Post on 23-Mar-2018
transcript
OSV Sector in Malaysia - State of Play
and the Way Forward
Capt. Hj. Tasripin Hj. Masotee F.IK
President
Malaysia Offshore Support Vessels Owners'
Association (OSV Malaysia)
Executive Director
Saujana Marine Sdn Bhd
The global OSV market will witness growth over the next five
years as key performance indicators such as offshore Capex,
the number of wells to be drilled, and the number of new
platform installations scheduled, are all set to increase
incrementally through to 2013 before peaking in 2014.
Within South East Asia, the two countries with the greatest
forecast investment in their offshore O&G industry, in terms of
platforms and subsea, are expected to be Malaysia and
Indonesia. These two countries are developing both their
shallow water plays, whilst also moving towards the deep
waters” [Source: ISL].
Market Outlook of Global OSV Sector
Current OSV fleet may not be sufficient in meeting demand due to
charterers’ increasingly demanding requirements, and the push
for younger and “greener” vessels by regulators.
There are nearly 400 Anchor Handling Tug Supply (AHTS), and
Platform Supply Vessels (PSV) in South East Asia. Further 500‐800
other OSVs including Construction Support Vessels (CSVs), Dive
Support Vessels (DSVs), Tugs, and Crew boats.
It represents approximately 20% of the global OSV fleet of about
2000-2500 vessels . Majority of the OSV fleet in South East Asia
are smaller in size.
Approximately 12% of the OSV fleet in South East Asia have past
their economic useful life (older than 30 years) and approximately
21% of the fleet lies between 20‐30 years (useful but
non‐competitive) [Source:M3M PL]
Market Outlook of Global OSV Sector
Cabotage laws prioritising local OSV service providers.
OSV market has witnessed a stable period over the last
few years due to the financially strong IOCs and NOCs in
Malaysia. [Source: ISL]
Whilst charter rates became depressed in other global
regions, the rates in the Malaysian market remained
comparatively buoyant. [Source: ISL]
5 active operators account for 42 per cent of all project
value over the next five years, comprising Petronas
Carigali, PTTEP, Exxon Mobil, Chevron and ExxonMobil. [Source: AmResearch]
Market Outlook of OSV Sector In Malaysia
One of the key drivers for the Malaysian OSV market continues
to be PETRONAS, and its plans to develop hydrocarbons
offshore.
Recent deals such as the Berantai Oil Field Project which totals
US$800million and the world’s biggest offshore Enhanced Oil
Recovery (EOR) project between Petronas Carigali and Shell
Malaysia, totalling US$12billion over 30 years; are big
opportunities for OSV members
PETRONAS' expenditure plans at this stage are two pronged;
the development of deep water reserves, which will require deep
water capable PSVs, and also the re-development of fields which
are experiencing declining production.
Market Outlook of OSV Sector In Malaysia
Additional drilling will require greater support from AHTS.
We believe that the O&G industry in the country will
continue to provide opportunities within the OSV market
[Source: ISL].
(1) The Company/Corporate Tax
Offshore Support Vessels is not defined as Malaysian Ship
under Malaysian Income Tax Act 1967 Sec. 54 A, hence it
is not tax exempted.
"Malaysian ship" means a sea-going ship registered as such
under the Merchant Shipping Ordinance 1952 [Ord. 70 of 1952]
other than a ferry, barge, tug-boat, supply vessel, crew boat,
lighter, dredger, fishing boat or other similar vessel.
(2) Personal Income Tax
Crew serving on board "Malaysian ship" as defined in the Act
are exempted from Tax Income and it is not applicable to crew
serving on board OSV.
The Main Challenges That Impact OSV Owners On Their Own Turf
(3) Bank Borrowings
Due to high cost of fund, cost of finance with local
banking institutions is much more higher than the offshore
foreign banking institutions.
(4) Access to Ship Funding is tough (Speaking in layman terms)
For new kid on the block – No contract No talk
For players with marginal but hopeful records – Have
collaterals Can Talk
For players with good track records - Bankable project
Can talk
Finally for No record - No problem Bro, I buy you “Teh-
Tarik”. You talk I listen.
The Main Challenges That Impact OSV Owners On Their Own Turf
TAX INCENTIVES IN SHIPPING INDUSTRY BY COUNTRIES
- Non-exempted shipping income is taxed at a rate of 25%.
- Tax exemptions are given to Malaysian ship owners
- A Malaysian ship is defined for tax purposes as a sea-going vessel registered as such under the Malaysian Merchant Shipping Ordinance.
- Corporate tax at 17%
- Two main tax incentives for the shipping industry
i. To promote Singapore registry by granting tax exemption to an owner or operator of Singapore-registered ships on income derived from the operating or chartering such ships in international waters.
ii. To encourage the control and management of foreign flagged ships from Singapore by Singapore resident companies which own or operate foreign flagged ships under the Approved International Shipping Enterprise (AIS) incentive.
- The standard tax rate is 16.5%.
- For Hong Kong-flagged vessels, income related to cargo uploaded in Hong Kong and navigated to international waters is exempt from Hong Kong corporate income tax.
- For a taxpayer resident in any territory outside Hong Kong but carrying on a shipping business in Hong Kong, it will be tax exempted in Hong Kong if there is a reciprocal tax treatment in that country for a Hong Kong taxpayer.
