A compilation of papers at the 1st National Maritime Conference

Preface by......

Malaysia As A Maritime Nation: Meeting Expectations 1 A compilation of papers at the 1st National Maritime Conference

Speeches

2 As A Maritime Nation: Meeting Expectations A compilation of papers at the 1st National Maritime Conference

Welcome Address by Sitpah Selvaratnam Co Chair, Organising Committee

Yang berhormat Minister of Transport Dato Seri Chan Kong Choy, Yng Berbahagia Tan Sri Abdul Gani Patail, The Attorney General of Malaysia, Mr Yeo Yang Poh, Presdent of the Malaysian Bar, Honourable Judges, distinguished guests, ladies and gentlemen.

We are, on behalf of the co-chair from the Attorney General’s Chambers and the rest of the organising committee, warmly welcome you to this national maritime conference. To see a sea of maritime faces here exceeding in numbers gives me great pleasure. This marks the realisation of the shipping and the admiralty law committee of the Bar Council to have all sectors in the Maritime industry for the common objectives of collectively aspiring and inspiring maritime reform. For this day we have many to thank, first and foremost Yang Berhormat Najib Tun Abdul Razak for agreeing to open the conference and delivering the key note address which is a significant endorsement for reform. Although we are deprived of Yang Berhormat’s physical presence today, we are grateful to Yang berhormat Dato’ Sri Chan Kong Choy for representing Yang Berhormat Najib Tun Razak at this opening. We thank the Attorney General for unhesitatingly accepting the Bar’s invitation to co-host this conference and providing all resources in support for this cause, Petronas and MISC for their most generous sponsorship that put an end to the committee’s sleepless nights, and for the conference registration fee to be heavily subsidised to encourage maximum participation here today.

To the President and Vice President of the Bar, Mr Yeo Yang Poh and Ms. Ambiga for the total confidence they placed in this organising committee and giving us a completely free hand in this conference altogether. I must add a personal note. For Yang Poh, no issues were too small nor too big. Despite a challenging year that the Bar faced in 2006-2007, Yang Poh always took pains to return my sms’s and simply helped to put out several bush fires.

The unwavering support and unshakable faith of the Chairman of the Shipping and Admiralty Committee Tuan Haji Hamid Sultan Abu Backer. We are immensely proud of the fact that Tuan Haji Hamid Sultan Abu Backer who championed our drive to improve our admiralty procedure was elevated to the Bench last week as Judicial Commissioner, marking his 5 years of chairmanship of the Shipping and Admiralty Committee of the Bar Council. Yang Arif now sits in Kuching and is unable to be here with us today and he conveys his best wishes for the success of this conference. To the eminent speakers, chair and moderators, for their spontaneous response to our invitation to facilitate the road for reform. The participants, all of you, who entered with such gratitude and enthusiasm to this conference and mounted a tremendous show of support for reform. Finally, I must thank the

Malaysia As A Maritime Nation: Meeting Expectations 3 A compilation of papers at the 1st National Maritime Conference organising committee. Alamena and I had total commitment and dedicated energy from the entire committee. We have a good standing committee and we hope that the efforts that each one of them put into this conference thus truly materialised into these 2½ days for an enjoyable and productive conference. With the total support and the overwhelming participation from the industry, the maritime institutions, the legal and judicial services and the members of the Bar, I am confident that we will achieve the desired objective of enhanced understanding of maritime skills in Malaysia, as the nation requires us to progress further together. It is our hope that there will be candid discussions and free flow of ideas between the platforms over the course of this conference and the reactions that we may hear in our maritime lives as we progress further into the future.

4 Malaysia As A Maritime Nation: Meeting Expectations A compilation of papers at the 1st National Maritime Conference

Welcome Address by Yeo Yang Poh President of the Malaysian Bar

The Honourable Attorney General Tan Sri Abdul Patail, Ms. Ambiga, Vice President of the Malaysian bar, Honourable Judges, distinguished participants. It is my pleasure to welcome you to the National Maritime Conference.

It is the vehicle for transporting information, ideas and communication across long distances has changed dramatically from the days of the horseback messengers to the time of the telephone and to now, our world of internet today. But the mode of transportation of goods across the seas and oceans has for centuries remained largely with the use of vessels. With 95% of trade relying on shipping, it is easy for Malaysia to allow its shipping industry and its legal infrastructure to stagnate but if we want to remain competitive in the volatile and challenging commercial world, a well-structured and efficient maritime legal regime is essential to international trade. The shipping industry is a service industry and like all industries must meet the expectations of its consumers and users. Its primary importance is reflected in the theme of today’s conference which focuses on meeting expectations. Lawyers practising admiralty law will warn us of the urgent need to reform in our current laws. There is no better group than lawyers for the public and private sectors, government offices, judges, industry players, business leaders to provide the input and ideas as to how maritime law can reform to better meet the expectations of the consumers.

