Sunday, August 5, 2012

Penang Port has what it takes to succeed

 WHEN Johor Port was being privatised in 1995, the group taking over the port - the same people that are now on the verge of taking over Penang Port - stipulated that they should be given the opportunity to build another port at Tanjung Pelepas, in south-western tip of Johor.

 The government acceded to the request and the rest as they say is history.

Port of Tanjung Pelepas (PTP) today is Malaysia's single largest port, handling 113 million freight weight tonnes (fwt), almost a quarter of Malaysia's cargo throughput last year. 

PTP is so successful that it has become a threat to Singapore ports.

Not bad for a port that grew from a greenfield site of swamps.

The growth of privatised Johor Port, which handled 33 million fwt in 2011, is not so shabby either. It is now a major regional port and has the world's largest edible oil storage tank facilities and accorded the London Metal Exchange status. Both ports now are profitable and compete with each other although they share the same owner.

There are several factors behind the successes enjoyed by PTP and Johor Port. Not least of which is geographical. This is God given and those who have it must exploit it to the fullest. 

Johor Port, which is located in the southeastern tip of Johor at Pasir Gudang, has hinterland of oil palm plantations and industrial estates. This is exploited by Johor Port to the fullest to become a port of preference for local cargoes.

Similarly, the promoter of PTP knew its geographical advantage when they proposed to build a port there. 

Tanjung Pelepas, located on the eastern mouth of the Pulai River, is as near to the busy sea lanes of the Straits of Malacca as Singapore is. For ships exiting the south end of the straits, turning left for them would be PTP and right is Singapore.

However, geography alone will not guarantee the success of PTP as a transshipment port when competing with the likes of Singapore. It has to be supported by good infrastructure and fortunately, the southern state's infrastructure is well developed. 

But Singapore too has very good infrastructure. Realising this, PTP has to compete on efficiency. This it has done and with lower cost compared to Singapore, it has managed to attract businesses from big shipping lines such as Maersk and Evergreen. 

Penang Port - among the last Malaysian port to be privatised - likewise has geographical advantage. It is located at the north end of the straits, and is ideal to be a regional port serving northern peninsular, southern Thailand, north Sumatera and Myanmar.

In fact, there is no other regional port in its hinterland which has better facilities and infrastructure support than Penang Port. The only thing that is hindering its growth is efficiency. For a port, which is the oldest in the country, it still handles less cargo than Johor Port, which also is a regional port. 

At the rate that it is going now with profit before tax of RM200,000 in 2011, it would hard pressed to service its debt of about RM1.3 billion.

There is no question that Penang Port must be privatised not only to better serve its hinterland, but also to guarantee its survival. 

The completion of the electrified double-tracking of KTMB's railway line from Rawang to Padang Besar in 2014 spells more trouble for Penang Port.

If the Penang Port does not buck up by then, it would see more shippers in its hinterland sending their cargoes down south to Port Klang.


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