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| September 2, 2000 | atimes.com | ||
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Southeast Asia
A new era in Asian shipping CHAPTER 3: PORTS OF CALL A port too many? Malaysia's principal port has always been Port Klang, which currently has three terminal operators. Other major ports include Penang, Johor Port at Pasir Gudang, Kuantan, Kemaman and Bintulu. Apart from these, there are ports in Sabah and Sarawak. The development of the Port of Tanjung Pelepas (PTP) is a key feature of the Malaysian government's attempts to combat the fact that an estimated two thirds of Malaysian container traffic "leaks" through Singapore. There are nearly a dozen feeder services from Port Klang to Singapore. On average, 95 percent of Malaysia's total imports and exports moves via ships. However, nearly 80 percent of this trade depends on the services of foreign ships. (Malaysia is listed by Lloyd's Maritime Information Services as having a total of 53 container ships with a total of 51,325 teu slot capacity, placing it 19th in the world. Singapore is in 9th position with190 ships and 220,766 teu slot capacity.) Singapore has been able to offer a multitude of direct calls to key destinations at a frequency that Malaysian ports could not match. Productivity and efficiency have also been cited as problems in Malaysian ports. Now that PTP is up and running, authorities are stressing that Port Klang will serve as the national load center, and PTP as Southeast Asia's premier transshipment hub. Port Klang is surrounded by a well-developed hinterland with advanced industrial development. This hinterland is well served by Port Klang, and it is a natural choice for a national load center. For PTP, located on a greenfield site, there is little immediate hinterland to feed it with indigenous cargo, but in terms of location for transshipment activities (which is no accident), PTP is a natural choice with the trans-Pacific, Far East-Europe, Southeast Asia-Australasia and intra-Asia routes at its doorstep. One analyst, drawing on a parallel between PTP/Port Klang and Hamburg/Bramerhaven in Germany, said both PTP and Port Klang could create their own niche markets. "The ports can have similar roles as that of Hamburg and Bremerhaven whereby Hamburg services the Europe-Far East trade whilst Bremerhaven caters for the trans-Atlantic trade." The government has commented that "ship operators have a freedom to choose and we will not stop the ports from competing with each other". PTP chief executive officer Mohd Sidik Shaik Osman is clear on which direction the port will take. "As exports increase from emerging Asian economies, there will be an obvious need for increased distribution and consolidation activities. PTP, aiming to be Southeast Asia's premier transshipment hub, is well positioned to capture this with plans for global port connectivity," he said. Everything is not quite so clear cut, however. On the very day that the PTP was officially opened in March, a high-level team from Port Klang was on an overseas mission drumming up support from major shipping lines, forcing them to miss the grand occasion. The Malaysian Minister of Transport, Dr Ling Liong Sik, led a marketing and promotion team from Port Klang to strengthen its position. The team visited several leading shipping lines in Europe. The team included the general manager of Port Klang Authority, O C Phang, the executive chairman of Westport, G Gnanalingam and representatives from the other two port terminal operating companies in Port Klang. Analysts say that severe competition and undercutting of rates could surface at Port Klang, leading to intense intra-port rivalry among its three gateway operators. The "buyer's" market benefits foreign shipping lines and undermines the investments of private port operating companies. The combined traffic of the three terminals at Port Klang in 1999 totaled 2.55 million teus, against a current capacity of more than four million, and the Port Klang terminals are understandably wary of any possible PTP moves to tap the same local market as a source of its throughput instead of the regional transshipment market. Port of Tanjung Pelepas The US$1 billion port project is located in Tanjung Pelepas in the state of Johor, at the southern tip of Peninsular Malaysia. Under a privatization agreement signed on March 24, 1995, with the Malaysian Government and the Johor Port Authority, the port was to be developed by Seaport Terminal (Johor) Sdn Bhd. Seaport novated its rights and obligations under the agreement on the same day to its subsidiary, Pelabuhan Tanjung Pelepas Sdn Bhd (PTP): PTP was entrusted with the planning, designing and construction of the new port in accordance with the master plan; supplying and installing the infrastructure; operating and managing the port on a commercial basis. The concession period for the Build Operate Transfer project is 60 years (from the date of the privatization agreement). A further 30 years may be granted to the company upon its application. Operations began in October 1999 with the official opening on March 13, 2000. Currently