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The Malaysian merchant fleet, painfully built over the years, lost 20 per
cent of its tonnage last year owing to sale of ships by owners seeking to
capitalise on unprecedented high ship prices.
It is estimated that the national fleet size lost close to 1.7 million
deadweight tonnes (DWT) in the wake of the supply squeeze worldwide.
“Basically, the supply squeeze and the insufficient number of new ships
entering the market impacted on ship prices and in many cases pushed market
prices of ships to several times higher than book value of the ships,” said
the chairman of Malaysian Shipowners’ Association, Datuk Dr Nik Mohd Zain.
He said the market condition presented with shipowners with an ideal market
opportunity to sell off their assets, including vessels that were ageing or
had to meet nearing deadlines of new ship conventions and rules,
particularly for tankers and dry bulk carriers.
“Of course for some shipping companies it presented opportunity to get out
of shipping or get out of specific sectors in shipping because of a
corporate strategy to specialize on the product base,” he said.
“Whatever the reasons, it makes robust commercial sense it was strategic
investment decision to sell assets at prices higher than you may have
acquired or sell such assets when you are convinced trading them over a
period is unlikely to contribute the much to the profit than you stand to
make from the capital gain,” said Dr Nik, who is the executive chairman of
Nepline Bhd, a second board company on the local bourse.
“The decline is certainly unfortunate since there has been so much focus and
emphasis on fleet expansion to achieve self-sufficiency in shipping,” said
Dr Nik.
“But I think commercial realities must take precedence over misplaced
sentiments. I am sure if market opportunities avail itself local shipping
companies will invest in ships in the near future,” he said.
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