(1) Tax Incentives
Malaysian Income Tax Act 1967 Sec.54A steadfast on the
definition of "Malaysian ship" under the Merchant Shipping
Ordinance 1952 [Ord. 70 of 1952]. – Understandable (SOP)
and no question about it, Sir!
Our counterparts in shipping companies enjoyed 100% tax
exempt for years. The Government announcement of 70% tax
for budget year 2012, was now put on hold for 2 years.
While for OSV owners including their crew, they get NONE of
the above till to date and for how long more they have to wait
before MSO 1952 will be reformed.
(2) Source of Finance for Fleet Expansion
The Government announcement that NOCs will invest in
the upstream activities and is expected to grow
exponentially over the next 5 years. Being on own turf,
OSV Owners were without doubt euphoric and inspired
by the announcement cause they see an opportunity to
expand their fleet. But they are in the bind, yes bro.
Question: The banking sector knows that the cost of
fund is high in Malaysia and with current scenario, would
they able to offer easy and “cheap” financing
comparatively with their foreign competitors.
Note: “Cheap” means competitive interest rate with
higher margin of finance and longer repayment period.
(3) Competitiveness
While I was in China, I came across a signage and it reads :
“AN ENTERPRISE BELIEVABLE IN PRICE AND MEASURE”
OSV owners are not asking for subsidy or hand outs. They want a
fair level playing field and tools so that they become competitive
and market driven.
It is for “rough neck” type businessman (not macho type) and not
for the light hearted but serious and dedicated businessman with
a vision for sustainability, likeable and yet humble.
Question : Can the legislators, relevant authorities and financial
institutions review their stringent regime and adopt more
industrial friendly approach for the future growth and
sustainability of Oil and Gas players.
The Malaysia OSV (Offshore Support Vessels) Owners Association,
or "OSV Malaysia" in short was established on 16th June 2011 and
has successfully held its maiden Annual General Meeting on 22nd
September 2011.
Offshore support vessels are ships and various types of marine
vessels, designed and built to cater to the needs of the Oil and Gas
upstream industry, at sea. The Association forms a crucial part of
Malaysia's Oil and Gas industry, especially in the exploration and
production sectors.
PRIMARY OBJECTIVES :
• To provide a collective platform to express common industry
concerns for members’ interest and welfare
• To facilitate in promoting research and development in the
Malaysianization of technical support and services
• Training and human resources development for OSV industry
The Association represents the ordinary members of Malaysian ship
owners, who own and operate OSVs in providing services in the
maritime logistic, accommodation and maintenance facilities. It
encourages other sectors, such as the financial institutions, maritime
training institutions, shipyards, marine insurance and vessel
classification society, which are engaged in or associated with the Oil
and Gas industry, to become its associated members.
Elected Committee Members
President Capt Hj. Tasripin Hj Masotee F.IK
Executive Director, Saujana Marine Sdn Bhd
Vice President Dato’ Capt Ismail Kamin
Executive Chairman, JRI Resources Sdn Bhd
Hon. Secretary Encik Sidqi Ahmad Said
Managing Director, Sykt. Borcos Shipping S B
Hon. Treasurer Encik Johany Jaafar
Managing Director, Efogen Sdn Bhd
Company Name Type of OffShore Support Vessel (OSV) Total of OSV
AHT/AHTS AW Boat AW Barge SSV GPV LCT FCB SFCB Standby ML UV TB DB WTS
Saujana Marine Sdn Bhd 2 2
OMNI Group Sdn Bhd 14 14
Jasa Merin (M) Sdn Bhd 13 3 16
Sapuracrest Petroleum Berhad 0
Sribima (M) Shipping Sdn Bhd 1 3 3 3 10
JRI Resources Sdn Bhd 4 4
Syarikat Borcos Shipping Sdn Bhd 9 2 9 6 2 4 2 1 35
Efogen Sdn Bhd 3 3
Bumi Armada Navigation Sdn Bhd 14 5 3 3 25
Powertium Marine Sdn Bhd 4 4
Tanjung Kapal Services Sdn Bhd 9 4 1 1 1 16
Dinastia Jati Sdn Bhd 3 3
DESB Marine Services Sdn Bhd 5 2 7
Gagasan Carriers Sdn Bhd 8 8
Intra Oil Services Berhad 8 2 4 14
Nam Cheong Dockyard Sdn Bhd 1 9 2 12
76 12 6 16 3 7 20 9 6 5 8 3 1 173
Associate Members – Total 4:
1. Muhibbah Marine Engineering Sdn Bhd
2. Global Maritime Ventures Berhad
3. American Bureau of Shipping
4. Lloyd’s Register of Shipping (M) Bhd
Ordinary Members – Total 16
Total Membership Strength as at 2 June 2011 = 20
Total Fleet’s Strength = 173 (Average age = 4.5 years old)
Next 5 years Members Fleet Expansion Plan = About 80 vessels
Total combined group revenue is worth more than RM15billion and a
combined group assets worth more than RM 10billion.
About 12,000 employed marine crews serving on all our offshore
vessels nationwide. There are about 49 Malaysian registered
companies (including Labuan registered) that own and operate
Offshore Support Vessels.
There is a demand for more than 200 vessels in the next five years in
Malaysia.
I understand that all our members fleet of 173 units are fully employed.
I believe others big players (non members) such as Alam Maritim and
Scomi Marine to name a few have their fair share with current surging
market demand.