DESPITE various measures taken by the Government to stem the outflow of payment for transportation services, the deficit on the service account continues to be a source of concern.

 
According to the latest statistics revealed by Bank Negara Malaysia (BNM), the deficit is expected to widen further to RM12.5 billion on an increased total payment of RM24 billion. This compares with RM11.4 billion recorded in 2001 on the total payment of RM22.9 billion.

 
As a major exporting and importing country, there is no doubt that the incidence of payment for transportation services will always continue to be high. The total trade volume last year, for instance, topped RM640 billion and this was an increase from RM598 billion in the previous year.

 
It is only natural that as a major exporting and importing nation, the demand for transportation services will remain high. But what is perhaps worrying is that much of the demand is met from foreign sources. About 90 per cent of the country's trade is seaborne and it is estimated that about 85 per cent of this is carried by foreign ships calling at local ports.

 
The high dependence on foreign shipping services is despite the fact that there has been an increase in national shipping capacity over the years. From a little over two million deadweight tones (dwt), the strength of the national merchant fleet has increased to more than seven million dwt in the last two decades. Despite the increase, the gap between the supply and demand for national shipping services remains somewhat unchanged.

 
This could be attributed to the fact that the growth in trade continues to outpace the growth of the national shipping capacity.

 
Given the huge volume of trade, it may be impossible for Malaysia to strive for self-sufficiency in shipping as the cost would be extremely astronomical. Even a national fleet of 200 ships would be hardly adequateto carry 10 per cent of the country's trade. And, each ship could cost anything between US$ 50 million and US$ 100 million.

 
Despite the high entry barriers, Malaysia has made good progress by striking self-sufficiency in selected trades. In the carriage of LNG from Malaysia to world markets there is 100 per cent self-sufficiency since the entire exports are carried by national flag vessels, namely those belonging to Malaysia International Shipping Corporation Bhd (MISC) which led the world LNG market by selling on C&F terms (meaning the LNG product was sold inclusive of shipping costs).

 
MISC, which two months ago placed orders for two new LNG carriers, will have a fleet of 21 LNG carriers by 2005, reinforcing its status as the world's largest owner/operator of LNG ships. This status complements Malaysia's position as one of the world's leading producers of LNG.

 
Similarly too, in line with Malaysia's position as an important producer of oil, the recent move by MISC to acquire Singapore-owned American Eagle Tankers (AET) for US$ 445 million should be viewed as a significant development in the nation's drive towards greater self-sufficiency in shipping.

 
The acquisition of the Neptune Orient Line-owned tanker company has dramatically increased national self-sufficiency in the transportation of crude petroleum.

 
Under the transaction, MISC will get AET's 29 Aframax tankers and two very large crude carriers (VLCCs), which will increase MISC's fleet to 37 Aframax tankers and three VLCCs.

 
In addition, AET has contracted for three Aframax and three VLCCs to be built and plans to charter in one Aframax, while MISC has contracted to build four additional Aframax and one VLCC.

 
With the acquisition, MISC will be the second largest combined Aframax fleet in the world and also the youngest, with an average age of 7.5 years compared to the world's average of 11.4 years.

 
The successful selective approach taken by MISC towards attaining self-sufficiency in shipping in selected trade such as in the transportation of PNG and crude oil could be emulated in other important sectors. This could cover the carriage of palm oil, the offshore oil and gas industries, and chemical and dry bulk cargo trades where the dependence on foreign shipping service continues to be high.

 
In this regard, a more coordinated approach should be taken, beginning with the formulation of a national maritime policy.

 
It is indeed a welcome development in this regard that MIGHT has set up an Interest Group in Maritime Industry to spearhead the formulation of a blue-print for the development of the maritime industry.

 
The committee, headed by shipping czar Tan Sri Halim Mohammad (executive chairman of Halim Mazmin Bhd), met on May 6 in Putrajaya to find a consensus in drawing up terms of reference for a blue-print on the  development of the maritime industry.

 
Following the day-long brain-storming session, the committee found agreement on the scope of the TOR that called for an evaluation of the total value chain and issues related to the development of the industry in relation to the competitiveness of the industry. The scope also included an evaluation of new technology and its implication on the development of the industry in Malaysia and the need to identify and propose the technology to be developed and the appropriate policy direction for the future needs of the maritime industry.

 
Attention was also given to the need to provide strategic direction to the development of the human resource capability of the maritime industry.

 
The importance of the task that has been assigned to the MIGHT Interest Group in the Maritime Industry cannot be understated, especially in the wake of various attempts in the past to evolve a policy framework for the development of the Malaysian maritime industry.

 
The importance of developing the maritime sector is also underscored bythe fact that the services sector is expected to fuel the growth of the economy.

 
In its report, BNM noted that that the services sector was less vulnerable during an economic downturn.

 
Prior to the Asian crisis, the performance of the services sector was closely correlated to the cycle in the manufacturing sector, which in turn was driven mainly by changes in external demand for manufactured products, the report said.

However, with the global slowdown in 2001, domestic demand replaced external demand as the main driver of growth.

 
The performance of the services sector, therefore, diverged from the cycle in manufacturing and exports.

 
`Concerted measures to promote services as a new engine of growth and the promotion of domestic consumption have helped the sector to develop on several fronts,' added the report