DOWN BY THE DOCKS

Malaysia 2016 | TRANSPORT | FOCUS: PORTS EXPANSION

As Malaysia's gateways to trade, ports play a vital role in the country's international competitiveness and economic development.

Since its inception in 1901, Malaysia's oldest port, Port Klang, has acted as the main gateway by sea to Malaysia. Today, it is the 12th largest port by volume as well as the 17th busiest port in total cargo tonnage in the world. Westports, one of Port Klang's three terminals, alone handled around 8.4 million TEUs and 10.3 million metric tons of bulk cargo in 2014. The Port of Penang, which is located along the Straits of Malacca, one of the busiest shipping routes in the world, acts as a strategic port of choice for shipping companies from some of Malaysia to some of the most important trading partners in Asia including China, Japan, and South Korea. Two other major ports are Johor Port and Port of Tanjung Pelepas, both located in the southern state of Johor. Operated by utilities and infrastructure group MMC Corporation, they handled 750,000 and 8.5 million TEUs of throughput, respectively, in 2014.

PRIVATIZATION

The ports in Malaysia were initially established either as federal ports, such as in the case of Penang, Bintulu and Port Klang, or else under state statutory bodies, as in Sabah and Sarawak. In the 1980s, in a drive to increase the efficiency and productivity of the ports, as well as relieve the financial and administrative burden of maintaining and investing in port infrastructure, the government embarked on a program of port privatization. This began with the privatization of container terminals at Port Klang in 1983 and was followed by the Port Privatization Act of 1990. This resulted in the operations of the federal ports either being corporatized or awarded to private operators, with the Port Authorities acting as the regulatory body.
Another motivating factor behind the port privatization was the rising entrepreneurship and asset ownership of Bumiputera, as part of the government's affirmative action policies. Today, Westports remains a 100% Malaysian company with 72% Bumiputera workers.

WIDER IMPLICATIONS

As well as directly providing employment opportunities for the maritime and transportation sectors, the presence of the ports has wider implications for the surrounding communities, contributing to poverty eradication and raising standards of living. Adjacent to Westports is the Port Klang Free Zone. Established in 2004, it is home to around 8,000 foreign companies and 400 MNCs. Pulau Indah, traditionally reliant on income from agriculture and fishing, is today a hub for eco-tourism, commerce, and industry thanks to its location on the western side of Port Klang. “In Pulau Indah, most locals are involved in some way or another in the port's activities. Many of them may not be working directly within the port; however, there are other related activities, such as haulage, warehousing, forwarding, and trucking,” according to Y. Bhg. Dato' Capt. David R. Padman, the General Manager of Port Klang Authority (PKA). In addition, the PKA is increasingly putting pressure on the government to improve the surrounding infrastructure. Construction of a fly-over linking Northport to Westports is currently underway and is expected to be fully completed in September, and works to widen the roads as well as add a double track rail are ongoing. Under the Logistics and Trade Facilitation Master plan, the government has designated $82.6 million to upgrade networks connecting Port Klang with Kuala Lumpur.

CONTINUED EXPANSION

To cater for continued volume growth, Malaysia's ports are continuously under expansion. In collaboration with the government, Kuantan Port Consortium, the developer and operator of Kuantan Port on the East Coast region of Peninsular Malaysia, has embarked on a port expansion project due to be completed in 2016. This expansion is expected to push forward the development of the $3.4 billion Malaysia-China Kuantan Industrial Park (MCKIP), a joint venture project between Malaysia and China. In 2014, both Westports and Northport launched major wharf expansion projects, the former having recently completed the expansion of its eight container terminal. For 2015, Port Klang is projected to handle 11.6 million TEUs in comparison with Northport's 2.6 million TEUs and Westports' 9.0 million TEUs. Driven by the expansion efforts and the Port Klang Free Zone, the Port Klang Authority expects the port to rank among the top 10 ports in the world by 2016.