Is it possible for a shipyard in a high cost country to compete with shipyards in low cost countries like China? (If it still is “low cost” in comparison to say India)
There are examples of that, even for fairly simple vessels.
Japan is NOT a low cost country by any stretch of the imagination, nor have it been for decades. Yet they are still building ship for both domestic and foreign owners.
Large cruise ships are built by yards in several European countries, incl. Finland, Germany, France and Germany for US based operators.
Yards in the Netherlands are still building short sea ships for the European market and specialized vessels for a wider market.
Even shipyards in high cost Scandinavia are competitive for certain types of more sophisticated vessels, although hull sections, or entire hulls, are usually built in lower cost countries, while the national yards do the final outfitting.
Otherwise Scandinavian companies are mostly involved with vessel design, as well as manufacturing of machinery and equipment for the worldwide shipbuilding industry.
Here is an example: Offshore Wind Farm vessels - #394 by ombugge
PS: I don`t know about the other countries mention in the MARAD testimony, but there were lots of foreign built vessels under 5000 DWT operating in Indonesian waters under Indonesian flag and manned by all Indonesians in 1996. (as well as before and after)
Most of those where purchased second hand, so maybe the rule only applied to newbuildings?