I hope that this conference will spark a new level of interest in and commitment to maritime reform in this country, which I’m sure, will lead to long term benefits for the nation as a whole. I join Sitpah in thanking all those whom she has thanked and would also like to place on record my special appreciation to the Honourable Attorney General’s Chambers for not only supporting but indeed co-organising this event with us. I hope that this is the start of many more collaborations between two institutions of importance in this country, the AG’s Chambers and the Bar. And over this spirit of co-operation we will be progressing a highly commendable approach. I would also like to thank the organising committee whose members have worked so hard to put this event together. And a big thank you to our generous sponsors who have enabled the committee to present to you over the next two and a half days this event in a style that befits its substance. The presence this morning of the Honourable Minister to deliver the keynote address adds prestige to this event and shows the Government’s support, for which I thank him.

My present task of delivering a very short welcome speech is a small one compared to the one that awaits all of you - to formulate the direction in which maritime law reform should take in this country.

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I have no doubt that we will meet the challenge with every success. When it is time for me to speak at the endnote of this conference, I am confident that I will be able to marvel at the amount that you will have achieved within such a short time, that I will be able to say with pride, that our ship has come in. I wish you an enjoyable and fruitful conference.

Summary With the increasing importance of the shipping industry, Malaysia needs to maintain a well-structured and efficient maritime legal regime in order to remain competitive. Lawyers, judges, government agencies and industry players play a key role in implementing reforms in maritime law. This conference is important in formulating new directions in maritime law reform in this country.

6 Malaysia As A Maritime Nation: Meeting Expectations A compilation of papers at the 1st National Maritime Conference

Welcome Speech by The Attorney General of Malaysia Ybhg Tan Sri Abdul Gani Patail

Opening Remarks Yang Berhormat Dato’ Sri Chan Kong Choy, Minister of Transport; Mr. Yeo Yang Poh, President of the Malaysian Bar Council; Honoured Judges; Distinguished experts, honoured guests, ladies and gentlemen; Assalammualaikum and a very good morning.

First and foremost, allow me to express my gratitude and deepest appreciation to: ! The honoured guests who have taken the initiative to take time from their busy schedule to be at this conference; ! The Malaysian Bar Council, the co-host of this Conference who has been kind to us; ! Members of the Faculty of Speakers, Panel Members, Moderators and Sessions Chairman; and ! To all those who have contributed towards the success of this event, including the National Maritime Committee, members of the media, relevant government agencies, associates and others for the support and their willingness to be part of this important gathering.

Ladies and Gentlemen, Malaysia’s geographical position places herself in the midst of a very important trade route. She is the recipient of the bountiful amount of commercial activities ranging from shipping and trade and more importantly having to bear iher domestic and international obligations in keeping these trade routes safe and conducive to trade and to the environment.

The Malaysian maritime industry has grown significantly since the 70’s after the Government’s announcement, as enunciated in the “THIRD MALAYSIA PLAN”, to make Malaysia a maritime nation.

Malaysia’s concern on the outflows of foreign exchange in the form of freight and insurance payments and her dependence on foreign shipping as well as the use of foreign ports as gateways for international trade have resulted in efforts over the past 20 years to developing Malaysia’s maritime industry to a level which would, apart from releasing her dependency on foreign shipping, contribute significantly to the national economy.

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It is therefore important for Malaysia to safeguard the industry in order to promote the efficient and smooth flow of world trade. Nonetheless, the industry itself has a number of weaknesses where measures are needed to enhance and sustain its viability for the growth of her economy and global trade.

The security scenario of international trade and shipping has changed significantly as a result of the September 11 terrorists attack. The incident has opened the question of the safety and security of the global maritime industry. All of a sudden shipping seems most vulnerable to terrorist and criminal attacks. A series of mandatory and voluntary measures have been proposed and enacted with the aim of improving ship and port security worldwide. It is thus important for States to now re-evaluate its policies and measures to ensure that a balance be achieved in providing security and safety whilst still allowing for the free flow of trade and commerce in the maritime industry.

In this regard, the true challenge that Malaysia would have to face would be for the effective enforcement and adherence of its international obligations under the various international instruments that she has undertaken.

