The RM1 billion for the National Shipping Fund, allocated by the government recently to replenish the RM1.1 billion provided for earlier, will be disbursed over a three-year period by Bank Industri Bhd. 

It is understood that out of the RM1 billion a sum totaling RM900 million will go towards meeting financing requirements of local shipping companies for vessel acquisition while the remaining RM100 million has been set aside for shipyard financing.

The additional allocation, announced by the Minister of Finance, Tun Diam Zainuddin last October, is aimed at replenishing the RM1.2 billion provided by the government under the Fund set up in 1992.

Tun Diam said the new allocation was Malaysia's direct call to further enhance its shipping capacity to boost its external trade.

"As an economy that is highly trade dependent on external trade, we need to further our shipping capacity," he said when tabling the 2001 Budget proposals in October last year.

The government-owned Bank Industri, picked by Bank Negara to disburse the loan, has set up a committee to help draw guidelines and evaluate applicants for the loans.

The Malaysian Shipowner's Association, which has been consulted by the Bank for its views on guidelines, is seeking to be represented in committee to protect the interests of local shipowners especially to ensure that bona fide Malaysian shipowners with good track record are given access to the loan.

MASA had in the past expressed its unhappiness over the manner the loans were previously disbursed in its dialogues with the government, including the Ministry of Finance.

"The evaluation process and eligibility should be more rigourous - with a view to ensuring that the loans given out benefit owners serious in acquisition of fleet and those who can prove strong track record," the Association said in its latest newsletter, "Ship Monitor". (see www.malaysianshipowners.org )

The Association, which also wanted to the government to pursue its proposal to turn the fund into a revolving one, claimed that a large portion of the earlier fund went to shipping companies serving foreign interests.

Meanwhile, loans from the new allocation are expected to be provided at preferential interest rates based on rating of companies by Bank Industri.

Shipping companies seeking loans will, based on risks and creditworthiness accepted by the Bank, fall into three classes with the Class I securing loans at interest rate 5 per cent - 5.5 per cent, Class II 6.0 per cent - 6.5 per cent and Class III at 7.0 per cent.

The Fund is also available to shipping companies engaged in offshore oil and gas industries operating service such as crew boats, anchor handling tugs, supply boats and similar vessels.