2027 Budget: Tax, stamp duty incentives to ease shipowners' financing constraints

KUALA LUMPUR: The 2027 Budget's extension of the income tax exemption and fixed stamp duty rates on ship financing is expected to ease financing constraints for Malaysian shipowners facing stringent collateral requirements and mismatches between loan tenures and ships' useful lives.

Maritime analyst Nazery Khalid said the two incentives announced under 2027 Budget could lower ship financing costs, particularly for vessels built locally, while creating more favourable conditions for the development of domestic shipping capacity.

Prime Minister and Finance Minister Datuk Seri Anwar Ibrahim announced the extension of the full income tax exemption for Malaysian shipping companies until the year of assessment 2036 when tabling 2027 Budget, themed "Reaching for the Skies, While Anchored On Our Values", in the Dewan Rakyat on Friday.

The government also introduced fixed stamp duty rates on loans for the purchase or construction of Malaysian vessels, at RM2,000 for loans of up to RM100 million and RM5,000 for loans exceeding RM100 million.

"These measures could support the development of local shipping capacity in key sectors such as energy, bulk commodities and container shipping, helping to cater to Malaysia's growing trade volumes and economic growth," Nazery told Bernama when met after a panel discussion titled "Strengthening Malaysia's Downstream Petroleum Value Chain and Identifying Gaps and Enabling Factors", organised by Maritime Network Sdn Bhd and Universiti Malaysia Terengganu (UMT) here today.

He also said the incentives could also reduce Malaysia's reliance on foreign vessels and limit foreign exchange outflows, while addressing longstanding requests by local shipowners for more supportive financing conditions.

The incentives could also help shipping companies, particularly smaller operators, accelerate digitalisation to remain competitive amid geopolitical uncertainty, major shifts in global supply chains and rising energy costs.

Nazery said shipping companies also needed to invest in modern vessels with environmentally friendly features to meet the International Maritime Organisation's (IMO) requirements to reduce greenhouse gas emissions, in line with the country's net-zero ambitions.

He said this when met after a panel discussion titled "Strengthening Malaysia's Downstream Petroleum Value Chain and Identifying Gaps and Enabling Factors", organised by Maritime Network Sdn Bhd and Universiti Malaysia Terengganu (UMT) here today.

INCREASE IN TRAINING BERTHS FOR MARITIME CADETS

Nazery pointed out that cadets from Malaysian maritime academies, including the Malaysian Maritime Academy, faced difficulties securing berths on commercial vessels to obtain the practical seagoing experience required to qualify as professional seafarers.

He proposed that the government consider linking access to financing from government-owned financial institutions, such as Bank Pembangunan Malaysia Bhd and Export-Import Bank of Malaysia Bhd (EXIM Bank), or special maritime funds allocated under the national budget, to the provision of training berths for cadets.

"If the government could gazette a requirement for shipping companies in Malaysia to provide training berths for cadets, it would address a long-standing need and be greatly appreciated, not only by maritime academies in Malaysia but also by the cadets themselves.

"However, this is clearly a commercial decision that the government may not be able to impose on them," said Nazery.

He said that this measure could help alleviate the shortage of training berths while encouraging more young Malaysians to pursue careers at sea, knowing that opportunities for obtaining the necessary onboard training would be available.