the PTP is focused on establishing a regional feeder network to key intra-Asia routes, and from there it will work at establishing direct calls to worldwide destinations. The PTP has said it will work on engineering "smart partnerships' for the new millennium. The naturally-sheltered port is located on the southwestern tip of the peninsula, at the mouth of the Pulai River. It is one of the few areas in the region that draws natural deep draft for international shipping. The site chosen for the port is adjacent to the Second Link, connecting Malaysia and Singapore across the Johor Straits. The port's strategic location at the confluence of the world's busiest international shipping lanes - trans-Pacific, Far East-Europe, intra-Asia, and Southeast Asia-Australasia - is a distinct advantage. Diversion times from these main trade lanes is about 45 minutes. The port is supported by the extensive application of IT. The Integrated Terminal and Port Management Information System (ITPMIS) supports all operational and administrative requirements. External port users are linked to the ITPMIS either via dial-up or leased lines. Port users key in data about the vessel, containers and trucks. This information is used by the operating personnel to plan for the vessel's berthing, container loading and discharging, yard space allocation, manpower allocation, etc. Other port users, such as customs and the Free Zone Authority, are linked to the system to grant clearance or holding of containers for import, export and transshipment. In the first six months of 2000, the port handled a total of 48,668 teus, with a first quarter of 18,921 teus. The total number of ship calls in the first six months was 188, including a large number of Maersk "S" class and "K" class vessels. These classes, with a length of 347 meters and 318 meters respectively, are the largest container vessels in the world. Since the weekly calls to US/Europe and West Asia/Mediterranean by Maersk Sealand on June 8, APL-NOL's West Asia Express on June 12 and Mitsui OSK Lines on April 30, the port has seen a surge of container volumes. With the port targeting a significant increase of services in September and October, the port is confident that volume will total approximately 450,000 teus by year-end. The average productivity levels in the first half of this year have also been consistently maintained between 23 and 25 moves per hour per crane. New ports generally take years to achieve the first 50,000 teus. PTP in January hosted the world's largest container ship, the Skagen Maersk, without a hitch. Skagen Maersk is an "S" class vessel, with a length of 347 meters, beam width of 43 meters, maximum draft of 15 meters, and a capacity of 6,600 teu. Perceived advantages: PTP is now looking at increased investment in equipment and facilities. To cater to the increased demand in the third and last quarter of this year, PTP plans to install five more Super Post Panamax quayside cranes, which will bring total number to 14 by year-end. PTP also plans to install 22 more rubber-tired gantry (RTGs) cranes by early next year. These additional 22 RTGs will bring the total number to 46. Delivery of these cranes has been scheduled to be in line with the completion of PTP's berth No. 5 and No. 6 and the remaining blocks of the container yard. Free trade zone: On June 16,1999, the government approved a Free Zone Authority within the PTP to administer both a Free Commercial Zone and a Free Industrial Zone. The free zone area - the different zone status relates to the types of activities that can be carried out - covers an area of about 810 hectares. Of this, approximately 405 hectares have been designated as industrial land. Of this, 162 hectares are reserved for warehousing, distribution and logistics activities and the remaining 248 hectares for light, medium and heavy manufacturing industries. The main objective is to develop export-oriented industries. A direct benefit of operating within a free zone is the elimination of duty on merchandise that is re-exported, and waiver of duties on departure from a free zone. Other advantages include facilities for storage of goods and merchandise pending more favorable market conditions, flexible and simplified procedures for import and export processes and cost-effective measures for commercial, industrial and manufacturing activities. Besides storage, the free commercial zone status allows an operator to carry out value added activities on cargo, including break-bulk, re-packing and packing, packaging, sorting/grading and repair of goods in storage or transit. The free commercial zone also embraces activities concerning direct transshipment, cargo consolidation, trading and regional distribution. These activities are generally found in most free zones in the region, but with PTP's status as a Free Zone Authority, added advantages are that PTP is able to focus on customer oriented services, guaranteeing efficient and fast release of cargo. In order to effectively supervise and manage the free zone activities the PTP has in place a Free Zone Information Processing System (FZIPS). It is purpose designed software