It said it had submitted a memorandum to the Government to highlight the impact of the downturn on the shipping industry since the stimulus packages did not specifically address the problems faced by the industry.
“Masa has suggested the need for a shipping fund to assist companies with distressed assets, along the line of previously-initiated Danaharta by the Government.
“The proposed fund will assist shipping companies, especially those that have ordered new ships and are now faced with difficulties in pursuing contractual obligations with shipyards and banks,” it said in a statement.
Masa said the fund would be used to provide a bridging finance to shipowners who were required by banks to “top up” the difference in the decline in loan-to-value ratio of the ship.
“Such a move will not only help the shipowners with their immediate problem but also avert a possible collateral damage on banks, shipyards and marine equipment suppliers as well as on the macro level of the economy arising from contractual defaults.”
Masa said it was hopeful that its concerns for the industry and the economy would be addressed at the forthcoming Budget 2010, adding that it intended to stress that the problems faced by the industry would not go away immediately with a recovery of the economy.
“This is because, first, the recovery of the economy is expected to be very slow and a much lower rate of growth is expected in 2010 and in the next couple of years.
“Second, the industry will be faced with excess capacity for quite some time and it is unlikely that the freight rates will firm up because the supply will still exceed demand,” it said.
Masa said shipowners might continue to face weak revenue streams or very low yields for some time to come.
“Although there are some signs of recovery in certain sectors of shipping, these are sporadic and not firm.
“A sustained recovery in shipping may not be expected till end of 2010 after the market rebalances itself to the supply and demand equilibrum,” it said.
In its memorandum to the Government, Masa said it had pointed out the need to extend the current tax exemption for shipping companies available under Section 54A of the Income Tax Act 1967 to include “other commercial vessels and craft”.
“MASA proposed the income tax exemption to be made available to offshore supply vessels, dredgers, barges and tugs (excluding harbour tugs) as well.
“The latest statistics show that of the 500 vessels in the OSV (offshore supply vessel) sectors, only about 30% are Malaysian vessels, reflecting large opportunities for Malaysian-registered OSVs,” it said.