Doubts raised over Syed Mokhtar’s plans for Penang Port
KUALA LUMPUR, May 29 — Shipping industry players have joined Penang MPs in expressing doubt over whether Tan Sri Syed Mokhtar al-Bukhary, who has emerged as a frontrunner to take Penang Port private, will deepen its channel at the logistics tycoon’s own cost.
Industry players, who declined to be named, told The Malaysian Insider it would not make economic sense for a private player to dredge the port’s channel at a reported cost of RM350 million, especially as Syed Mokhtar also controls the rival Tanjung Pelepas Port (PTP).
“Definitely it makes more sense to turn Penang Port into a feeder port instead of splitting up resources and competing with yourself as well as Port Klang,” said a former top port official.
Datuk Seri Dr Chua Soi Lek had justified yesterday the government’s decision to shelve plans to dredge the port’s channel at the reported cost of RM350 million as it is set to be sold by the Finance Ministry (MoF).
The Penang Port Commission (PPC) chairman told The Malaysian Insider it did not make sense for any bidder not to improve the port’s performance as “it is not doing as well as it should be and has accumulated a debt of around RM1.3 billion.”
“How will the new owner settle the outstanding debt without deepening the harbour? It does not make sense to assume the liabilities and not dredge. It only makes sense to DAP but it makes no sense to any businessman,” the MCA president said.
Three Penang MPs had accused Johor-born Dr Chua of a “sinister” plot to stifle the state’s economy by conspiring to benefit his home state at Penang’s expense and relegate Penang Port to a feeder for PTP.
The lawmakers said that the dredging was needed to allow bigger ships measuring 8,000 TEUs (twenty-foot equivalent units) to call on the island state along the Straits of Malacca, the world’s busiest waterway.
One of them, Liew Chin Tong, also rejected Dr Chua’s explanation today, saying the former health minister was trying to project a “false image of Penang Port as a loss-making outfit when the debt is mostly due to the RM1.1 billion investment.”
The Bukit Bendera MP repeated their warning that Syed Mokhtar may “engage in asset stripping by bringing the seven units of Super Port Panamax cranes from Penang to PTP” and replace them with six smaller quay cranes from Johor Port, run by the tycoon’s Seaport Terminal.
The DAP strategist said that with the smaller cranes unable to handle ships measuring 4,000 TEUs and above, Syed Mokhtar would have no reason to carry out dredging works around the Penang channel.
The trio also questioned today if there was any precedent in which a federal port was dredged by a private company and demanded a deadline for the new owner of PPSB to dredge the channel if the privatisation goes ahead as it has been delayed since the 9th Malaysia Plan (2006 to 2010).
An industry source also told The Malaysian Insider that “never in our history has any port been dredged by the private sector.”
“Even Port Klang or Syed Mokhtar’s own PTP was not dredged by private players. Given the cost of servicing Penang Port’s current debt and the growth in traffic needed, it makes no economic sense to pay for the dredging,” the source said.
The Penang DAP MPs also called today for the privatisation exercise to be aborted after Dr Chua’s rationale that the government should not spend on an asset it is planning to sell.
They said that following the same logic, the RM1.1 billion — or over three times the cost of dredging — spent over five years up to 2009 to double the port’s capacity to two million TEUs meant that Putrajaya should scrap the sale altogether.
“Why must Penang Port be privatised when Penang Port Sdn Bhd (PPSB) had just spent RM1.1 billion to expand the Port and bought the seven units of Super Port Panamax cranes?” Liew, Chow Kon Yeow and Chong Eng told The Malaysian Insider.
Although Dr Chua also insisted that PPC has not been informed of any winning bid, the DAP MPs challenged him to deny knowledge of a Cabinet decision on November 25 to endorse Syed Mokhtar’s Seaport Terminal.
The Malaysian Insider reported in December 2010 that the Cabinet had approved the MoF’s sale of PPSB to PTP despite competitive bids from other businessmen and also the Penang government, which owns the port land.
Penang Chief Minister Lim Guan Eng wrote to Prime Minister Datuk Seri Najib Razak in early December 2010 to put in a bid to run the port, which has declined since the MoF took over in 1994.
The port lost its free-port status in 1974 but Najib’s Barisan Nasional (BN) is offering to reinstate its free-port status if the federal coalition regains Penang which it lost in Election 2008.
PPSB is a wholly-owned subsidiary of MoF Inc while the regulator, PPC, also reports to Putrajaya through the Transport Ministry.
It is learnt that cargo volumes at Penang Port have failed to match that of Port Klang and Tanjung Pelepas, growing only 5.8 per cent a year between 1995 and 2009, against Klang which grew 14.2 per cent annually.
Tanjung Pelepas Port began in 1999 but now handles more than six million TEUs a year, five times more than Penang Port, which Liew said had grown to handle 1.3 million TEUs last year.
Penang has complained that federal ownership of the port operator has worsened its financial position, with net debt rising from RM148 million in 2004 to RM832 million in 2009 — a 462 per cent increase in five years.