YB Tuan Lim Guan Eng, Minister of Finance Malaysia
Launch of Maritime Fund 2.0
17 September, 2019 (Tuesday), Kota Kinabalu
YBhg Datuk Zaiton Mohd Hassan
Chairman of Bank Pembangunan Malaysia Bhd
YBhg Encik Arshad Mohamed Ismail
President and Group Chief Executive Officer of Bank Pembangunan
Senior officers from the respective ministries;
Ladies and gentlemen,
Good morning and Salam Harapan,
1. I’m honoured to join you today at the launch of Bank Pembangunan Malaysia Bhd’s RM1.5 billion Maritime Fund 2.0, which we hope will help boost the industry, and enable Malaysia to become a major player in the global maritime industry.
GROWTH POTENTIAL OF MALAYSIA’S MARITIME INDUSTRY
2. Our dependency on sea and oceanic trade cannot be understated. In fact, our export-based industrialisation and our rise from a backwater to an upper middle income economy would not have been possible if we did not have access to one of the busiest shipping lanes in the world, supported by excellent port infrastructure and accommodative industrial policy carried out by the Government.
3. The importance of maritime trade is all the more apparent today with the ongoing trade war between the United States and China. Luckily, the trade war has positive effects on Malaysia due to trade and investment diversion. According to MIDA, during the first half of 2019 approved foreign investment across all sectors rose 97.2% to RM49.5 billion from RM25.1 billion last year. Out of the RM49.5 billion approved foreign investment, RM25.1 billion were in manufacturing. This is after approved foreign investment reached a record high in 2018, hitting RM80.1 billion last year with RM58.0 billion dedicated for the manufacturing sector.
4. As global investors and manufacturers seek safe havens to protect their supply chain, Malaysia’s geographical location, combined with its skilled workforce and clean and rules-based governance, makes for an attractive proposition. However, we believe that a prolonged trade war will in the end benefit none, and Malaysia looks forward to a conclusion to the dispute.
5. While we remain committed to multilateral international trade that is both free and fair, in the meantime the Government must do more to increase Malaysian competitiveness, either through regulatory reforms or through enhancement of sea infrastructure and logistics.
6. The maritime sector will be crucial in supporting sustainable Malaysia growth and it has a big role in realising the Malaysian dream to become a fully developed nation. It is then highly necessary for Malaysia’s local shipping industry be afforded the opportunity to develop and expand in order to be competitive and relevant nationally and globally.
7. Rest assured that the Government has and will continue to extend further support to the industry, designating the shipbuilding and repairing industry as a strategic sector, providing Federal funds to dredge port harbours, as well as extending financial assistance to ship owners in the form of a RM1.5 billion Maritime Fund, which we are launching today.
8. It is also worth noting that under Budget 2019, the Government has earmarked 153.8 hectares of land in Pulau Indah for the development of a free zone, which is expected to bring further growth for the port in terms of cargo generation.
MARITIME FUND 2.0 DETAILS
9. The Maritime Fund 2.0, a relaunch by Bank Pembangunan Malaysia after the existing fund expired in December last year, can be used by shipping and shipyard companies, as well as companies that are involved in marine and oil and gas-related activities. The financing can be tapped to part finance the acquisition of all types of vessels or aircraft, the purchase of land, the construction of shipyard, hangar or related infrastructure.
10. With all these initiatives in place, we are confident about the prospects and potential of the maritime sector. We believe that given Malaysia’s prime geographic location, our maritime economy can grow further with the support of numerous shipyards, ports and terminals. Even though the maritime industry in Malaysia continued to be in rough waters in recent years due to overcapacity and tight financing, opportunities are still aplenty. Players may also tap the regional market for growth by taking advantage of the ASEAN FreeTrade Area and expanding into other regions such as the Middle East. The demand for mariners or seafarers are also increasing as a result of the rapid global growth.
11. The Maritime Fund 2.0, alongside the Tourism Infrastructure Fund, RM3 Billion Industry Digitalisation Transformation Fund and RM1 Billion Sustainable Development Fund, managed by BPMB, are all part of Budget 2019’s initiatives aimed at providing Malaysian businesses the opportunity to equip themselves and adapt to the changing economy, whether caused by trade uncertainties, or digital disruption. I invite eligible Malaysian businesses to apply for these funds and seize the opportunities ahead., These initiatives announced last year in Budget 2019 shows the Government’s commitment to supporting Malaysian businesses as they adapt to becoming capable and competitive in this new economic landscape.
12. As we head towards 2020 and the tabling of Budget 2020, the Government has been engaging with industry players from across the spectrum to understand the sectoral challenges and difficulties faced by businesses, while getting feedback and ideas on fulfilling the “Shared Prosperity” vision.
13. We are optimistic that Malaysia’s maritime industry will be able to play a larger role in the development of our economy. I’ve discussed with the CEO to try to see if the interest rates can be further reduced. At present time, we are looking at an interest rate that ranges to a maximum of 5.5%, I’ve told Mr Arshad if possible that this should be brought below 5%. I’m sure you can expect to see further reduction in interest rates so that it can benefit borrowers, and more importantly the industries. However, a lot more needs to be done for Malaysia to become a bigger regional distribution centre and a true maritime nation. This cannot be done overnight, but if the private sector and the Government join hands and march forward together, this goal is within reach.