A Joint Interview with MIGHT’s LIMA Open Forum Speakers
Malaysia’s Shipbuilding and Ship Repair (SBSR) industry stands at a crucial crossroads, poised for significant growth amid shifting global trends. As one of the key players in the region, Malaysia’s SBSR industry benefits from its unique position for growth, leveraging its strategic geographical positioning, government support through incentives, and a strong manufacturing base.
However, the industry must address key challenges such as technological innovation, investment landscapes, and workforce development, to remain competitive. It is clear that collaboration among policymakers, industry leaders, and academia is not just beneficial but crucial to strengthening Malaysia’s position as a global SBSR hub.
In this special joint interview, we bring together experts from MIDA, AMIM, UniKL MIMET and Bureau Veritas to discuss a few pertinent issues in the industry. Our expert panel includes:
- Positioning Malaysia in the Evolving Global Shipbuilding Market through Decarbonisation, Digitalisation and Skills Development
INVESTMENT
Investment in the SBSR Industry
From 2020 to 2024, MIDA has approved 24 SBSR projects with a total investment of RM593.5 million over five years, with RM53.4 million recorded for 2024. These projects are expected to create more than 800 employment opportunities throughout Malaysia. These investments were driven by the growing demand in leisure and security segments in the region. Malaysian SBSR companies can produce high-quality leisure yachts and defence-related boats, commonly exported to Australia and Europe, with some reaching as far as Nigeria and Brazil.
Technology Adoption and Innovation
Based on global trends, MIDA sees three major trends reshaping Malaysia’s SBSR industrial landscape. First, the Green Shipping Revolution, driven by the International Maritime Organisation’s (IMO) 2050 net-zero Green House Gas, (GHG) emission targets, is accelerating green investments. Malaysia is responding by encouraging the development of electric and hybrid vessels, facilitating green bunkering infrastructure (such as ports equipped with facilities for refuelling eco-friendly ships), promoting retrofitting with eco-efficient technologies, monitoring interest in alternative energy sources like Liquefied Natural Gas (LNG), hydrogen, and wind-assist propulsion, and upskilling the maritime workforce.
Secondly, Digital Disruption is transforming the industry as smart ships become the future. Investors are keen to explore the Internet of Things, (IoT) for predictive maintenance and digital twins for ship design. Ports like Tanjung Pelepas, ranked the fifth most efficient container port globally, have adopted these technologies. Automation, such as robotic welding and 3D printing, is essential to stay competitive, requiring workforce upskilling in data analytics and automation.
Skills Development for the Maritime Workforce
Thirdly, geopolitical shifts and supply chain resilience are influencing the industry as Western companies seek to diversify from China. Malaysia’s neutral stance and prime location make it an attractive Plan B for Maintenance, Repair and Overhaul (MRO) and niche shipbuilding, focusing on high-value areas like naval defence, leisure vessels and localising key technologies to reduce import dependence. The recent US tariff review, including the Jones Act, limits Malaysian shipbuilders from exporting finished vessels directly to the US market, but has minimal impact on Malaysia’s SBSR industry overall. Malaysia excels in small to medium-sized vessels, with exports focused on Southeast Asia, the Middle East, Oceania, and Europe. While the tariff review may increase the price of US-sourced equipment and affect regional trade dynamics, Malaysia’s century-old SBSR industry is well placed to adapt by shifting to non-US equipment and reinforcing regional markets.
INDUSTRY
Investment in the SBSR Industry
Several key global drivers of change are shaping the SBSR industry. First, IMO’s target for 2050 is to achieve net-zero GHGemissions from international shipping, a significant advancement from the initial strategy aiming for a 50% reduction by 2050. This revised strategy also includes interim targets of reducing emissions by 20% (striving for 30%) by 2030 and 70% (striving for 80%) by 2040. Consequently, shipowners are prioritising shipbuilding projects that focus on energy efficiency, low-carbon fuels, hybridisation and battery systems. The Malaysian SBSR industry is not just reacting, but proactively and evolving to meet these new challenges. AMIM has been at the forefront since 2013, starting with building diesel electric offshore support vessels and advancing towards hybridisation and battery technology. They have empowered members through summits and roadshows on hybridisation and electrification, with investments already underway to build knowledge and readiness for maritime sustainability.
