Malaysia’s ship owners are seeking some MYR3 billion (US$952 million) in government support over the next three years to help them overcome a financial fiasco that is threatening to push the industry into bankruptcy.
The Malaysian Shipowners Association (Masa) said the sector needs to restructure loans taken at the height of a ship-building frenzy years ago, reported the Malaysian Reserve.
In addition, the industry is currently being pummeled by low freight rates for dry bulk carriers, overcapacity, high bunker costs, and threatening geopolitical risks, according to Masa chairman Nordin Mat Yusoff.
The local shipping industry began rising to prominence in 2001, contributing 1.05 percent to the global merchant fleet capacity by 2009 before suffering from overcapacity and from the impact of a prolonged downturn in the global shipping sector starting late 2008, according to Business Times.
The hard times caused Malaysia International Shipping Corporation to get out of the box liner business in 2011 after sustaining massive losses. Many other big shipping companies are also in deep financial trouble, reports said.
The association said half of the local shipping companies listed on the Malaysia stock exchange have been either delisted or listed as under financial distress in the last couple of years.
Industry stakeholders are knocking on government doors to help bail them out of possible “extinction” with relief funding and refinancing assistance, pointing out that South Korean and Chinese governments are giving financial aid to support the shipping industry.