The Malaysian Shipowners’ Association has appealed to the government to extend the income tax exemption, now available to shipping companies, to include offshore shipping supplies services operators engaged in the transportation of materials, personnel, food supplies, fuel supplies between supply base and platforms/rigs

The Association, which was led by its Vice Chairman Tan Sri Datuk Halim Mohammad to the pre-budget dialogue last week, said the extension of the tax exemption available under section 54A of the Income Tax Act would help foster the growth of more Malaysian tonnage in the specialized sector of shipping.

The Association, in its memorandum to the Finance Minister, Datuk Seri Dr Mahathir Mohamed noted that at present foreign vessels are dominating offshore services in Malaysia since the sector lacks the incentive for Malaysian companies to venture into.

MASA also said the same income tax exemption to Malaysian seafarers serving onboard Malaysian flag vessels should also be extended to local seamen serving on board the offshore supply shipping vessels.

MASA, which represents more than 60 shipowners in the country also pleaded with the government to resolve the problems faced by shipowners over the inability of the Department of Environment to accept the Letter of Undertaking issued by Protection and Indemnity Clubs in the event of alleged oil spills caused by the their vessels.

“MASA is concerned with the procedural aspect of enforcement, particularly the form of security and the personal liability required which pose difficulties to the shipping companies,” the memorandum noted.

MASA wanted the DOE to follow international standards that are more sensitive to the commercial and international aspects of shipping.

The shipping industry places much importance on the transportation of cargo on time and within schedule.

“The costs of any delay in releasing the ship which has been detained, on alleged pollution, are enormous if the losses suffered by each component of the transportation chain is taken into account,” MASA added.

Third party liabilities/risks are covered by the Protection and Indemnity mutual insurance, or P&I Club as commonly known.

“The P&I Club  Letter of Undertaking  can be issued expeditiously to protect  claimant’s interest as a sufficient security to a pending claim, in exchange for the release  of ships from detention  or the refrain from such intended detention.” MASA said.

Under the Environment Quality Act 1974, the only form of security accepted by the DOE in incidents of  marine  pollution is a bank guarantee.

Bank guarantee, which must be provided to the DOE as requirements and security in exchange for the release of the ship against detention with regard to any alleged oil discharged cases.

MASA said such guarantees are difficult to obtain during weekends/holidays and at short notice.

The Association also urged the government to withdraw the limitation imposed by KLSE on directorship that could be held by an individual.

MASA said the ruling has affected shipping companies which generally adopt “one ship, one company” approach based on legal, technical and operational factors.

It said in shipping companies directors become personally liable for certain offences and it would be inappropriate to delegate it to independent directors.

MASA also expressed its concern over the lack of progress in the allocation of RM1 billion shipping fund announced by the government last October.