Globally, many countries are introducing financial incentives, tax benefits, and funding programs to attract shipbuilders and investors aiming to develop cutting-edge maritime infrastructure. However, Malaysia currently lacks a clear vision, roadmap and such incentives for SBSR investment, and AMIM continues to engage the government to provide support aligned with IMO’s 2050 target. A notable example of maritime innovation is the Frisia E-1, Germany’s first fully electric catamaran ferry, which operates a carbon-neutral service powered by onshore solar panels. Similarly, the RSD-E Tug 2513, building on an efficient diesel propulsion design, can perform multiple towage operations on a single charge and recharge in just two hours. It is encouraging to see maritime sustainability gaining traction; what was once a rarely mentioned topic is now central to industry discussions. This exciting period of innovation suggests we may already be witnessing the first signs of a successful maritime energy transition.
Technology Adoption and Innovation
Automation and digitalisation are revolutionising the shipbuilding industry, with digital twin technologies playing a pivotal role in transforming processes by reducing costs while enhancing precision and efficiency. Alongside this, advanced manufacturing techniques and tools such as CNC machining, robotics and modular shipbuilding methods are driving improvements in production speed, quality and sustainability. As smart ship technologies rise, the importance of cybersecurity becomes paramount. Recognising this, AMIM is initiating knowledge-sharing sessions focused on the upcoming regulations for Cyber Resilience Enforcement. The emergence of smart ships demands robust cybersecurity measures, sophisticated data analytics and seamless communication systems to ensure effective vessel operation and monitoring.
Skills Development for the Maritime Workforce
Skills development for the maritime workforce is increasingly critical as the industry evolves. Technical upskilling and industry-academia collaboration are essential, with AMIM members and training institutions such as UniKL MIMET and Universiti Malaysia Terengganu playing a key role in training future maritime professionals through hands-on, technology-driven learning. The government’s emphasis on TVET is long overdue; while engineers are needed, producing more technicians to drive industry operations is even more critical. Syllabuses must become more dynamic, reflecting current and future industry needs while anchoring strong basic engineering knowledge. Digital competency and smart ship operations are also vital, as the growing reliance on automation requires workers to be proficient in computer science, electrical, electronics, and instrumentation. Additionally, maritime professionals must be well-versed in new environmental regulations, alternative fuel systems, and eco-friendly ship design as green shipping initiatives expand to ensure sustainability and compliance with evolving global standards.
TALENT
Investment in the SBSR industry
Now is a strategic time to invest in Malaysia’s Shipbuilding and Ship Repair (SBSR) industry, especially in upgrading physical facilities and adopting high technology, modern equipment, and advanced Information Technology (IT) solutions. The sector is undergoing significant transformation, strongly pushing toward digitalisation, automation, green technologies and smart ship systems to enhance competitiveness, shorten delivery times and improve product quality. Government support is robust, with new incentives such as pioneer status offering 70% income tax exemption for five years or a 60% investment tax allowance on qualifying capital expenditures, available nationwide until 2027. These measures, along with Malaysia’s strategic location and established maritime infrastructure, position the country to become a leading SBSR hub in Asia.
Technology adoption and innovation
The adoption of advanced technologies such as robotics for inspections and maintenance, virtual reality and digital twin applications for ship design enables local industry players to meet rising global demand for environmentally friendly, efficient vessels that align with Environmental, Social and Governance (ESG) principles and Malaysia’s net-zero targets by 2050. Continuous investment in innovation ensures compliance with international standards and strengthens Malaysia’s reputation for quality and reliability in the global market.
Skills development for the maritime workforce
Equally critical is the development of a highly skilled maritime workforce. As the industry integrates more automation and digital systems, workers must acquire expertise in robotics, artificial intelligence, data analytics and digital platforms to support operational efficiency, predictive maintenance and vessel performance. The government’s commitment to skills development, combined with industry collaboration and targeted incentives, will help ensure Malaysia’s SBSR sector remains competitive, sustainable, and primed for long-term growth.