program to process the manifest and free zone declaration forms. FZIPS also allows agents to submit documentation and manifests electronically to the PTP Free Zone Authority for processing and approval. Agents can also view the status of their forms online at any future date. Master plan: The master plan for the port contains five phases, extending to the year 2020. The total development will embrace a full range of facilities from container to liquid, dry bulk and conventional cargo. Phase one began in 1995 with a budgeted cost of US$737 million. The main feature is the development of six berths spanning 2.16 kilometers of linear wharf. The berths, each 360 meters long, are designed to cater for super-post Panamax container vessels. All of the berths are expected to be completed by year-end 2000. With these key facilities, the PTP will be able to handle an annual throughput of 3.8 million teus. The complete range of developments in phase one includes: The draft alongside the wharf is15 meters while a 12.6 kilometer approach channel provides easy two-way passage for giant container ships such as the new Super Post-Panamax vessels. The turning basin is 2.16 kilometers in length and 600 meters wide, allowing vessels to maneuver with ease. The container yard to be built under Phase 1 has an area of 1.2 million square meters and is subdivided into nine blocks by 12 rows of container stacking area. The container yard's storage capacity is approximately 110,000 teus. Other facilities are 2,100 reefer points to accommodate reefer containers and a specially designated area for dangerous cargos. Two container freight stations of approximately 10,000 square meters each will be constructed under phase one. Movements of containers in and out of the terminal are through a single gate comprising of seven entry lanes and seven exit lanes. The Port of Singapore Singapore's deepwater port has been both the foundation and the engine of the tiny nation's rapid development since independence in 1965. The port's prominent position results from the natural advantage of its location combined with the wide range and high quality of shipping-related and other services offered. First as a colonial trading post and later as an independent nation, Singapore has benefited from the natural advantage of its location adjacent to one of the world's busiest shipping lanes. Singapore has further enhanced the value and competitiveness of its port by enacting free trade policies, which fueled high growth and attracted foreign investments and firms. Today, one out of every 10 people in Singapore is dependent in some way on the port of Singapore. The port offers fuel, pilotage and towage, cargo, vessel repairs, warehousing, and a host of services including banking, insurance, communications, and entertainment. Singapore's role as a transshipment center for containers and bulk oil products is complemented by its position as the world's top bunkering port. As an important petroleum processing hub with its facilities so close to the shipping lanes, Singapore can bunker ships more rapidly and at lower cost than other ports. To accommodate the volumes of transshipments, Singapore has created a number of free trade zones which allow for a wide range of dutiable and controlled goods to be stored and re-exported without customs documentation. The free trade zones include two million square meters of covered and open storage areas. Outside the free trade zones, there is 500,000 square meters of covered warehouse space. The Port of Singapore Authority Corporation (PSA Corporation): In October 1997 the government spun off the port into the PSA Corporation. However, the Singaporean government holds 100 percent of the shares in the PSA Corporation. The primary change as the port shifted from an "authority" to a "corporation" was its loss of regulatory and statutory power to draft and revise regulations and tariffs regarding port activities. Corporatization was aimed at freeing the PSA from the encumbrances of a government body and to allow it to be more commercially focused and customer oriented. Thus, it was in a better position to respond faster to the changing needs of the industry and to provide customized services for individual clients. The PSA Corporation manages all the operations of the port. There is no private sector involvement with the leasing of terminals or other facilities. Eventually, there are plans to open the port to competition for contracts and bids for further development, but currently, the PSA Corporation manages everything. The PSA Corporation is the world's single largest container terminal owner-operator. It handles about one tenth of the world's container throughout. Under the PSA, the Port of Singapore has seen spectacular growth. From a conventional port, it is today the world's busiest port in terms of shipping tonnage, attracting over 1,000,000 vessel calls registering over 700 million gross tons a year. As the world's second largest transshipment hub, over 400 shipping lines and over 600 ports world-wide link it. In 1999 it handled 15.9 million teus. This was not enough to beat its main rival, Hong