The Right Set-Up

With an impressive 20-year expansion program planned, Malaysia’s Port of Tanjung Pelepas is intent on catering for the changing needs of new foreign investors, says CEO Captain Ismail Hashim.

Port of Tanjung Pelepas (PTP) is already Malaysia’s largest container port. Are there plans for further expansion or upgrading of facilities to keep pace with the rapid growth of the Iskandar Development Region?   

In line with our vision of being the ‘preferred port of choice in south-east Asia', PTP has ambitious plans for further expansion. Berth 11 has just been completed and berth 12 will be ready before the end of 2009, by which time we shall have 44 quay cranes and  138 rubber tyre gantry cranes. This year, despite the severe drop in world trade, we expect to see growth in our throughput (last year we recorded 5.6 million TEUs [20-foot equivalent units] and this year we expect to hit 6.1 million TEUs). We do have plans for berths 13 and 14 and have already reclaimed land for this, but work will only commence once the economy recovers and world trade picks up again.
 
Plans have already been developed to cover the growth of the port for the next 20 years. This will entail further reclamation and berth construction as well as investment in the latest automated container handling technology. Of course, we are also taking into account concerns for the environmental impact on the surrounding area and the studies on this aspect have proceeded hand in hand with the planning.
 
We foresee that the throughput of the port may quadruple over this 20-year period so it is our intention to be as efficient as possible in the use of new land. We also expect to expand the area of the free zone by up to 3.6 million sq m to provide for the demand generated by Iskandar development.

How much FDI has been attracted into PTP and its free zone over the past year, and from which markets and which types of companies is the investment being generated?

There was not much foreign investment in the Pelepas free zone last year. Most of the new tenants that we signed up were local Malaysian brands and they were from the logistics and manufacturing sectors.

What is the outlook for the second half of this year for PTP, Iskandar and Malaysia generally?

PTP is optimistic about the second half of 2009. This is because in the first half of this year it has outperformed the world’s largest container ports, namely Singapore, Shanghai and Hong Kong, which suffered a double-digit decline, while  PTP managed to achieve a small increase in container volume handled through the relocation of new strings from existing customers.

Our optimism for the second half is also fueled by the recent successful signing of a new shipping line to call at PTP. With the additional strings from our existing customers and further volume from new customers, PTP is confident that it will achieve double-digit growth in the second half of this year, bucking the trend of world container volume decline arising from the economic crisis.

The leading index compiled by Malaysia’s government showed that the decline had slowed to 0.7% in February 2009, compared with a 3% decline in December 2008 and January 2009. This trend, together with the impact of the RM60bn ($16.9bn) stimulus package announced by the government in March, should improve the country’s economy for the second half of this year. PTP is optimistic that the Malaysian economy will recover over this period, resulting in an increase of import and export volume for the port.

What type of strategy is PTP employing in order to keep FDI levels robust during the global recession?

Over the years, PTP has attracted about RM4.5bn in FDI. It has attracted international companies including Ciba Vision from Switzerland, Flextronics and Cameron from the US and JST from Japan. The strategy is to continue to provide ready-developed land, coupled with excellent facilities and port services, to retain and encourage the expansion of the FDI business.

How do you see the needs of investors evolving to adjust to the new economic challenges and what unique advantages can PTP offer them?

Under the current economic conditions the market for FDI has declined. Many international companies are either rightsizing or consolidating their business. Potential foreign direct investors have a lot of choice as to where to put their investment. They are now looking for the most cost-effective set-up and PTP, as industrial park owner will have to cater for the challenging requirements of these limited investors.

Apart from providing free co-ordination with local government and other government agencies, PTP has the unique advantage of having ready-built, high-quality staff quarters for rental within walking distance of the industrial park. This will enable investors to reduce transportation costs and improve control over their production operators. For reduction of set-up cost, PTP can provide very conducive terms to property investors who can build plants in accordance with its specific requirements. This will reduce foreign direct investors’ set-up and operation costs and give PTP industrial park an advantage over other industrial parks in the region.