Last Friday Finance Minister Tengku Datuk Seri Zafrul Tengku Abdul Aziz tabled in Parliament the 2021 Budget. The budget was put together to achieve three aims: wellbeing of the people, continuity of businesses, resiliency of the economy.

In line with the budget’s second aim, continuity of businesses, the government will be providing assistance to boost investment and strengthen certain businesses. One of the sectors that will benefit from this assistance is the maritime industry.

The maritime industry is central to Malaysia’s economic growth. Malaysia is acknowledged as a maritime nation based on it being strategically located within the route of the international trades and logistics.

As with the other industries, the maritime industry could not escape the impact of the Covid-19 pandemic, causing it to experience significant slowdown. Maritime businesses and supply chains were affected due to financial problems and workers’ layoffs. This in turn affected Malaysia’s economy, as maritime businesses represent 90 percent of the country’s business activities.

A scheme introduced in the budget, called National Development Scheme, that is worth RM1.4 billion and funded by Bank Pembangunan Malaysia is expected to aid in the implementation of domestic supply chain development.

The Maritime and Logistics Development Scheme that holds a fund of RM3.7 billion and will be extended to 31 December 2023 is expected to help with the development of seaports and maritime infrastructure.

The government’s willingness to provide access to investment funds will help shipping and logistics companies that experienced slow growth to get back on their feet. This will create more job opportunities for the people.

In addition, the limit for the sale of value-added activities at the Free Industrial Zone and Licensed Manufacturing Warehouses will be raised from 10% to 40% of the yearly sales amount. This increase is expected to help reestablish the warehousing sector and make it more competitive and relevant at the national and global levels.

Finance Minister also announced the extension of special tax brackets of 15% for five more years. This extension is given to non-citizens holding top posts in companies that shifted their operations to Malaysia. This initiative is expected to attract foreign investment, which will re-stimulate maritime-based business activities in Malaysia.

In addition to technology, the stability of the maritime industry is correlated with improvement in human resources. Through the 2021 Budget, a total of RM300 million is provided through Skills Development Fund Corporation, to be made available as loans for trainees of Technical and Vocational Education and Training programmes at public and private training institutions.

To encourage more youth participation in TVET programmes, the government will introduce the National Dual Training System (Plus) with monthly participants’ allowances increased from RM625 to RM1000. NDTS is an industry-based training programme that combines training at the workplace and learning at an institution, its target group being school leavers and current semi-skilled workers. The programme is expected to produce skilled local workers, thereby reducing the country’s reliance on skilled foreign workers.

In an effort to increase graduates’ employability, especially in midlevel jobs in the professional fields, the government has approved an allocation of RM150 million for MOE-PACE programme whereby new graduates are offered vouchers worth RM3000 when they enroll in professional courses.

The government is also setting aside a fund totaling RM100 million for HRDF programme, which offers training through collaborations with companies in the private sector. This reflects the government’s seriousness in developing holistic human capital in line with its aim of placing Malaysia as a maritime nation respected globally.

As evidenced by approved allocations in the 2021 Budget, it can be concluded that the government has taken proactive measures in ensuring the sustainability of the maritime industry. Players in the maritime industry benefitting from these allocations need to play more active roles in propelling the development of this industry in Malaysia.

English translation by:
Corporate Communication Centre
Universiti Malaysia Terengganu

Original version in Malay by:
Dr Izyan Munirah Mohd Zaideen
Senior Lecturer
Faculty of Maritime Studies
Universiti Malaysia Terengganu