The Shipbuilding and Ship Repair (SBSR) industry is a critical component of Malaysia’s maritime economy. However, unlike the national automotive sector which achieved global standards through strategic Japanese collaborations, the SBSR sector remains trapped in low-value, conventional operations. This study proposes a strategic framework to transform the national SBSR industry into a high-technology sector by leveraging Malaysian Investment Development Authority (MIDA) incentives and Foreign Direct Investment (FDI) from Japan within the Free Trade Agreement (FTA) framework. A significant research gap exists, as previous literature overlooks the integration of bilateral trade instruments and agential incentives specifically tailored for high-tech maritime transfer.

Using a mixed-method research design, this study combines qualitative and quantitative approaches. First, in-depth interviews will be conducted with key policymakers from MITI, MIDA, the Association of Marine Industries of Malaysia (AMIM), and Japanese trade organizations (JETRO) to analyze policy gaps in current FTAs. Second, quantitative surveys will be administered to local shipyard operators to assess technological readiness and incentive penetration. Finally, a comparative analysis of the Proton-Mitsubishi and Perodua-Daihatsu automotive models will be executed to extract best practices for technology absorption.

The expected outcome is the formulation of the “Malaysia-Japan SBSR Integration Framework” (MJ-SBSR), alongside policy recommendations for “MIDA Incentives 2.0” tailored for smart and green shipping technologies. This research is highly significant as it provides a tactical blueprint for policymakers to attract high-tier Japanese OEMs, empowers local shipyards to move up the global value chain, and strengthens bilateral economic ties. Ultimately, this study bridges the gap between international trade policy and domestic industrial execution, driving Malaysia’s ambition to become a premier high-technology maritime hub in the Asia-Pacific region.