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''One of the major challenges facing the logistics and maritime transport sector is the ongoing negotiations at the bilateral, regional and multilateral level to liberalize trade in services,'' she said in a speech to the World Shippers' Conference that was read out by her deputy Ng Lip Yong.

''Liberalization efforts not only affect shippers but also the whole logistics value chain, including maritime transport. Although Malaysia has not yet entered into any commitments in services in the various FTAs signed, it is nevertheless going to take place sooner or later,'' Rafidah said.

''It is therefore important that logistics and maritime services providers be prepared for liberalization,'' she added.

Malaysia has signed a free trade agreement with Japan and with South Korea it has inked an FTA on trade in goods but is still negotiating for an agreement on investment and services.

Other countries Malaysia is still in discussion with for an FTA are the United States, its biggest trading partner, Australia, New Zealand, Chile and India.

At the regional level, the 10-member countries in the Association of Southeast Asian Nations have already inked the ''Roadmap for Integration of the Logistics Sector'' this August, which will see the gradual opening up of the logistics services sectors from 2008 to 2013.

The sectors involved include maritime cargo handling, storage and warehousing, freight transport agency, courier, packaging, customer services, maritime transport, air freight, rail freight and road transport.

Rafidah said Malaysia has already offered ''substantial'' commitments in the maritime sector under the World Trade Organization regulations.

''Malaysia allows foreign equity of up to 70 percent in international transport maritime services, maritime agency services covering marketing and sales of maritime transport and related services and vessel salvage and refloating services,'' she said.

Malaysian trade in 2006 amounted to $291.5 billion, but it recorded a deficit in its transport services amounting to 19.6 billion ringgit ($5.6 billion).

Total earnings in transport services, Rafidah said, amounted to 15.5 billion ringgit last year, but the country paid 35.1 billion ringgit to foreign carriers.

''Malaysia is therefore greatly dependent on foreign vessels for its international trade,'' she said.

But just as pressure mounts for the country to open up more, the industry is also facing bigger global competition and the urgency to cut cost further.

Some of the issues facing shippers worldwide are the heavy weight container surcharge, lack of ships calling at major ports due to demand in other parts of the world and limited shipping services to certain destinations.

There is also the trend towards monopolistic control of the global shipping industry where the carriers are consolidating and the top 20 carriers currently accounts for 60 percent of the global containerized shipping fleet, Rafidah said.Z

To add to the host of problems are new security rules such as a recent announcement by the United States to require 100 percent pre-shipment checks of all containerized U.S.-destined cargo within the next five years.

''The U.S. is the biggest market for most Asian countries and this requirement is anticipated to create congestion at ports if early preparations to accommodate these measures are not taken,'' she said.

//Kyodo news