Kong. The Chinese territory last year regained the title of the world's busiest container port after total throughput last year topped 16.2 million teus, an 11.2 percent increase over 1998. Industry sources say it would be difficult for Singapore to regain its position because of intense competition in the regional market - and especially Malaysia. Through investments in infrastructure, information technology and manpower training, PSA Corporation has achieved some of the world's highest productivity rates. The strength of the corporation is its ability to integrate various aspects of the supply chain for its clients. In addition, the PSA Corporation has secured contracts to develop and operate container terminals in such places as Italy, China, and the Middle East. The management of the PSA Corporation has full authority to operate the port facilities as long as no regulations are violated. The Maritime and Port Administration (MPA) is the regulatory body that ensures environmental regulations are followed. The MPA's mission is to protect Singapore's strategic maritime interests and promote Singapore as a world-class port and international maritime center. The MPA is concerned with navigational and human safety issues, training of mariners, managing environmental hazards, and enforcement of International Maritime Organization standards. As a pioneer in IT, PSA uses over 350 IT applications to drive its operation and provide value-added services. CITOS (Compute Integrated Terminal Operations System) and the Portnet drive the operations at the container terminals. CITOS plans and directs all handling operations at the container terminals, allowing PSA to manage the huge complexities of shipping connections efficiently and reliably. Using expert systems, CITOS plans the use of berth, yard, equipment and manpower. From the central yard control computer, work instructions are transmitted to the machine operators using a real-time wireless data transmission system. Portnet facilitates the fast exchange of information between PSA and its customers, allowing the latter to place booking for berths, tugs and pilots, and submit information for the planning of loading and unloading operations on a ship. Customers can also check the progress of activities at the container terminals and cruise terminal. In order to deal with the increased traffic, the Maritime and Port Authority recently launched a second Port Operations Control Center (POCC2). The center was developed at the cost of US$15 million and is able to track up to 5,000 vessels in real time, a five-fold increase from its first POCC at the Tanjong Pagar Complex. The PSA Group in 1999 saw an 18 percent increase in net profit before tax to S$1,103 million from S$934 million in 1998. Group net profit after tax in 1999 grew to S$750.3 million, an increase of 4.5 percent over S$718 million in 1998. This is attributed to the rebound in the Asian economies, increased contribution from our overseas operations and the PSA Group's intensified efforts at optimizing its assets, and containing costs and expenses. The performance was achieved despite PSA Corporation offering competitive rates to its customers through customized agreements, as well as across-the-board rebates aimed at helping local businesses. In 1999, PSA Corporation handled 15.9 million teus, a 5.3 percent growth over 1998. During the first quarter of 2000, PSA Corporation handled 4.2 million teus, a 15.4 percent increase compared to the same period in 1998. PSA Corporation also set a world record throughput of handling 1.5 million teus in a month - March 2000. The first quarter of 2000 also saw new operational records for PSA Corporation. Four vessels were handled at vessel rates of more than 200 containers per hour at its terminals, joining the VR200 Club. On January 15 it set a new world record for container moves by discharging and loading 1,375 containers in six hours. This meant PSA achieved a moves-per-hour rate of 234. This broke the previous world record, also held by PSA, of 229 containers per hour. The ship involved was NYK's Antares. The port earned Best Container Terminal Operator (Asia); Best Air Cargo Terminal Operator (Asia) and Best Seaport (Asia) at the 14th Asian Freight Industry Awards in March 2000. In July 1999, PSA Corporation was the first Singaporean multinational to be conferred the Singapore Quality Award for business excellence. In April 2000, PSA Corporation won the National Productivity (Company) Award for Training and Development. Both awards were conferred by the Singapore Productivity and Standards Board. On the international front, through PSA International Business, the PSA Group handled a combined throughput of 1.72 million teus in its container terminals outside Singapore. The PSA currently manages, develops and operates ports in China, Italy, India and Yemen. Its flagship projects include the Dalian Container Terminal and Fuzhou Port in China, and the Aden Container Terminal in the Middle East. PSA Corporation also recently secured three new port projects: Sines Container Terminal (XXI) in Portugal; Muara Container Terminal in Negara Brunei Darussalam; and