Frequently Ask Question (FAQs) of Centre for Maritime Economics and Industries (MEI)
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Maritime economics focuses on studying the production of services and manufacturing of products in the maritime industry. It is dedicated to developing an understanding of the dynamics of economic activities in the maritime industry and in explaining the factors affecting the demand and supply of those activities.
The types of economic activities in the maritime industry can be broadly categorised into the following :
i. Sea based activities
These include shipping, offshore oil and gas exploration and production, fishery and aquaculture.
ii. Land based
These include shipbuilding, ship repairing, port operations, cargo handling, logistics support services and maritime ancillary services such as naval architecture, maritime financing, legal advisory, classification, crewing, and product/equipment manufacturing.
According to UNCTAD, 85% of the world's trade (by volume) is carried by seaborne transport. For Malaysia, 95% of its trade is carried by merchant ships, and most of its hydrocarbon energy riches are found offshore. The seas also provide transportation, source of protein and recreation, and facilitate industrial activities that generate employment and positive economic multiplier effects to the country. Ships provide the most economically efficient means of transporting huge volumes of a variety of cargos and commodities across great distances. Ports act as gateways in facilitating the trade of many nations, including Malaysia. As such, it is hard to imagine international trade and the global economy - and for that matter modern living - to function efficiently without ships and ports, and the maritime industry in general.
There is no official definition of what constitutes a maritime nation but Malaysia, which is surrounded by seas and depends heavily on the seas to facilitate much of its trade and generate economic activities, and has done well to harness its maritime features, could well be considered as one. Malaysia enjoys a strategic location along major shipping trade lanes, namely Straits of Malacca and South China Sea, and draws its hydrocarbon energy riches and much of its source of protein from the seas. It has world class ports. and the world's largest owner/operator of gas tankers in MISC Bhd, the national career, and its shipyard are capable of building for the export markets. Malaysia also generates revenue from marine tourism by developing island resorts and promoting activities such as boating, cruising and diving. These attributes could well qualify Malaysia as a maritime nation.
There is no such body governing maritime economics activities as such activities are essentially governed at national level. However, through its work, the International Maritime Organisation (IMO), the United Nations body responsible towards safe, secure and clean seas, indirectly ensures that maritime economic activities are carried out in a sustainable and orderly manner. This is achieved via various IMO conventions governing activities such as shipping, port operations and shipbuidling and the United Nations Convention on Law of the Seas (UNCLOS).
Malaysia ranked as the 18th largest maritime nation in the world in a list compiled by United Nations Conference on Trade and Development (UNCTAD) in 2009, contributing 1.3% to world maritime trade volume and merchant shipping tonnage. MISC Bhd is world's largest owner/operator of gas tankers in MISC Bhd. Port of Tanjung Pelepas and Port Klang were ranked 15th and 18th respectively by UNCTAD in the list of the world's largest container ports by way of throughput volume handled in 2008. Bintulu Port is the world's largest LNG export terminal, while Johor Port is the world's largest palm oil exporting terminal. Malaysia is also a major player in the offshore oil and gas sector, being a net exporter of oil and gas. Testimony to its international stature as a maritime nation, Malaysia was re-elected as a member of the IMO Council in November 2009 for the third time.
According to the US Energy Information Administration (EIA), Malaysia was the world's largest exporter of crude oil and second largest of Liquefied Natural Gas (LNG) in 2009 after Qatar. The Oil and Gas Journal stated that as of January 2009, Malaysia had proven oil reserves of 4 billion barrels, much of which were found offshore, and gas reserves of 83 trillion cubic feet (tcf). According to Malaysia Industrial Development Authority (MIDA), the country had the world's 23 largest crude oil reserves and its 14th largest gas reserves in 2008. With the discovery of oil and gas fields in deepwater sites offshore Sabah and Sarawak in Borneo, Malaysia is poised to become a deepwater hub in the Asia Pacific. Petronas, the national oil company, is a Fortune 500 company which is involved in upstream and downstream activities and has emerged as a global player in offshore oil and gas E&P.
