Shipbuilding / Ship Repair Industry Strategic Plan 2020 STATUS REPORT 2nd October 2012 © MIGHT 2012 Proprietary and Confidential 1 Content Recap Industry y Performance Action Taken Number of effective slides: 16 Challenges Way Forward © MIGHT 2012 Proprietary and Confidential 2 Content Recap Industry y Performance Action Taken Challenges Way Forward © MIGHT 2012 Proprietary and Confidential 3 Recap Since the last forum held in 2010, shipbuilding / ship repair sector of the maritime industry has gone through several key milestones Stakeholders Briefing 2010 © MIGHT 2012 2011 Proprietary and Confidential 2012 4 Recap SBSR Strategic Plan 2020 - our vision is to be a major player in the small to medium-sized medium sized shipbuilding market; substantially contributing to the nation’s economy OBJECTIVES to capture 80% of local new build market to capture 2% of global new build market to capture 3% of Selat Melaka repair market to capture 80% South China Sea offshore repair market to focus development initiatives on niche market k t involving i l i <120 <120m vessels l © MIGHT 2012 Proprietary and Confidential 5 Recap SBSR Strategic Plan 2020 - in our quest to achieve the set objectives, objectives seven (7) Strategies and forty (40) Action items have been identified STRATEGIES 1. Establish business friendly policies that support the growth of the industry 2 Strengthen 2. St th institutional i tit ti l framework f k 3. Reinforce regulatory framework to assure the integrity of SBSR companies and quality of their products 4. Attract and prepare adequate and capable workforce 5 Apply local design and adopt new shipbuilding / ship repair technologies 5. 6. Improve financial & incentive packages and promote inward investment 7. Upgrade competency and level of sophistication of the industry © MIGHT 2012 Proprietary and Confidential 6 Content Recap Industry y Performance Action Taken Challenges Way Forward © MIGHT 2012 Proprietary and Confidential 7 Industry Performance In 2011, SBSR industry generated RM7.05 billion in revenue, provided more than 30,000 30 000 jobs & attracted investments worth ~RM6 billion approved by MITI Export & Import: Ships, Boats & Floating Structures Number of vessels imported by local shipowners is reducing in the last 3 yyears - g good sign g to local shipbuilders p 6 Imports 5 Exports 4 RM Billions Downtrend in exports indicates that local shipyards have not been able to capture foreign new build market due to global economic slowdown capturing domestic new build market i th is therefore f essential ti l 3 2 1 0 2007 2008 2009 2010 2011 2012 (Jan ‐ July) Source : MITI © MIGHT 2012 Proprietary and Confidential 8 Industry Performance Number of vessel build by local yards is relatively consistent in the last 3 years whilst gross tonnage is on an uptrend Although the size of vessels is increasing, the complexity of the product may not necessarily y be in accordance with our target g Out of RM2.4 billion worth of vessels built last year, 14% are OSVs - slightly lower than the previous year Local Build - Vessel Type No. of vessel Total GRT - New Build 200 200 OTHERS 180 180 160 140 OFFSHORE 140 120 PASSENGER 100 SPECIALTY SHIP 80 Th housands GOVERNMENT 160 TANKER 60 100 80 60 BULKER 40 40 CONTAINER 20 N. COASTAL 0 2005 © MIGHT 2012 120 2006 2007 2008 2009 Source : Marine Department 2010 2011 20 0 2007 Proprietary and Confidential 2008 2009 2010 Source : Marine Department 2011 9 Content Recap Industry y Performance Action Taken Challenges Way Forward © MIGHT 2012 Proprietary and Confidential 10 Action Taken Several action items identified in SBSR Plan 2020 are currently implemented through an EPP under Business Services NKEA Strategy Strategy 1 Policy 1 3 imports 1.3 i t off raw material t i l andd marine i equipment i t Strategy 4 Human Capital 4 2 enhancement of blue collar training 4.2 4.3 bridging program for graduate engineers 4.4 establishment of apprentice programs Strategy 5 Design & Technology 5.2 developing indigenous OSV design Emerging Malaysia g/ as Shipbuilding Ship Repair Hub Strategy 7 © MIGHT 2012 Industry Enhancement 7.4 improve river draft around SBSR clusters Proprietary and Confidential 11 Action Taken MITI is positively responding to the industry’s request to ease the process of importing raw materials (Action 1 1.3) 3) raw materials certified by internationally recognized Classification bodies are exempted from SIRIM sample testing applicable to all materials for use in SBSR and marine i equipment i t manufacturing f t i activities ti iti propose introduction of ‘Certificate of Recognition’ (COR) to replace Bona-Fide scheme 1 • Exporter send invoice & mill cert / Cert of Origin to local companies 2 • C Companies i submit b it above b documents, relevant forms & ‘COR’ to Customs 3 © MIGHT 2012 Proprietary and Confidential • Goods allowed out from port 12 Action Taken Adequate supply of capable workforce (both white & blue collars) is key to the growth of SBSR industry (Actions 4.2, 4 2 4.3, 4 3 4.4) 4 4) MOHR and MARA are currently engaged to develop National Occupational Skill Standard (NOSS) for specific skills of high demand Suitable shipyards are being identified to participate in SLDN apprentice program Ministry of Human Resource MIGHT Meteor has been tasked to undertake MIGHT-Meteor bridging programs for graduate engineers through TeSSDE / LEADER Series AMIM has been appointed by MOHR as Industrial Lead Body (ILB) to chart the direction of HCD for SBSR industry © MIGHT 2012 Proprietary