I believe that this conference is a positive move to bring together the maritime community ranging from regulators, transport service users, practitioners, and administrators to deliberate, and discuss developments that will impact on the maritime industry, especially in the region. It is also my hope that this conference would lend a sense of urgency to re-look at the evolution of liability and risk regimes and responsibility. We have with us today some eminent speakers who will throw some light on relevant and current issues in the maritime industry.

In conclusion I hope that this conference would be an open and frank discussion about the current issues in regard to the maritime industry which will lead to positive endeavours.

Thank You.

8 Malaysia As A Maritime Nation: Meeting Expectations A compilation of papers at the 1st National Maritime Conference

Keynote Address by the Deputy Prime Minister, YAB Dato’ Sri Mohd Najib bin Tun Hj Abdul Razak

Multi-cultural Malaysia is what she is today, because of the seas. The voyages and adventures of traders and travelers from all corners of the world and spanning more than 600 years, have shaped our nations’ heritage, culture and composition. The ships of old were not only laden with treasure and commodity, but more importantly they delivered onto our shores, the people and culture of Malaysia. All three major races of this country were ancient and advanced seafaring civilizations, who have come together as one, in this bountiful and beautiful land.

Early settlements were coastal, dependent largely on the seas for livelihood. The seas and the winds brought home their fortune. In this 21st century, the seas remain just as relevant to our fortunes. The perceived remoteness of the seas to our everyday life in this age, lies merely in the complexity of new found structures we have developed for the use of the seas.

The Straits of Malacca has sustained its strategic position as the main highway connecting the East and the West, with more than 60,000 vessels plying the Straits each year. 30% of the world’s trade and 50% of the world’s energy pass through our Malacca Straits. Its biodiversity continues to be a source of livelihood to many , and people of the region.

The mission by our forefathers to develop Malaysia into a dominant developed maritime nation was clearly justified. Nevertheless, the challenges we face in Meeting Expectations as a Maritime Nation will necessarily be manifold.

I must therefore, heartily congratulate the Bar Council and the Attorney General’s Chambers for their wisdom and initiative in jointly hosting this Conference as a National Event, to identify the maritime milestones achieved todate, and the tasks ahead of us as a Maritime Nation.

Malaysia has come a very long way in her maritime achievements. In 1968 we had one National carrier, Malaysia Shipping Corporation Berhad which owned 2 vessels, and there were 2 major ports, Port Swettenham and Penang Port. Regardless of this modest beginning, the vision was firm - to support and encourage Malaysia’s maritime development. For the period from 1970 to 1975, RM230,000 was allocated for port and marine development. We must appreciate though, that this was in times when a cup of coffee in a local coffee shop cost 20 cents!

Malaysia As A Maritime Nation: Meeting Expectations 9 A compilation of papers at the 1st National Maritime Conference

From the Third Malaysia Plan, in the late 1970s, maritime enhancement was aggressively driven. Tax incentives were introduced by an amendment in 1979 to the Income Tax Act of 1967, for total exemption from tax of income derived from the carriage of cargo or passengers by sea, and from the voyage or time charter of Malaysian owned vessels. Concurrently, the Cabotage Policy was introduced to promote domestic trade on board Malaysian owned vessel, implemented through the Domestic Licencing Board. This was towards reducing reliance on foreign ships, for savings in foreign exchange, and the development of expertise in the Malaysian shipping industry.

The 1970s also saw the formation of MASA, the Malaysian Shipowners’ Association (1976) as a common voice for Malaysian shipowners; the Maritime Training Centre (1977), now known as Akademi Laut Malaysia, ALAM to groom ships’ officers and seamen; and Bank Pembangunan Malaysia Berhad (1973) to invest in the shipping sector. Bank Pembangunan, was later to develop into the custodian of the Shipping Fund of RM1.3 billion allocated by the Government for the provision of ship financing on advantageous terms, and to encourage the establishment of world class shipyards in Malaysia. Institutes of learning and research have contributed significantly to the advancement, adoption, and application of superior technology.

The privatization of the ports from the 1980s further inspired creative and productive joint ventures between port operators and main line shipowners, increasing manifold the traffic of cargo and vessels in our 7 international ports, in Penang, Port Klang, Johor, Tanjung Pelepas, Kuantan, Kemaman and Bintulu.

We have thus, arrived at an enviable position of our ports, specially Port Klang and Port Tanjung Pelepas, regularly breaking records and receiving international awards, securing admirable ranking in the world as top ten best seaports and container terminal operators. Our traders achieved in 2006, through exports and imports, RM1 trillion in revenue for the nation.