Several government agencies are involved in the maritime industry including :
- Ministry of Transport, through its Maritime Division, is responsible to build a modern, efficient and a safe maritime sector and carry out intersectoral activities in an effective, efficient and organised manner towards making Malaysia a maritime nation.
- Economic Planning Unit in the Prime Minister's Department formulates and oversee policies related to the nation's oil and gas industry.
- Ministry of Energy, Water and Communications regulates Malaysia's hydrocarbon energy sector.
- MIDA undertakes promotion and facilitation of manufacturing and services activities including in the maritime sector.
- Ministry of Agriculture and Fisheries Department are responsible for the development of the nation's agriculture and fisheries sectors respectively.
- Ministry of Tourism is responsible for the development and promotion of Malaysia's marine tourism sector.
- Marine Department Malaysia, a department under MOT, is responsible to administer the affairs of port and shipping activities and maritime affairs in Malaysia waters.
- Various port authorities plan, develop, manage and regulate ports under their purview and also act as trade facilitators to those ports.
Among the policies are :
i. Malaysia as a maritime nation
Developing Malaysia as a maritime nation, enhancing shipping and ports capacity, optimize human resources, ensuring the safety of ships and navigation, and providing efficient ancillary services.
ii. Cabotage Policy
Under this policy, the transport of goods and carriage of passengers from any port or place in Malaysia to another port or place in Malaysia including the exclusive economic zone (EEZ) must be on Malaysian registered vessels holding valid Domestic Shipping Licenses issued by Domestic Shipping Licensing Board under MOT.
The Merchant Shipping Act (Amendment) 1998 has expanded the definition of 'domestic shipping' to include other service-oriented activities namely dredging, cable and pipe laying and hydrographic surveys. Ships employed in such activities are therefore subject to licensing.
iii. Load Centering and Transshipment Hubs
Port Klang, the premier port, is designated as the national load centre for both local and regional containers. This is to ensure sufficient critical mass at one port and subsequently make it an attractive destination for Main Line Operators (MLOs), thereby developing the port as a transshipment and distribution hub of the region. Port of Tanjung Pelepas is designated as the transshipment hub for containers.
Among Malaysia's strengths that have contributed to its growing stature as a maritime nation are :
- Location along the world's most important and busiest sealanes such as Straits of Malacca and South China Sea.
- Located within a populous and dynamic economic region which is fast developing.
- Excellent maritime infrastructures such as deep seaports, excellent highways and roads connecting the ports with the hinterlands.
- Having hinterlands with vibrant manufacturing activities and rich in natural resources and commodities.
- Pro-business and pro-investment policies.
- Strong institutional support for the planning, development, management and promotion of maritime-related activities.
- Attractive incentives for investors, local and foreign, to be involved in maritime economic activities.
- Strong regulatory and institutional framework.
Among the main issues faced by the Malaysian maritime industry are :
- Lack of domestic manpower, especially skilled manpower in areas such as merchant shipping and maritime ancillary services.
- Rising competition coming from regional nations which enjoy lower cost of production and economies of scale in activities such as port operations and shipbuilding.
- Absence of policies or master plan in activities such as shipping and shipbuilding.
- Small domestic market.
- Difficulty in raising adequate and competitive financing in capital intensive activities such as shipping and shipbuilding that prevents companies from growing.
- Presence of too many players in certain activities such as shipbuilding and cargo handling that result in price undercutting and low quality service.
- Labour-intensive nature of certain activities such as shipbuilding and fisheries which contribute to low productivity and low revenue.
The role of the Centre of Maritime Economics and Industries (MEI) conducts policy research and other activities related to issues and recent developments in maritime economics and industries. They include areas such as maritime trade, ports, shipping, maritime ancillary services, maritime supply chain and offshore oil and gas. MEI also covers other maritime economic activities such as aquaculture and frontier marine resources. The centre conducts timely, relevant research and organises events to advance Malaysia's maritime economic interests. Its researchers speaks at seminars and conferences, give lectures, conduct events and publish in various publications to disseminate information about maritime economics and industries and to expand the literature on the subject.