MALAYSIAN SHIPBUILDING

ISSUES AND CHALLENGES

Khamarudin Bin Mansor

Deputy President Shipbuilding
Peninsular Malaysia
 UNDERSTANDING THE INDUSTRY
SHIPYARD
a) Classification by MOF Class A, B C Class D & E
b) Business nature Contract manufacturing
c) Market Small domestic market
d) Business start up consideration 1. Strategic location
2. High capital investment
3. High operating cost
4. To survive require
continuity of projects
e) Work force Professional staff
Knowledgeable skill worker
BOATYARD
Contract manufacturing
(not so for leisure boats)
Domestic market enough for
only limited number of
boatyards
1. Start as repair yard
rivers/slipway
2. Serve boats in proximity
3. Evolve into boatbuilding
4. To survive require project
continuity (for yards
focused on boatbuilding)
Minimal staff and mainly
subcontract
 SHIPBUILDING
BUSINESS NATURE MINISTRY RESPONSIBLE

1. Manufacturing (Manufacture/ Ministry of International

build and sell) Trade and Industry

2. Contracting Ministry of Works

3. Marine Transport and related Ministry of Transport

infrastructure
4. Contract Manufacturing
(Turnkey- design and build)
Ministry of International
Trade and Industry
(dedicated marine
section?)
 GLOBAL MARKET / ORDER BOOK

  Candidate of
120 Surplus Fleet
110
Reflecting depressed market, actual delivery is bound to
100
be smaller than the original due to strong pressure from
90 troubled shipowners.
80 The level of new deliveries in 2009 - 11 (though it gets
70 smaller) will be still by far beyond the imagined required
fleet level.
60
Others
50
China
40
Europe
30
Korea
20
Japan
10

                           




          








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1926-2008 Lloyds – Fairplay

2009-2012 Clarkson
 WORLD NEW ORDERS

 

165
 Reflecting severe shipping market, Others
new orders will plunge in 2009.
Under the current market condition (trade contraction

China
 + huge orderbook), there can hardly be any
100
 temptation for placing new merchant vessel orders.
86

 74 77

60

46
36 36
 Europe 27 29 29 Korea
19 19
24
20 23 25 26 23
14 17 19 17 16 13 13 14
 13 12 8 11 12 13
Japan

75 76 77 78 79 80 81 82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10
Lloyds - Fairplay
 SHIPBUILDING CHALLENGES:

1. Excess merchant navy fleet until 2011

2. Japanese & Chinese Shipyard least affected

due their own big domestic market

3. Malaysia has small domestic market

4. Stiff competition from Japanese, Korean and

Chinese shipyard
 INFORMATION IS THAT THERE ARE
APPLICATIONS FOR STARTING NEW SHIPYARDS
IN MALAYSIA despite:

1. High capital investment;

2. Small domestic commercial market;
3. Surplus worldwide market;

4. Malaysia Naval Ships New Building

– Is the market enough for many players?
 IMP3
The Third Industrial Master plan (IMP3) focuses on the development
of shipbuilding and ship repairing activities, amongst which includes:
1. Increase in ship repairing and maintenance activities
2. Production of vessels of 30,000 DWT and below for coastal
shipping
And the incentives given are:
i. Investment tax allowance up to 100% capital expenditure
ii. Pioneer status 100% tax exemption
iii. Exemption from import duty and sales tax
Item iii above in not helping local vendor/suppliers
 Boat Building Industry Insight
Influences:-
i. Mostly start operations as boat repair;
ii. Scattered all over country, close to market;
iii. Market is mainly Government vessel;
iv. Govt Technical Team determine workscope;
v. Less stringent delivery times;
vi. Minimal staffing and infrastructure;
vii. Subcontract labour (mainly);
viii.Some evolve into boat building
 BOAT BUILDING CHALLENGES

• BOAT BUILDING IS NOT A HIGH TECH INDUSTRY

• THE CHALLENGES ARE COMMERCIALLY DRIVEN I.E.

• HOW TO BUILD THE BOAT:
• ACCORDING TO STANDARDS & BUDGET,
• IN THE TIME SCHEDULE,
• PERFORMING TO SPECIFICATION AND
• ACHIEVING CUSTOMER’S SATISFACTION
 PROBLEMS RELATING TO THE CHALLENGES

1. Proximity -
Marine industrial parks provides Common Logistic,
Infrastructure & Support Services which helps to lower cost ;
2. Continuity of project means continuity of skill work force
employment, necessary for quality of works;
3. Continuity of project means opportunity for continuous
development, especially in shipbuilding management;
4. Boatbuilding knowledge and skills require special training
scheme;
5. Is tendering suitable for ‘TURNKEY PROJECT’?