CERTIFICATION
Investment in the SBSR Industry
The urgent need for decarbonisation increasingly drives global investment in the Shipbuilding and Ship Repair (SBSR) industry, as governments implement policies and incentives to promote sustainable shipbuilding technologies that reduce environmental impact and meet emissions targets. Alongside this, rapid advancements in automation and digitalisation, such as autonomous systems, digital twins and data analytics, are attracting significant funding to improve operational efficiency and cut costs. Additionally, growing demand for innovative, efficient and environmentally friendly vessels, pushing investors to support cutting-edge shipbuilding and repair solutions that align with evolving market needs and sustainability goals.
Technology Adoption and Innovation
The adoption of new technologies in the SBSR industry is primarily propelled by stringent environmental regulations, including the International Maritime Organisation’s carbon intensity reduction measures and the European Union (EU) Emissions Trading System, which compel shipbuilders to develop energy-efficient and low-emission vessels. Furthermore, the rise of ship connectivity and the widespread use of onboard sensors enable advanced data analytics, predictive maintenance, and remote monitoring, all of which enhance operational efficiency and support emissions reduction. These innovations are critical for modernising the industry and meeting the dual demands of regulatory compliance and market competitiveness.
Skills Development for the Maritime Workforce
As the maritime industry evolves, developing a workforce with specialised skills in decarbonisation and sustainability is essential, particularly to manage alternative fuels and new environmental technologies safely and effectively. The increasing complexity of automated and digitally integrated ships also demands expertise in data analysis, software development and systems integration, requiring ongoing upskilling and reskilling initiatives. Moreover, the future maritime workforce must possess multidisciplinary competencies that combine traditional maritime knowledge with emerging fields such as renewable energy and Industry 4.0 technologies, supported by updated training programmes and strong collaboration between industry, academia, and government to ensure readiness for future challenges.
- Strengthening Malaysia’s Global Positioning in SBSR
INVESTMENT
Malaysia’s strategic geographical position along the Straits of Malacca, one of the world’s busiest maritime trade corridors, offers a natural advantage, with about 60% of global trade passing through these waters. This makes Malaysia ideally situated to provide critical maritime services such as bunkering, MRO and transhipment operations. Recognising this potential, the Government is actively promoting the development of an integrated maritime hub to support the regional and global maritime community. Strategic shipyard locations in Lumut, Melaka, and Johor are being positioned as regional anchors for MRO services and Original Equipment Manufacturer (OEM) partnerships, enabling these shipyards to efficiently serve a wide spectrum of international clients seeking well-connected and cost-effective service hubs.
Malaysia also possesses niche expertise in constructing and servicing of specialised vessels, particularly in the offshore and defence segments. Offshore Support Vessels (OSVs) and Floating Production Storage and Offloading (FPSO) conversions remain core competencies, led by established players such as Malaysia Marine and Heavy Engineering (MMHE) and Shin Yang Shipyard. In the naval defence sector, companies like Lumut Naval Shipyard (LUNAS) and operations in Langkawi continue to lead in littoral combat ship production. At the same time, BHIC Submarine Engineering in Sabah provides rare regional Submarine MRO capabilities. These specialisations allow Malaysia to serve defence and energy clients that require bespoke, high-performance vessel solutions, setting the country apart from mass-market shipbuilders in East Asia.
The Government’s prioritisation of the SBSR sector under the New Industrial Master Plan (NIMP) 2030 underscores its strategic importance to national economic growth and industrial modernisation. This commitment is reinforced by policy instruments such as Automation Capital Allowance, SBSR Tax Incentives and Reinvestment Allowances administered through MIDA, which support the integration of Industry 4.0 technologies across the SBSR value chain. These incentives drive productivity, precision, and energy efficiency, aligning Malaysia’s SBSR capabilities with international sustainability and digitalisation benchmarks. NIMP 2030 also promotes a collaborative approach among government, industry and academia, fostering maritime technology incubators and innovation ecosystems to accelerate local development in smart ship design, alternative propulsion systems, maritime cybersecurity and AI-powered diagnostics and automation.
