BY Anuar Mohd Noor
Principal Analyst
Industry Intelligence & Foresight
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The shipbuilding industry in Malaysia can be defined as those enterprises that are involved in designing, building and constructing, converting and upgrading of vessels as well as marine equipment manufacturing. In this case, ‘vessels’ means various types of ships such as ocean going, near coastal, government, passenger, offshore and fishing vessels, whereas ‘marine equipment’ means parts and components that are fitted and integrated to form the sub-systems and systems of a vessel.

The shipbuilding industry, as addressed in the Third Industrial Master Plan (IMP3), is part and parcel of the marine transport sub-sector of the larger transport equipment industry. Structurally, the shipbuilding industry serves the shipping industry in terms of building and supplying new vessels to vessels operator or ship owners. In ensuring the safety of maritime operations as well as seaworthiness, the shipbuilding activities are regulated in accordance with the international standards and the local regulations.

Globally, the industry has seen an emerging giant vis-a-vis China taking over Korea as the world’s largest shipbuilding nation in terms of the number of vessels produced. It is interesting to observe that percentagewise, China together with Korea and Japan represent 85% of the world’s total order book of new shipbuilding.

Year 2009 recorded the lowest number of demand for new vessels, understandably in response to the global economic crisis. Prior to the slowdown, order for new vessels peaked in September 2008 with 11,661 ships in the 

pipeline. Two thirds of the new build demands were made by corporations operating ocean going vessels such as tankers, bulkers and containers, followed by liquefied natural gas (LNG) carriers or liquefied petroleum gas (LPG) carriers and cruise ships. However, when the recession hit hard on businesses, the global shipbuilding industry recorded a 40% decline, leaving only 6,914 ship orders to fulfil. With economic recovery plans taking the right course, the global demand for new vessels is expected to grow by 26% in the next few years. The case is however, not the same with large container ship and the LNG sectors.

The growth of the fleets around the world has a direct impact on the global demand for ship repair services since the more ships are in operation, the higher repair and maintenance work will be in demand. In fact, the five year statutory dry dock repairs cycle for big ships with sizes longer than 300m are already taking up dock spaces through to 2015. This can only mean that ship repair sector is enjoying an upward trend steadily.

With offers of business incentives mainly in the form of cheap but skilled labour, the Philippines and India are rising to become shipbuilding nations in South East Asia. In their bid to climb up the ranks, they have been actively engaging different approaches to develop their shipbuilding industries. As a clear result of its foreign direct investment, the Philippines recorded USD420 million in its shipbuilding export in 2009. The Government of Philippines has laid down investor-friendly laws with attractive incentives to lure investors such as Hanjin of South Korea, Tsuneishi of Japan and Keppel of Singapore.

In India, domestic investors play a major role in developing its shipbuilding industry with USD5 billion worth of business dealings in 2009. This figure represents 250 new vessels built in 27 shipyards where eight of them are owned by the government while the rest belongs to the public sector. The Indian Government offers a 30% subsidy on all sales closed on foreign buyers and on local sales of ocean-going vessels of longer than 80 meters.

Singapore is riding high on its world class reputation for being the provider of choice for a broad spectrum of marine services which generates a turnover of SGD10 billion (USD7.7 billion) annually. Out of this, the island nation’s thriving ship repair and ship conversion businesses have steadily contributed more than half of the total marine industry revenue. Apart from the wellknown Keppel, Sembcorp Marine is expected to also significantly contribute to Singapore’s shipbuilding revenue once the new Sembawang Integrated Shipyard in Tuas is in operation from mid 2012.uture.

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