Inchon South Port in South Korea. These three new projects brought the total number of ports developed/managed/operated by PSA Corporation worldwide to 10. PSA's goal is to manage one-third of its operating income from businesses outside Singapore by 2007. The Dalian Container Terminal (DCT) in northeast China is PSA's first international joint venture. DCT started operations in mid-1996 and in 1998 handled 475,104 TEUs, reflecting an 11 percent growth over 1998. Under the joint venture contract with the Port of Dalian Authority, DCT owns, develops, manages and operates three container berths in Dalian's Dayaowan Container Terminal. Two deeper berths are being developed adjacent to the three existing berths. Vessels are serviced at an average rate of 30 moves per crane hour while hauliers are serviced within 30 minutes of arrival. In 1997, PSA and the Fuzhou Port Authority entered into an agreement to manage the Qingzhou and Aofeng Container Terminals. Within its first year of operations, Fuzhou Qingzhou Container Terminal (FQCT) recorded a throughput volume of 177, 568 teus in 1998, a 17.3 percent growth over 1997. To better position itself for more direct shipping and cross-Straits trade between China and Taiwan, a deep-water container terminal will be developed. Aden Container Terminal (ACT), PSA's pioneer project in the Middle East, commenced operations in March 1999. ACT is the cornerstone of the Aden Free Zone Project, which is being developed by Yeminvest - a joint venture between PSA Limited and Yemen Holdings Limited. In June 1997, PSA secured an engineering, procurement and construction contract to construct, manage and operate ACT. Phase I, comprising two berths with an annual handling capacity of 500,000 teus, began operations in March 1999. ACT is strategically located to serve the Red Sea, the Arabian Sea, the Indian Ocean, the Gulf, South and East Africa, making it the perfect choice for cost-effective transshipment operations between the European markets and the East Asian economies. PSA Corporation last year signed a Memorandum of Understanding with the Polyolefin Company to develop an Integrated Logistics Solution to enable petrochemical companies on Jurong Island to take advantage of Singapore as a distribution hub to reach international markets more quickly and cost-effectively. PSA Corporation's Singapore Cruise Center (SCC) and Domestic Ferry Terminals handled more than six million passengers at its international and regional terminals in 1999. PSA Corporation also made inroads into the cruise and harborfront market in the United States. PSA (USA) Inc, a wholly-owned subsidiary of PSA Corporation, together with three global partners, won the bid to develop a prime waterfront project in San Francisco known as the Bryant Street Pier Project and the James R Herman International Cruise Terminal. Not just any port in a storm Port Klang Port Klang is situated in the state of Selangor, on the west coast of peninsular Malaysia. Its strategic location - only 40 kilometers from Kuala Lumpur - in the Klang Valley, the richest and most developed region of the country, has ensured its consistent growth as the leading gateway. Port Klang serves a hinterland that covers major existing and planned growth centers in Selangor. Within its hinterland are the new Kuala Lumpur International Airport at Sepang, the federal government's new administrative center at Putrajaya, and the Selangor state government's designated new growth centers at Sabak Bernam, Kuala Selangor and Kuala Langat. The government's intention is to make Port Klang a load center for Malaysian and regional cargo. Port Klang, which was designated as a national load center by the government in 1996, has trade links with over 120 countries and receives calls from more than 600 shipping lines. Its location makes it the first port of call for ships on the eastbound leg and the last port of call on the westbound leg of the Far East-Europe trade. Port Klang has three gateways - Northport, Southport and Westport - which are all operated by private companies. Northport and Westport are free commercial zones. Port Klang has enjoyed considerable recent growth. The Containerization International Yearbook 2000 reported that in 1999 Port Klang was the 14th largest container port in the world, up from 21st place in 1998. The new placing made it the only port in the world to record such a high improvement. Port Klang also recorded the largest increase in its container throughput among the first 25 major container ports in the world - a 40.1 percent increase in traffic totaling 2.55 million teus against the 1.82 million of 1998. However, its current capacity is more than four million teus. Port Klang attributed 37.9 percent of its traffic, totaling 966,090 teus last year, as transshipment traffic. The improvement saw Port Klang overtake Yokohama, Kobe, Gioia Tauro, San Juan and Tanjung Priok. The Klang Port Authority (KPA), a quasi-government corporation, operated all the port facilities before 1986. In that year, KPA privatized the container terminal, the first major port facility in Malaysia to go private. Klang Container