INDUSTRY
Malaysia’s competitive advantages in the SBSR industry are anchored by its strategic geographical location along key global shipping routes such as the Straits of Malacca and the South China Sea, making it an ideal hub for shipbuilding, repair and maintenance services. The country boasts diverse industry expertise and a skilled workforce, supported by strong local talent and technical education institutions. This enables Malaysia to provide the human capital needed to support SBSR growth. Government support and incentives, including tax incentives, funding for R&D, and infrastructure development initiatives, further bolster industry expansion. To strengthen its global positioning, Malaysia should focus on investment in high-value niche markets, such as specialised shipbuilding segments for offshore support vessels, modern fishing vessels, green ships and Government or GLCs projects in security, defence and port operations. Enhancing technological capabilities by encouraging shipyards to adopt digital technologies, automation and AI-driven predictive maintenance will improve efficiency and global competitiveness. Additionally, strengthening international partnerships through collaborations with global maritime players, research institutions and technology providers can accelerate knowledge transfer and market expansion.
TALENT
Producing a highly skilled workforce will transform Malaysia’s maritime industry, strengthening its global competitiveness and driving sustainable, long-term growth. With around 100 shipyards nationwide, Malaysia is well-positioned to expand its talent pipeline by producing more graduates from certificate to postgraduate levels who are equipped to meet the evolving needs of the sector. Innovative teaching concepts such as the “Teaching Factory” model will enhance local technical capabilities and foster a culture of innovation, enabling the industry to move from low-margin ship repair to high-value shipbuilding and advanced marine engineering.
Engineers and naval architects with expertise in marine design, automation and artificial intelligence will be crucial for developing complex, innovative vessels and facilitating the adoption of smart manufacturing, including AI-driven production, IoT-based monitoring and predictive maintenance. A highly skilled workforce will also reduce production errors, improve assembly precision and shorten repair times, allowing Malaysia to compete on technology and quality, mirroring the successful transitions in countries like South Korea and Japan.
Rapid growth in producing professionals for marine support services, alongside expanded partnerships between shipyards, technical universities, and research institutions, will foster innovation and effective knowledge transfer. Government incentives and increased investment in workforce training, particularly in marine technologies and Industry 4.0 practices, will further ensure that Malaysia’s maritime sector remains competitive and resilient in the face of global challenges.
CERTIFICATION
Malaysia’s competitive advantages lie in its cost competitiveness and strategic location. The country offers a skilled workforce at more attractive rates compared to Japan, making it an ideal destination for shipbuilding services; for example, Japan could subcontract some shipbuilding blocks to Malaysia to reduce overall costs. Geographically, Malaysia is positioned close to major shipbuilding nations like Japan and Korea, enhancing its appeal as a regional hub.
To further strengthen its global position in the SBSR industry, Malaysia can pursue joint ventures or partnerships with shipyards from advanced countries and identify competitive market segments or ship components where it can provide lower-cost, skilled services. Given the stiff competition Japan and Korea face from China, Malaysian yards could explore subcontracting opportunities to offer better pricing, helping those yards compete more effectively. Additionally, Malaysia can specialise in niche product offerings, targeting markets such as the Middle East and Australia, by leveraging its lower cost structure to deliver specialised vessels and services.
- Navigating Transformation: The Future of Malaysia’s SBSR Sector
INVESTMENT
If Malaysia plays its cards right, the country could emerge as the Association of Southeast Asian Nations (ASEAN)’s green shipbuilding hub, leveraging its strategic location and Petronas’ push for LNG and offshore wind to build the clean ships of tomorrow. The nation’s shipyards and shipbuilding industry are poised for a tech-driven transformation, with flagship yards like MMHE adopting AI-driven design and robot-assisted welding to cut production times and ports integrating digital twins for real-time vessel monitoring, all of which align with global trends toward digitalisation and efficiency. Decommissioning also presents a significant opportunity, as Malaysia can capitalise on contracts for dismantling aging offshore infrastructure and circular economy ship recycling, supported by Environmental, Social, and Governance (ESG)-aligned policies. By focusing on niche strengths, aggressive technology adoption, and green specialisation, Malaysia is well-positioned to become a high-value, sustainable maritime hub. However, the country must remain vigilant of regional competitors like Vietnam and Indonesia, whose lower-cost yards may offer a competitive edge. To sustain its advantage, Malaysia should focus on high-tech, high-margin segments and reduce reliance on foreign automation tools by fostering local robotic manufacturing and system integration, further boosting productivity and innovation in the SBSR sector.
