Maritime Industry Seeks Budget 2025 Incentives For Growth And Decarbonisation

By Harizah Hanim Mohamed

KUALA LUMPUR, Oct 1 (Bernama) -- Key players in the maritime industry are calling for Budget 2025 incentives to stimulate growth and advance the green development agenda, specifically through support for low-emission vessel acquisition, green port investments and infrastructure expansion.

Port operators are seeking tax relief and incentives amid increasing global trade volumes.

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Suria Capital Holdings Bhd's group managing director and Sabah Port Sdn Bhd (SPSB) managing director, Datuk Ng Kiat Min, stated that in line with the national decarbonisation agenda, SPSB hopes for tax reliefs and incentives to encourage greater investment in technology and sustainability projects.

“As part of our commitment to this crucial initiative, we are working to reduce our dependency on fossil fuels and are exploring renewable energy and electrification options for cargo handling equipment,” she told Bernama.

Ng noted that SPSB received the Green Terminal Label Certification in 2023 and has set a goal for all ports under its management to achieve green port status.

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“To realise this vision, we hope for incentives to further advance the application of green technology at our ports,” she said, adding that SPSB aims to expand the use of solar energy and transition to green energy on a larger scale, with hopes for some form of rebate to support this investment.

Ng further suggested that the government should consider offering tax breaks or incentives to aid ongoing port infrastructure investments, such as the construction of the Sapangar Bay Conventional Cargo Terminal and major upgrades at Tawau Port.

These initiatives would allow SPSB to fully capitalise on the improvements.

“Incentives or relief would enable us to channel more resources towards these vital projects without needing to secure loans or external funding. Such measures would also allow us to reinvest in further infrastructure improvements, boosting the capacity and efficiency of our ports.

“This would not only strengthen port operations but also significantly contribute to the state’s economic and trade growth,” she said.

On the issue of tariff revision, Ng stressed the need for a full revision of the port tariff, which is still based on the 1977 rate set by the Sabah Ports Authority.

“We believe a comprehensive revision is essential to align with current industry standards and operational needs. Modernising our tariff structure will help us remain competitive while providing efficient and reliable services to port users,” she added.

Penang Port Sdn Bhd chief executive officer, Datuk Sasedharan Vasudevan, echoed these sentiments, noting that as Malaysia prepares for Budget 2025, port operators nationwide are seeking solutions to critical challenges in port expansion, operational costs, and workforce development—all crucial for growth in a competitive global environment.

“One of the primary requests from port operators is for increased financial incentives to boost capital expenditure in the maritime sector.

“Operators are urging the government to consider tax adjustments that would enable them to reinvest profits into port expansion and modernisation. This reinvestment is crucial not only for enhancing capacity but also for maintaining competitive tariff rates in an increasingly demanding market,” he told Bernama.

Sasedharan pointed out that port tariffs have become a significant concern for operators, as these fees directly affect their ability to fund expansions and improvements.

“For instance, the labour-intensive nature of port operations is closely linked to cargo volume, so managing tariffs is critical for sustaining operations and ensuring ports remain financially viable,” he said.

Another area requiring attention, according to Sasedharan, is incentives for training and skill development initiatives to better equip the workforce for the evolving demands of the maritime industry.

“As ports expand and adopt new technologies, a skilled workforce becomes increasingly important,” he said, adding that despite the dynamic nature of the port industry, there is optimism among operators regarding the government’s responsiveness to industry needs.

Many operators are confident the Ministry of Transport is open to their recommendations, seeing this government-industry collaboration as key to meaningful outcomes in the upcoming budget.

Funding mechanisms crucial for shipping industry alignment with decarbonisation agenda

Malaysia Oil Support Vessel (OSV) owners' association president, Jamalludin Obeng, highlighted the need for a funding mechanism to facilitate fleet renewals, given the ageing fleet in Malaysia.

“We must remove financial barriers for OSV owners to invest in new vessels, as the average age of Malaysian OSVs is now 12.3 years,” he told Bernama.

Between 2010 and 2015, Malaysian companies spent approximately RM15 billion on new OSV builds.

“Assuming 70 per cent of this requires financing by commercial and development banks, about RM10 billion in loans would be needed. If the government covers two per cent of this, it would amount to around RM200 million,” he explained.

Addressing the urgency of the situation, Jamalludin noted that while vessels can operate for up to 20 years, building a new vessel can take up to three years due to the extensive planning and long lead times for components.

“The next few years are critical for renewing Malaysia’s OSV fleet to maintain operational efficiency and competitiveness,” he added, stressing that the renewals would also pave the way for greener vessels, such as OSVs powered by diesel-electric engines.

Jamalludin also urged the government to consider tax exemptions for Malaysian seafarers in Budget 2025, as local crews must compete with foreign vessels whose crews enjoy tax-exempt status.

Malaysian Shipowners' Association (MASA) chairman, Mohamed Safwan Othman, shared similar views, hoping for the reactivation of the national shipping fund to acquire new, lower-emission ships.

“We hope to see two things in Budget 2025: the reactivation of the shipping fund with a subsidised loan to acquire low-carbon ships and tax rebates for building and repairing ships in Malaysian shipyards,” he said.

-- BERNAMA