Penang says port privatisation will hurt Malaysia’s competitiveness
KUALA LUMPUR, June 19 — Penang warned today Malaysia's competitiveness as a trade and investment destination will be hurt by plans to privatise Penang Port Sdn Bhd (PPSB), which it says will relegate it to a feeder port.
Chief Minister Lim Guan Eng told a press conference today that as Penang accounted for a quarter of Malaysia's trade and attracted the most manufacturing foreign-direct investment (FDI) of all states in the past two years, the move "made no sense at all."
"You can't afford to let Penang Port become a feeder port," the DAP secretary-general (picture) said, referring to Putrajaya's proposal to let Tan Sri Syed Mokhtar al-Bukhary's Seaport Terminal run the port.
His policy adviser Liew Chin Tong also added that "once you are a feeder port with no direct call, it will cost more and take longer to ship there."
"The current plan damages Malaysia's competitiveness by making it more difficult to do business in Penang, one of its main trade and industry centres," the Bukit Bendera MP said.
The plan has come under fire from Penang DAP lawmakers who say the logistics tycoon will strip assets from the island's port and prefer to boost his main transshipment hub Tanjung Pelepas Port (PTP) in Johor while condemning Penang Port into a feeder port.
They had also accused Penang Port Commission (PPC) chairman Datuk Seri Dr Chua Soi Lek last month of conspiring with Syed Mokhtar to stifle the economy of Penang by shelving plans to dredge the port’s channel, benefitting the MCA president's home state of Johor.
Penang resolved last week to reject the privatisation of PPSB to Syed Mokhtar, demanding Putrajaya undertake the promised RM353 million dredging project crucial for the port’s expansion and condemned Dr Chua for “selling out” the rights of Penang folk.
But the former health minister told the state government not to “sabotage itself” by refusing to cooperate with the federal government’s plan to privatise Penang Port, a move he insists would increase its competitiveness.
The Penang Port Commission (PPC) chief warned Lim Guan Eng’s administration that its decision to reject the privatisation of Penang Port Sdn Bhd (PPSB) and implied threat to derail the move “would just mean the whole port won’t work.”
“The privatisation is not to sabotage but to improve the efficiency of the port. They can fight the federal government or try to derail it but if they refuse to cooperate they will be sabotaging themselves,” he said last week.
But Lim insisted today that "no self-respecting government will agree to diminishing the status of its own port."
"We want to cooperate but we cannot agree to Penang Port being reduced to a feeder port," adding that the state owned "strategic portions" of land on which the port is sited.
Although the Bagan MP refused to say if his administration would take back its land, he said "it will be very difficult to move forward... the port will be disjointed where this part you have but another part you don't."
Putrajaya confirmed on Wednesday that Syed Mokhtar’s Seaport Terminal had won the bid to take Penang port private but said the firm must foot the bill of dredging work although it failed to specify if dredging would be compulsory under the concession.
Dr Chua has said the federal government's decision not to embark on the RM350 million dredging was made collectively by the National Economic Council (NEC) as the port is set to be privatised and the cost should be borne by the concessionaire instead.
He also 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.”
But several shipping industry players expressed doubt over whether Syed Mokhtar will deepen its channel at his own cost when he also controls the rival 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.
The Penang DAP lawmakers have 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.
Liew has also rejected Dr Chua’s explanation, saying the former Labis MP 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 federal lawmaker warned 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 work around the Penang channel.
The Penang DAP MPs have also called 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.
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 wholly-owned by the finance ministry 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 PTP, growing only 5.8 per cent a year between 1995 and 2009, against Klang which grew 14.2 per cent annually.
PTP began in 1999 but now handles more than six million TEUs a year, five times more than Penang Port, which Lim 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.