I think we should also give our focus to how to give special incentives to small shipbuilders to stay afloat and to expand in the industry. Datuk Amar Awang Tengah Ali Hasan, Second Minister of Resource Planning and Environment

However, he said more could be done to create a conducive environment for them to stay afloat amid the headwinds facing the industry and to eventually flourish and help to fulfil the targets of Malaysia Shipbuilding/Ship Repair Industry Strategic Plan (SBSR) 2020.

“More incentives should be given especially to smaller shipbuilders. In Sarawak most of them are small shipbuilders who also play an important role in the expansion of the shipbuilding industry.

“I think we should also give our focus to how to give special incentives to small shipbuilders to stay afloat and to expand in the industry,” he said when officiating at the ‘4th National Marine Industries Forum 2016’ here yesterday.

Awang Tengah, who is also Minister of Industrial and Entrepreneur Development, Trade and Investment, said shipyards with such criteria could continue to remain viable and profitable even during the cyclical downturn which characterises the industry.

He said shipyards with adequate resources and strong support to grow and flourish were in a better position to undertake value- added work and focus on building high-end, technologically-sophisticated, multi-purpose, highpowered, energy- efficient and environmentally- friendly vessels.

“These are the kinds of vessels which are still in demand amid the slump in the shipping industry and cutbacks of offshore exploration and production activities by oil and gas majors in the current low oil price environment.

“Yards capable of building such vessels and delivering them within reasonable time frames and at competitive cost can weather the downturn and stay profitable amid low demand for new vessels and offshore structures,” he said.

MITI announced last month that new companies will be able to enjoy either pioneer status with a 70 per cent tax exemption on their statutory income for a period of five years or an investment tax allowance of 60 per cent on the qualifying capital expenditure (capex) incurred within five years from the date the first qualifying capex is incurred.

For existing shipbuilding and ship repair companies, they will be given an investment tax allowance of 60 per cent on the additional qualifying capex incurred within a period of five years.

It also said that all applications will be evaluated by Malaysian Investment Development Authority ( MIDA).

Regional Corridor Development Authority ( Recoda) chief executive officer Tan Sri Datuk Amar Wilson Baya Dandot, Assistant Minister for Industrial Development (Investment and Promotion) Datuk Julaihi Narawi, Assistant Minister for Resource Planning Datuk Mohd Naroden Majais, Association of Marine Industries Malaysia (Amim) and Maritime Institute of Malaysia ( Mima) president Tan Sri Ahmad Ramli Md Nor, Malaysia Industry- Government Group for High Technology president Datuk Dr Mohd Yusoff Sulaiman and Malaysia Joint Branch Royal Institute of Naval Architects and Institute of Marine Engineering, Science and Technology ( RINA-IMarEST) chairman Othman Kadir were among those present.