Terminal (KCT) became the terminal's new operator. This was followed in 1992 by the privatization of the non-container services which were taken over by Klang Port Management (KPM). Port Klang newest gateway, Westport, was privatized in 1994. It was built and is owned and operated by Kelang Multi Terminal Sdn Bhd (KMT). Since late 1998, KCT and KPM) have jointly marketed their services under the banner of Northport. The two companies, with Kontena Nasional (KN), one of Malaysia's leading container haulage operators, are due to formally merge in September. Once merged, they will concentrate on port terminal activities while KN will provide logistic support. Northport has recorded nine additional services this year and in July, the Grand Alliance, which includes the national carrier Malaysia International Shipping Corp (MISC), announced that it would increase its service frequency to the port from two to four calls weekly. Westport: Located on the western fringe of an island called Pulau Indah off Port Klang, Westport is 220 nautical miles north of Singapore, and next door to the industrial and commercial heartland of Malaysia. It is the nearest deepwater port to the Straits of Malacca. Currently, 37 main-line operators make direct calls to Westport. These include include Maersk Sealand, Hanjin, Cho Yang, DSR Senator, Evergreen, Uniglory, Lloyd Triestino, CMA, Norasia, the National Shipping Company of Saudi Arabia's (NSCSA) and MISC. In March this year China Shipping Container Line Co Ltd (CSCL) made its inaugural call at Westport. Local cargo using any one of the nine vessels deployed by CSCL on its Far East-Mediterranean service no longer have to be feedered to Singapore. The fledgling Chinese mainline operator - with 91 container ships and a combined capacity of 110,000 teus - has indicated it will use Port Klang to stage an aggressive foray into the container market in Southeast Asia. The two-year old China Shipping (Group), which owns and operates the CSCL, plans to turn Westport into its base port in the region to reach out directly to major ports in the Mediterranean, Europe, East Asia and the transpacific. It previously operated mostly within Asia. Senior officials of the China Shipping (Group) said CSCL decided to focus its operation at Port Klang because of the strong support it had received from the government, the port authority and the terminal operator. Under Kelang Multi Terminal Sdn Bhd (KMT), Westport has been responsible for 80 percent of Port Klang's growth of 70 percent since 1996 and KMT's conventional cargo volume had grown to eight million tonnes. KMT, which is owned by Westport executive chairman G. Gnanalingam and listed Advance Synergy, has a 33-year concession from 1996 to own and operate the S$542 million port. Westport has strong relationships with all the other ports in the region and it has ties with Dubai, Madras and Chittagong as well as sisterly port arrangements with Colombo, Jakarta and Kaohsiung. To date, a total of 17 berths are fully operational, with a capacity to handle 21 million metric tons of conventional cargo and over 1,000,000 teus of container cargo. It has room to expand to handle 15 million containers a year. When fully developed it will have 32 berths stretching along 11 kilometers of coastline. All berths, with natural depth of 14 to 17 meters of water alongside, are designed to take ships up to 80,000 DWT. Westport is a third generation modern port, with fourth generation super post panamax gantry cranes, catering to fifth generation post panamax vessels of 5000 TEUs or more. Westport was voted Asia's ninth best container terminal in 1997 and sixth in 1998 for the Asian Freight Industry Awards. The port handles containerized cargo, vehicles, and bulk cargo, in addition to facilities to handle warehousing, feeders, and haulage. It recorded a pretax profit of 11 million ringgit last year, following a 44-million-ringgit loss in 1998. Phase One of the distribution park at Westport which offers warehousing and a consolidation area was developed by Konsortium Logistik Bhd, formerly known as Konsortium Perkapalan Sdn Bhd. The latter company, of which Prime Minister Mahathir's son Mirzan had a controlling interest, was subject to a controversial deal in which Malaysia International Shipping Corporation Berhad (MISC), a unit of Petronas, the state oil giant, purchased US$220 million of Konsortium Perkapalan's shipping assets during the economic crisis in March 1998. Konsortium has further entered into a joint venture with the port operator and three of the world's largest Japanese car shipping companies to operate a vehicle transit center. This specialized center caters for the transshipment of vehicles and heavy equipment in the region. Westport up for grabs?: Hutchison International Terminals Ltd (HIT), a unit of Li Ka-shing's Hong Kong-based Hutchison Whampoa Group, plans to buy a 30 percent stake in Kelang Multi Terminal, which owns and operates Westport. It applied on August 14 to Malaysia's Foreign Investment Committee (FIC) for approval of the sale. Permission from the FIC is required for any deal worth more than five million ringgit (US$1.3 