Transport & Logistics
Generally, logistics services cover transportation, storage and handling of production inputs and finished products from producer to consumer.
Logistics is a significant component of a modern economy as it helps facilitate the flow of goods and personnel both within and beyond national borders.
It boosts productivity and competitiveness across industries and as demand on the business sector increases, the expectation on the logistics services intensifies.
Malaysia, with its open economy and increasing integration in the ASEAN, is well placed as a regional logistics hub.
Apart from involving in product handling and delivery from one point to another, the logistics services providers are also required to provide value added services to their clients, such as facilitation services, warehousing, packaging and etc.
International market access and local trade could be improved by reducing the cost and improving the quality of logistics and transport services.
Components of the logistics services are:
- Land transport is a very important link in logistics activities as it covers road and railway transport.
- Air transport is typically used for the transportation of low volume, perishable items and high value products.
- Maritime transport (shipping and port) plays an important role in international freight, particularly to transport bulky items such as crude oil and grains.
What a service provider needs to know
If you are a service provider of this sector, you may be interested in the following:
REGULATORY BODIES AND RELATED ASSOCIATIONS
In 2007 the Malaysia Logistics Council was set up to serve as the focal point for the overall coordination of strategies, regulations and rules governing this sector. The other related bodies and associations are :
- Ministry of Transport (MOT);
- Department of Marine;
- Department of Civil Aviation;
- Suruhanjaya Pengangkutan Awam Darat (SPAD);
- Federation of Malaysian Freight Forwarders (FMFF);
- AirFreight Forwarders Association of Malaysia (AFAM);
- Logistic & Supply Chain Association of Malaysia (L-SCOM);
- Association of Malaysian Haulier (AMH) ;
- Malaysian Shipowners Association (MASA);
- Federation of Malaysian Port Operating Companies (FMPOC);
- Malaysia Institute of Transport (MITRANS); and
- Chartered Institute of Logistics and Transport.
Malaysia's Transport & Logistics commitments under AFAS and the WTO are primarily focused on transport and logistics. In addition to commitments made in trade agreements, five sub-sectors under Transport & Logistics have been autonomously liberalised to allow foreign equity participation since 22 April 2009:
- Class C Freight Transportation
- Rental/Leasing services of ships that excludes cabotage and offshore trades
- Rental of cargo vessels without crew (Bareboat Charter) for international shipping
- Maritime Agency services
- Vessel Salvage and Refloating services
Specific Service Commitments
Malaysia's commitments under GATS are in terms of market access and are as follows:
International maritime transportation services, excludes cabotage and government cargo
Only through a representative office, regional office or locally -incorporated joint - venture corporation with Malaysian individuals or Malaysian-controlled corporations or both and aggregate foreign shareholding in the joint -venture corporation shall not exceed 30 per cent.
Maritime Agency services
Vessel salvage and refloating services except on inland waters
Under AFAS, liberalisation has occurred in stages. Foreign equity participation has been increasing, from 49% in 2008 to 51% in 2010 and ultimately 70% in 2013. The areas that are included are the following:
- International maritime transportation services, excludes cabotage.
- Rental of cargo vessels with crew for international shipping.
- Rental of cargo vessel without crew (Bareboat Charter) for international shipping.
- Vessel salvage and refloating services (not applicable in harbour).
- Maritime Agency services.
- Maritime Cargo Handling services.
- Vessel salvage and refloating services.
- Storage and warehousing services.
(Covering private bonded warehousing services only).
- Maritime freight forwarding services.
- Maintenance and repair vessels.
It must be noted that to register a vessel in Malaysia, the following conditions must be met:
- The owner of the vessel must be a Malaysian citizen or corporation incorporated in Malaysia;
- The majority shareholding must be held by Malaysians;
- The majority of the board of directors must be Malaysians; and
- The principal place of business is to be in Malaysia.
Integrated Logistics Services (ILS)
The main activities in the integrated logistics services (ILS) industry cover freight forwarding, warehousing, transportation and other related value added services such as distribution, procurement and supply chain management on an integrated basis.
Currently, companies undertaking ILS are eligible for PS or ITA. The objective of granting the ILS incentive is to create an efficient and competitive logistics industry to encourage the integration and consolidation of the various transport intermediaries along the logistics supply chain in Malaysia. In this regard, Malaysian companies are encouraged to expand and venture into higher value-added services to enable them to compete globally.
International Integrated Logistics Services (IILS)
The IILS scheme was mooted in 2008. The Government announced a major development in the logistics sector whereby access is given to International Integrated Logistics companies for Customs Agent Licence. This licence, which was previously restricted to domestic logistics service providers, is now open to International Integrated Logistics Services (IILS) providers without any restrictions on equity.
The Customs Agents licence will be issued to qualified IILS providers that provide integrated and seamless logistics services (door-to-door) along the logistics value chain as a single entity on a regional or global scale.