Our shipowning in tonnage, although experiencing some fluctuation, earned us a place as the 20th most important Maritime Nation under the Review of Maritime Transport 2006 released by UNCTAD. MISC Berhad, 40 years later, has a fleet of 106 vessels, with 26 new ship constructions in the pipeline. Her fleet includes 23 LNG carriers, 45 Petroleum tankers and 13 chemical tankers, making MISC Berhad the largest single owner-operator of LNG tankers in the world. The strategic acquisition by PETRONAS of MISC Berhad in 1998, created integrated and rationalized logistics and shipping support for PETRONAS’ operations in LNG crude oil and petroleum product export.

PETRONAS, where I began my young working life, also the brainchild of the 1970s (1974), was incorporated pursuant to the Petroleum Development Act 1974 passed by the Government to

10 Malaysia As A Maritime Nation: Meeting Expectations A compilation of papers at the 1st National Maritime Conference provide for a structured exploration and exploitation of resources of the seas. From her first export of crude oil in 1975, PETRONAS has now grown into a world giant, entering into major joint ventures for exploration, exploitation and retailing in Myanmar, Vietnam, South Africa, , Gabon, Pakistan, Algeria, India, Morocco, Mozambique, Indonesia, Turkmenistan, Sudan, Egypt, Ethiopia, United Kingdom, Iran, Philippines and Switzerland.

These achievements, in all sectors of the maritime industry do us Malaysians proud. But, there remains much more to be done. In this present age of rapid changes and high expectations, there is no time nor room for complacency, lethargy or indifference.

We are 13 years away from attaining our common dream of a developed nation. It is now the moment of self-audit and critical analysis, of constructive criticism and positive action.

The maritime sector is fundamental to the continued success of this nation. 95% of the country’s RM1 trillion trade finds its entry and exist by sea. Sea freight is projected to more than triple to 751 million tonnes by 2020. The efficiency of the entire maritime network is heavily depended upon, to support the manufacturers and traders, and in itself generates employment and revenue on-shore and off-shore for many. Ladies & Gentlemen, the seas clearly continue to impact on our lives, directly and indirectly.

It is undisputed that the maritime industry’s comprehensive and wholesome development must be, and will be, afforded high priority. In so doing, the concerns of all sectors within the industry need simultaneous attention, be it the ports, the shipowners, the logistic operators, the insurers, the shipyards, the ship financiers, the shippers, and the national and international consumers of all these services.

Underlying the capacity for great maritime success is the soundness in foundation of the maritime laws that govern Malaysia’s maritime dealings. The laws are the bedrock of any society. The unseen protection, and the threat. The protector and the prosecutor. The law-makers, regulators, the lawyers, the Judges and the entire legal system are therefore vital to the proper and effective workings of the maritime cycle. The confidence to use Malaysian ships, to deal with Malaysian traders, and to ply Malaysian waters are premised on the fairness and relevance of Malaysia maritime laws, in ensuring that anticipated rights are recognized and upheld expeditiously through an effective legal system.

In the context of maritime rights, much of these are governed by International Conventions, custom and practice. To meet Expectations, is to know, understand, and where compatible with national circumstances, to apply such international yardsticks of rights and responsibilities, through our laws, in our Courts and our alternative dispute resolution centers.

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I am therefore, tremendously pleased to learn that an Admiralty Court was established in July 2005, within the Commercial Division of the High Court of Malaya at Kuala Lumpur. This sends a positive message that maritime interests are properly looked after by a dedicated Admiralty Court, that can ensure speed, uniformity and quality maritime decisions. I believe that Practice Directions for Admiralty Actions, a first of its kind in Malaysia, has come into effect in the High Courts of Malaya from 1st February 2007, to procedurally compliment the smooth and consistent determination of maritime disputes in Malaysia. These efforts are commendable, but we must continue to strive to be a foremost forum for resolution of maritime disputes.

Consistent with Malaysia’s intent to co-exist uniformly, and harmoniously with the international shipping community, Malaysia participates as a member at the IMO, International Maritime Organization, which is concerned primarily with safety, and pollution of the seas. Many international conventions have been adopted and implemented in Malaysia, including UNCLOS, the Third United Nations Convention of the Law of the Seas 1982, which defines amongst others, the sovereign rights of nations over their Territorial Waters, and their exploration and exploitation entitlement within the Economic Zone and Continental Shelf.