and Confidential 13 Action Taken Indigenous OSV design is essential to maximize local content in the targeted niche market (Action 5 5.2) 2) Discussions with local design houses and system designers / providers are on going Project duration - 2 years from design to prototype Boustead to formalize a group of design team Specification of OSV required by OSV owners and P t Petronas are being b i compiled il d © MIGHT 2012 Proprietary and Confidential 14 Action Taken Permanent solution to siltation problem at Kuala Baram will further grow SBSR activities in Miri (Action 7.4) 7 4) State Government and Authorities are reviewing various options proposed by the consultant & technical experts - channeling siltation out to deeper water & maintaining draft at least 8m Project funding option is yet to be finalized - 100% PFI & joint funding are being considered © MIGHT 2012 Proprietary and Confidential 15 Action Taken In intensifying global marketing, MATRADE is collaborating with AMIM members to facilitate international trade for SBSR industry Specific Marketing Mission (SMM) - MATRADE’s Business Trade in Singapore during Asia Pacific Maritime Exhibition (Action 2.4) Business Partnership p Program g with Gyeongnam y g Province of South Korea - potential collaboration with renowned Korean shipbuilders & equipment manufacturers (Action 7.2) © MIGHT 2012 Proprietary and Confidential 16 Action Taken Discussions with MOT and Marine Department are underway to tighten Cabotage Policy and reinforce regulatory framework In response to request made by East Malaysia traders to use more foreign flagged vessels, vessels MIGHT insisted MOT not to further relaxed the Cabotage Policy - to date, remain status quo (Action 1.1) Apart from resolving CoA issue, issue proposal to use ‘Certificate Certificate of Recognition Recognition’ (COR) scheme to promote certain level of industry standard is well received by Marine Department (Action 3.2) © MIGHT 2012 Proprietary and Confidential 17 Action Taken A proposal is to be tabled to MoF & MIDA to stimulate industry growth by incentivising DDI and FDI (Action 6.3) 6 3) Sector Shipbuilding Ship Repair Training Certification © MIGHT 2012 Activities Incentive Justification Ship ddesign Shi i engineering & R&D PS/ITA & RA Promote P t growth th in i high hi h value l marine i ddesign i andd engineering i i business through DDI and FDI Eqpt manufacturing & assemblyy PS/ITA & RA Promote growth of local content in shipbuilding activities through DDI and FDI Ship construction RA Increase capability and capacity of local shipyards in capturing international and domestic market through DDI only Repair / Conversion / Upgrade / MRO RA Increase capability and capacity of local shipyards in capturing international and domestic market through DDI only Component MRO PS/ITA & RA Seafarers training PS/ITA & RA Technicians training PS/ITA & RA Design approval, marine product certification RA Promote growth in equipment / sub-system MRO activities though DDI and FDI Promote P t private i t sector t iinvestment t t in i fulfilling f lfilli the th demand d d off marine i industry workforce requirement though DDI and FDI Encourage locally established classification bodies to deepen their activities beyond basic survey services Proprietary and Confidential 18 Content Recap Industry y Performance Action Taken Challenges Way Forward © MIGHT 2012 Proprietary and Confidential 19 Challenges New Build & Equipment Market - specific actions have to be taken to overcome the following challenges Replacing foreign vessels currently serving the local O&G sector - TERAJU TERAJU’s s target to increase Bumiputera participation Shipyards capability to satisfy shipowners’ quality, cost and delivery expectation Capability of local players to market its own products without going through third party / broker Component and equipment manufacturers to qualify their products into marine standard and meeting classification requirement F i market Foreign k t penetration t ti as a resultlt off FTAs FTA entered t d by b Malaysia M l i © MIGHT 2012 Proprietary and Confidential 20 Challenges Ship Repair Market - specific actions have to be taken to overcome the following challenges Capturing repair and conversion markets from vessels plying the Straits of Malacca Capability of local players to be responsive and achieve the required q turn around time Availability of service providers in East Coast to avoid OSVs resort to Batam facilities East Malaysia shipyards to expand their capabilities to offer repair services apart from new building © MIGHT 2012 Proprietary and Confidential 21 Content Recap Industry y Performance Action Taken Challenges Way Forward © MIGHT 2012 Proprietary and Confidential 22 Way Forward Cooperation of all stakeholders are requested to enable the following urgent initiatives to be undertaken next year Financial contribution by the industry to enable more 6G welders to be produced t fulfill to f lfill currentt d demand d off skilled kill d ffabricators bi t b based d on MARA MARA-Petronas P t model d l (Action 4.1) Introduction of Export Rebate, income tax exemption for OSV seafarers and import tax exemption for shipowners (Action 6.2) Improving industry data capture system between local companies, Classification B di Bodies, M Marine i D Department, t t R Royall C Customs t and d MIGHT (Action (A ti 3 3.5) 5) © MIGHT 2012 Proprietary and Confidential 23 Th k You Thank Y www.might.org.my © MIGHT 2012 Proprietary and Confidential 24