OSV Malaysia slams weak cabotage policy

KUALA LUMPUR: The Malaysia Offshore Support Vessels Owners Association (OSV Malaysia) has called upon the Malaysian Ship Owners Association (Masa) and Transport Ministry to tighten the cabotage policy and plug leakages.
"The cabotage policy in Malaysia is very weak in terms of protecting the Malaysian market. You can see the trickle effect of having a weak policy, it affects the shipbuilders and shipowners, and that knock-down effect affects many other service industries related to the marine industry, specifically the offshore support vessels (OSV) industry," OSV Malaysia president Dr Jamal Yusof told reporters at the Seminar on Offshore Support Vessels in Malaysia: Opportunities & Challenges yesterday.
Due to the weak policy, a lot of money and services in the OSV industry have been repatriated out of Malaysia while many Malaysian marine crew are not working in Asian waters as foreign investors come in with Indonesian and Filipino crew.
"It's affecting our employment figures in terms of mariners in Malaysia and the onus of controlling the domestic shipping license falls with MASA. We feel that Masa should take a more active role in tightening up the Cabotage Policy. We're talking about Malaysian interest here in terms of employment, business opportunity, investment opportunity not only for the yards but for the financiers, the banks as well. So the impact to the Malaysian economy is huge. There's a knock-on effect of some RM28 billion if we can close up the holes of the policy," said Jamal.
According to Pareto Securities Pte Ltd CEO David Palmer, Indonesia has strengthened its cabotage rules and the OSVs operating as Indonesian flag vessels are earning 10% to 15% more than they can earn in the outside market.
"But that's not true in Malaysia," he said.
In his presentation entitled "OSV Sector Global Outlook Particularly in Malaysia - The Traffic Light Analysis" at the seminar yesterday, Palmer said 120 vessels out of 169 existing OSVs located in Malaysia currently fly the Malaysian flag.
"As an evidence of cabotage, 74% (101 vessels) of vessels operating on term contracts are Malaysian-flagged as compared with vessels operating spot where only 58% (19 vessels) are Malaysian-flagged," he said.
He added that 46 Malaysian-flagged OSVs are not operating in Malaysia and these are mainly owned by Malaysian owners such as Bumi Armada, Petra Petroleum, Nam Cheong and Yinson Holdings.
Commenting on the outlook for the OSV industry, Jamal said the next three years still looks rosy on the back of Petronas' RM300 million capital expenditure planned for the next five years, various contracts being awarded and the continued planning of enhanced oil recovery projects.
Palmer advised Malaysian owners to go for more sophisticated vessels that have better capabilities in terms of safety and versatility as well as improve customer service in order to meet demand and compete globally as the OSV market is maturing and rigs become more sophisticated.
Meanwhile, the Icon Maritime Training Centre is working with the Ministry of Human Resources' Department of Skills Development, Petronas and Shell to come up with a training syllabus.
"We're also engaging the customers, industry and regulatory body to come up with a new accreditation," said Jamal.
He said it aims to get the accreditation by August, set up a training centre in the Klang Valley and start operations by the second quarter of 2015 to train captains, chief mates and regular masters.
"The simulators that have been established in different Asean countries, these are not cheap, about US$10 million. That's where the maritime industry probably would need some grants from the government to set up the simulator where by it is open to anyone to come and use.
"If the association can get the grant, they can take on the role, set up the training centre and it can be used by its members."