Petronas’ OSV tender supportive of local shipbuilding growth

By RAHIMI YUNUS / Pic By BLOOMBERG

THE Association of Marine Industries of Malaysia (AMIM) is positive of Petroliam Nasional Bhd’s (Petronas) plan to put out a tender to build 16 offshore support vessels (OSVs).

AMIM president Soo Jee Main said Petronas’ proposal to build new OSVs to phase out its old fleet would contribute to the growth of the local shipbuilding and ship repair (SBSR) industry.

AMIM signed the memorandum of understanding with Petronas on Nov 24, 2020, with the main objective to support the local shipbuilding ecosystem by developing fit-for-purpose OSV design for the oil and gas industry.

“I wish to extend my appreciation to Petronas for the opportunity to be part of this historic moment. The SBSR industry players, especially AMIM members, are really thankful that the new OSVs will be built in local shipyards.

“The SBSR industry and its spillover effects can contribute significantly to the Malaysian economy, not just to shipyards, but the whole maritime industry ecosystem. This is timely for the recovery of Malaysia’s economy after Covid-19 disrupting the global economy,” Soo said in a statement yesterday.

Under Petronas’ new build pro-gramme, all 10 yards that were shortlisted by the national oil company for Phase 1 of the Safina Project are AMIM members. Bidders are required to engage these listed shipyards for the construction of 16 OSVs.

AMIM said local shipyards have the capacity and capability to be involved in a big project such as the Safina Project. It said Malaysian shipyards have built over 297 OSVs since 2005 and have been sold worldwide.

AMIM said the extension of the bona fide status incentive until Dec 31, 2022, as announced in Budget 2021 will provide huge support to shipyards that will be participating in providing competitive pricing to the Petronas’ new build programme.

“Finally, it is implemented after countless engagements and meetings, especially with the Ministry of Finance (MoF) and the Ministry of International Trade and Industry (MITI).

“As part of the bona fide task force set up by the government, AMIM would like to extend the utmost gratitude towards the efforts and decision by MoF and MITI on the extension of the tax incentive,” Soo said.

He noted, however, that the extension of existing tax incentives are still insufficient, making it difficult for shipyards to plan and encourage new investments in the SBSR industry to increase capacity and capability.

“Petronas’ new build programme is looking to build up to 100 vessels over the next four to five years to phase out the older vessel reaching the 15 years age limit. Even Phase 1 of the new build programme can- not be completed within the timeframe of the new extension deadline,” he said.

Soo said the usual shipbuilding tender or bidding process takes about six months, while shipbuilding construction duration is about 18 to 24 months.

He said shipyards are in a difficult position to bid for the new contract if the subsequent renewal of bona fide cannot be ascertained.

The uncertainty makes it difficult for shipbuilders to determine whether to factor in the duty and tax for materials and equipment used directly for the construction of vessels or otherwise.

Malaysia’s SBSR industry covers an extensive range of ships, most of which specialise in building small and medium-sized vessels, such as ferries, barges, tugs, OSVs, yachts, fishing vessels and patrol crafts.

Malaysian-made vessels have been exported to Australia, New Zealand, Pacific Islander (Fiji, Tokelau, New Caledonia), the United Arab Emirates, Qatar, Turkey, Indonesia, Thailand and Singapore.