INDUSTRY
Over the next five to ten years, Malaysia’s SBSR industry is poised for significant transformation driven by global and domestic trends. There will be a stronger focus on green shipbuilding as Malaysia is expected to develop more fuel-efficient and environmentally friendly ships, including LNG-powered, alternative-fuelled and hybrid vessels, in response to growing global sustainability efforts and the nation’s commitment to net-zero carbon emissions by 2050. Shipyards will increasingly integrate digital solutions and smart technologies such as automation, AI-driven maintenance and digital twins to modernise their operations, improve efficiency and attract international clients. Additionally, with the rising demand for sustainable practices, Malaysia is set to enhance its capabilities in offshore decommissioning and ship recycling, creating new business opportunities within the circular economy and further establishing itself as a leading SBSR hub in Asia.
TALENT
Over the next 5 to 10 years, Malaysia’s Shipbuilding and Ship Repair (SBSR) industry is poised for a major transformation, propelled by rapid technological advancements, a global shift toward sustainability and intensifying international competition. Adopting advanced technologies such as robotics for inspections, virtual reality, and digital twin applications for ship design, and smart manufacturing solutions will be central to increasing productivity, precision and compliance with international standards. Green and sustainable shipbuilding will become a priority, with Malaysian shipyards increasingly focusing on fuel-efficient, low-emission vessels and integrating Environmental, Social and Governance (ESG) principles to align with both market demand and the nation’s net-zero carbon ambitions by 2050.
A structured approach to workforce and talent development will be crucial, ensuring that engineers, naval architects and technicians are equipped with the skills needed for automation, AI-driven production and digital platforms. International collaboration among shipyards, designers and marine support services is expected to expand, fostering knowledge transfer, innovation and the development of cutting-edge vessels. Modernisation of shipyards and port infrastructure, supported by government incentives such as extended tax exemptions and financial schemes, will further enhance Malaysia’s capacity to serve as a regional SBSR hub.
Resilience to global market changes will be built through diversification, strategic partnerships and a focus on high-value, specialised vessels, enabling the industry to weather external shocks and supply chain disruptions. In summary, Malaysia’s SBSR industry is set to prosper by embracing innovation, sustainability and global partnerships. By prioritising advanced technology, green practices, talent development and infrastructure upgrades, Malaysia is well-positioned to become a key player in the international maritime sector, with a competitive, resilient and forward-looking SBSR industry.
CERTIFICATION
In the next 5 to 10 years, Malaysia’s Shipbuilding and Ship Repair (SBSR) industry is poised for significant transformation, leveraging its strategic location, established maritime capabilities, and robust government support to diversify and expand its offerings. Malaysia is well-positioned to target niche market segments such as offshore structures and ship decommissioning, capitalising on its expertise and cost advantages to serve specialised global demands. At the same time, the industry is expected to emerge as a regional hub for constructing and repairing environmentally friendly vessels, driven by rising international demand for sustainable shipping solutions and Malaysia’s commitment to decarbonisation and Environmental, Social and Governance (ESG) principles. With the government extending tax incentives and providing financial support for innovation, local shipyards are encouraged to modernise facilities and adopt advanced technologies such as robotics, digital twins and smart manufacturing to enhance productivity and meet international standards. By focusing on innovation, sustainability, and strategic partnerships, Malaysia can strengthen its position as a leading SBSR hub in Asia, ensuring long-term growth and resilience in a competitive global maritime landscape