In recent times, UNCLOS has proven useful in dealing with the differing views on the rights to police the safety of waters, such as the Straits of Malacca, against attacks of piracy.

The right of Transit Passage under UNCLOS through the Straits of Malacca is clear in its preservation of a balance between the usage of territorial waters of a country by foreign vessels, with the sovereign right of the coastal states to manage the affairs of security and safety in their waters. Whilst suggestions on means to overcome the hazards of piracy are welcomed, the ultimate control over the measures taken in protecting the Straits remains with the littoral states. The recent reports of the IMB, International Maritime Bureau, prove that the measures taken by Malaysia, both unilaterally and with the co- operation of its neighboring countries, have proven to be effective in reducing the instances of attacks significantly in 2005 and 2006, such that the controversial categorization of the Straits of Malacca as a War Risk Zone, has been properly revoked.

The MMEA, Malaysia Maritime Enforcement Agency, was established in 2005 to provide an authoritative presence of organized patrol in the Straits, both as a deterrent and as a responsive mechanism to combat piracy. I have no doubts that at the Conference, the MMEA will be drawn into hearty discussion on the measures taken, and to be further taken, in enhancing the safety and security of Malaysia waters.

On the issue of safety and security there can be no compromise. There can be no hint of their neglect

12 Malaysia As A Maritime Nation: Meeting Expectations A compilation of papers at the 1st National Maritime Conference to meet bottom lines. Malaysian commerce must place security and safety as paramount considerations, and effect all measures necessary in ensuing their fulfillment. One life lost is one life too many. Security extends to responsibility over cargo and commodities moving on our ships, through our ports and over our soil. One consignment lost, is one too many. The highest quality of services are demanded by consumers, and the highest quality of service is the very Expectation to be met.

Malaysia has faired well in terms of her technological know how. We need seriously to focus on our investment in human capital; the development of the intellect and the maturity of the mind. Our training centers, our universities, and our research institutes must prime themselves to produce the best. This can only work with the co-operation of the business sector. Opportunities for training the best must be made available by commercial entities, viewed as a vital investment component of their future, and the maritime future of the nation.

There is so much potential for growth in the Malaysia maritime industry. We are well placed to assume the role of a Global Halal Hub. The Governments’ allocation of RM95 million towards this development, needs the dedicated support of the maritime industry to provide impressive, world class services, using world class technology. That is the Expectation.

Transhipment traffic through Malaysia increases significantly each year. Malaysia must be geared to harness these opportunities. The anticipated shortage of shipping space for palm oil in 2007, with the introduction of new pollution prevention rules, must be effectively addressed within the Malaysian maritime sector. We cannot continue to allow over 75% of our trade volume to board foreign shipping lines. The Third Industrial Master Plan, IMP 3, for the years 2006 to 2020, strives to achieve for Malaysia a three fold trade growth, anticipated to reach RM2.8 trillion in 2020. Significant emphasis is placed on exports. In recognition of the need to complement trade growth with a duly corresponding ship fleet, the IMP 3 focuses on the development of shipbuilding and shiprepairing activities to increase the capacity to build and maintain Malaysian ships. For all these Government efforts to bear result, there must be co-operation within the maritime industry, and faith in local talent. The Malaysia maritime industry cannot afford to be fragmented.

The Malaysian maritime industry must act in concert to support one another. In turn, the industry must, at all times, conduct its affairs with utmost good faith, with complete integrity and relentless diligence. This is a pledge you, the maritime industry must make, to take this nation to great heights. You can rest assured that the Government will be fully behind you.

It is recognized that in meeting Expectations of a Maritime Nation, laws may need to be introduced, rules may need to be amended, systems may require refining. There should be no hesitation in placing

Malaysia As A Maritime Nation: Meeting Expectations 13 A compilation of papers at the 1st National Maritime Conference these reforms as matters deserving of immediate attention. The fact that the private and public sector lawyers have combined their efforts in slaving over this Conference, generously sponsored by PETRONAS and MISC Berhad, with the objective of maritime reform is most heartening. The nation requires the combined strength of all institutions and organizations in the Malaysian maritime industry, working with the public maritime authorities, to channel collective resources to inspire and implement reforms that fully befit Malaysia as a superior maritime nation.

I am confident that this Conference will meet its objective of laying strong foundations towards joint and unified efforts in improving maritime standards in Malaysia, to meet national and international Expectations; in taking Malaysia Towards Global Competitiveness. I wish all participants a meaningful Conference.

I have pleasure in Opening the National Maritime Conference, and hope that it will be the first of many.

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