million) that involves a foreign entity. The acquisition of assets or any interests, mergers or take-overs of companies and businesses are governed by the powerful FIC of the Economic Planning Unit under the Prime Minister's Office. If the sale is approved, HIT will pay more than 300 million ringgit for the stake in Westport. HIT controls over 10 percent of the globe's container traffic through its interests in 18 ports around the world and eight affiliated companies. HIT is a subsidiary of Hutchinson Port Holdings (HPH) which operates 15 ports and moves in excess of 11 million teus each year, accounting for over 10 percent of the global container traffic. The HIT bid is a part of its ongoing strategy to move into Southeast Asia. It first won a bid to operate Indonesia's Koja container terminal, a contract Singapore's Neptune Orient Lines had eyed but backed off from. HIT operates the world's largest privately-owned container terminals - one of eight such terminals in the territory - at the Kwai Chung Container Port. HIT services over 40 shipping lines, 24 hours a day. Approximately 185,000 transactions per hour speed through the port. Despite Kelang Multi Terminal's potential to handle more containers, its relatively modest financial position - it recorded pretax profit of 11 million ringgit in 1999, rebounding from a 44 million ringgit loss in 1998 - has hindered its expansion plans. A major player such as Hutchison, with its financial strength and world links, could help strengthen the port operator's balance sheet and assist in improving efficiency and in steering business Westport's way. If the deal goes through it could have wider implications for Malaysia, sparking a resurgence in foreign interest and investment. The Malaysian economy is rebounding strongly from the regional crisis, but foreign investment in Malaysian companies has remained low (See Chapter 5). The prospects for investments may have been hurt by Singapore Telecommunications' 2.2 billion ringgit failed attempt to acquire minority interests in the fiber-optics network of Time Engineering in May. SingTel had agreed to pay about 2.4 billion ringgit to buy 15 percent in Time Engineering and 20 percent each in Time dotCom and Time Online. However, Malaysian politicians objected to the deal on the grounds of national security. Halim Saad, the managing director of Time dotCom and major shareholder of Renong Bhd, called off the deal on the eve of the signing ceremony with SingTel and Khazanah Nasional, the investment arm of the Malaysian government, stepped in to take up a stake in Time dotCom. Another major potential deal also foundered in early July when a proposal by Japanese telecoms giant Nippon Telegraph & Telephone (NTT) to buy up to 15 percent of state-owned Telekom Malaysia, a deal that Mahathir personally favored, collapsed over a disagreement over how much management control NTT would gain through the purchase. Hutchison International Terminals has vast experience of operating in the cutthroat shipping business as Hong Kong relies on the private sector to finance, build, own and operate new terminals in response to market demand. The operators of the eight container terminals in Hong Kong, such as Hutchinson, assume the risks and take the profits. The government provides the necessary back-up land, navigation channels, infrastructure and utilities. The Port of Hong Kong is also the busiest in the world, handling 16 million teus at its facilities in 1999, a growth of 11.11 percent, compared to growth of just 1.39 percent in 1998. As for overall tonnage, the port moved 169 million tonnes in 1999. The Port Development Board of Hong Kong expects container throughput to reach 33 million by the year 2016. Hong Kong's US$510 million Container Terminal 9 contract has been awarded to South Korea's Hyundai Engineering and Construction. The six additional berths (four deep sea, two feeder) will raise port capacity by 2.6 million teu in the next five years. Construction is to be completed in 2004. Container Terminal 9 will be built on Tsing Yi Island opposite the existing eight terminals at Kwai Chung. The first container terminal in Hong Kong started operations in 1972 at Berth One in Kwai Chung. It was operated by Modern Terminals Ltd. Terminal 8 became operational in 1994. The Klang Port Authority (KPA): The KPA is the regulatory authority for port operations. It was established in 1963 as a statutory body created by parliament to take the port, which was then managed by the Malayan Railway. With all port services now privatized, KPA acts as a landlord and regulatory authority as well as a trade facilitator. The KPA has also taken an active role in developing facilities aimed at promoting Port Klang as a transshipment hub for the region. It initiated the development of the first inland port in Malaysia - the Ipoh Cargo Terminal - and the country's first distripart - Port Klang Distribution Park. It is a shareholder in both companies. The KPA is also developing another inland port -the Segamat Inland Port - in Johor. The Free Zone Authority is also under its jurisdiction. Klang Port Authority was awarded the Excellent