The repositioning exercise is expected to take 3 years to complete, says MD

by SHAHEERA AZNAM SHAH 

Suria Capital Holdings Bhd is expanding its cargo operation at the Sapangar Bay Container Port as part of the group’s plan to relocate its general cargo terminal from its limited space at the Kota Kinabalu Port.

Suria Capital and Sabah Ports Sdn Bhd (SPSB) MD Ng Kiat Min said the repositioning exercise and the construction of the new facility are expected to take three years to complete.

“An expansion of a new general cargo facility will be built at the Sapangar Bay Container Port, and the group is currently in the middle of planning phase for the new port construction which is expected to start its physical construction works in 2019,” she told The Malaysian Reserve.

She said the limited land space at the Kota Kinabalu Port has driven the company to acquire a 28.9-acre (11.69ha) piece of land for the development of an international cruise terminal.

Suria Capital, wholly owned by Sabah Ports, is 51%-owned by the Sabah state government via the privatisation exercise from Sabah Ports Authority (SPA) on Sept 1, 2004.

Ng said the property developer and port operator will undertake a corporate exercise involving issuance of rights shares to fund the land acquisition.

“Suria Capital intends to issue the rights shares with possibly bonus shares attached in order to raise fund to acquire the land.

“The offer letter for the subject land has been received from the Lands and Surveys Department of Sabah, and we are in the middle of fulfiling the terms of accepting the offer,” she said, adding that the EGM is targeted to be held within this year.

However, as the general cargo operation at the Kota Kinabalu Port is currently sitting on the respective land. The construction of the proposed international cruise terminal will only begin after the cargo facility is completed at the Sapangar Bay.

Suria Capital is planning to raise between RM300 million and RM350 million through a rights share issuance, as well as considering bonds issuance to fund the respective expansion.

At present, Ng said Suria Capital has not determined the amount of capital for the cruise terminal development and related realty as the company may look into collaborating with a strategic partner to undertake the project.

Ng said the port’s current expansion plan is a part of its strategy to be a transshipment hub for the eastern region-bound routes, while progressively building its container terminal capacity.

“The expansion in Sabah Ports, particularly at the Sapangar Bay Container Terminal, will realise the port’s aim to be the transshipment hub to serve East Asean Growth Area that covers Brunei, Indonesia, Malaysia and the Philippines (BIMP-EAGA).

“We are leveraging on our container terminal and progressively building its capacity to expand operations on a global scale, specifically in securing transshipment and international bound cargo,” she said.

Ng asid the port is currently in the middle of tying the knot with other ports in order to attract main line operators (MLOs) to consider Sabah Ports as one the berthing points.

“We have studied the possibilities of tapping into niche markets within the BIMPEAGA region and seeking collaboration with other ports and shipping lines as a way to attract MLOs.

“We are open to jointly managing Sapangar Bay with other ports or shipping lines, if this can benefit the state in terms of volume and connectivity,” Ng said.

On the total development plan, Sapangar Bay’s expansion plan is expected to take place over the next 30 years in three phases.

“The initial phase will focus on building the container port’s capacity and securing the businesses from potential MLOs through a strategic pricing model.

“In fact, we have started some preliminary works this year and it is expected to be completed by 2021,” she said.

Since the ports’ privatisation exercise, the company has invested RM951 million as at February 2018 for its total development and expansion.

“For the last four years, Sabah Ports, Sabah Economic Development and Investment Authority and SPA have been studying Sapangar Bay Container Port’s potential as a transshipment hub, coupled with the commissioning of the international consultants.

“In 2016, we had secured the funding for the expansion of Sapangar Bay from the federal government that was considered as our first major breakthrough along with the endorsement by them,” she said.

Sabah Ports recently received two additional shipto-shore cranes, which will increase its container terminal’s annual handling capacity to half a million 20-ft equivalent units (TEUs).

With the current undergoing expansion, the port is expected to reach the capacity handling of 1.25 million TEUs by 2022, compared to the 105,239 TEUs registered in 2007.