Service Award 1999 by the National Chamber of Commerce and Industry Malaysia last year, which cited the authority's "qualitative improvement in the growing pervasive influence over its role in facilitation of the nation's trade". Klang Port Management Sdn Bhd (KPM): The main shareholders are: Johor Port The port began full operations in 1977 and in the past 20 years it has undergone rapid development. Besides providing for containerized cargo, the port is now a fully-fledged port with facilities to cater for dry bulk, liquid bulk and conventional cargo. The port is also a fully integrated seaport offering a range of services to meet almost all types of maritime, commercial and industrial activities. Johor Port Berhad (JoPort), a listed company, operates, maintains, manages and provides port facilities and other related services at Pasir Gudang, Johor, under a license issued by the Johor Port Authority (JPA). Prior to the corporatization of the port in 1993, the operations of the port were under the authority and supervision of the JPA. All landed properties and permanent fixtures of the port remain under the ownership of the JPA and are currently being leased to JoPort for a period of 30 years with an option for renewal for another 30 years. The port's container terminal, with a berth length of approximately 760 meters and water draft of 15 meters, is able to accommodate up to three post panamax fully cellular container vessels of up to 80,000 DWT while the container berth is equipped with five units of high speed post panamax cranes. The container yard operation is complemented with an integrated transtainer and tractor trailer system. The container yard covers an area of 178,000 square meters with 5,500 ground slots and it has a holding capacity of 25,000 containers at any one time with a throughput of one million teus per annum. The port also provides dedicated and specialized jetties and facilities to handle palm oil, petroleum and petrochemical products and other types of liquid bulk. Palm oil is exported through a twin berth jetty with a total berthing length of 657 meters and a water depth of 11 meters for the outer jetty and nine meters depth for the inner jetty. It can accommodate parcel tankers of up to 30,000 DWT. The palm oil jetty can accommodate up to four vessels simultaneously. Petroleum products and chemicals are handled at another specialized hazardous cargo jetty. The hazardous cargo jetty can accommodate three vessels of up to 50,000 DWT at any time and has a total berth length of 351 meters and a water depth of 12 meters for both the outer and inner jetty. The port provides separate terminals to handle edible and non-edible dry bulk cargo. The dry bulk terminal comprises three specialized berths with a total length of 624.5 meters and has 12.8 meters of water depth with the capacity to receive up to three vessels simultaneously of up to 60,000 DWT. Besides these dedicated terminals, Johor Port has also wharf capacity to handle general or break bulk cargo. There are two deep water wharves and a domestic wharf. Total available wharf length for conventional cargo vessels is 537 meters with water depth of 11 meters for the deep water wharves and 5.5 meters depth for the domestic wharf. The deep water wharves are designed to handle up to three vessels of up to 30,000 DWT. Malaysian national ports study The resurgence of Malaysian ports coincides with the decision by the Malaysian Ministry of Transport to commission a study to recommend the content of the enabling legislation, structure and scope of functions of the proposed National Ports Authority (NPA). The six-month study will consider the organizational structure and legal responsibility of the new body, whose primary role is expected to be regulatory in character. The formation of the NPA will bring all the federal port authorities under a single legal entity. The port authorities that will be involved in the restructuring exercise are Port Klang Authority, Penang Port Commission, Kuantan Port Authority, Johor Port Authority and Bintulu Port Authority. These port authorities, with the exception of Penang Port Commission (PPC), are constituted under the Ports Authorities Act (1963). The PPC is constituted under the Penang Ports Commission Act (1955). The five port authorities at present perform regulatory functions over the privatized port terminal operators at the respective ports. The functions include monitoring of port performance and facilitation of trade. It is expected that once the NPA is constituted the five port authorities will be reconstituted as regional directorates of the national body. The NPA, which will probably acquire the assets of the port authorities, is expected to have several divisions, including planning legal and regulatory. One of the major issues to be addressed by the consultants is the division of responsibility between, on the one hand, the Ministry of Transport and, on the other, the NPA on matters to be regulated. This is of particular importance in the regulation of port tariffs. (C) Asia Times Online CHAPTER 4: CALLING CARDS |
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