Local ports expected to reach record high value due to US-China trade war

Malaysian ports, especially Port Klang, experienced a marked increase in trade in 1H19

by NG MIN SHEN/ pic by RAZAK GHAZALI

MALAYSIAN ports have become an indirect beneficiary of the US-China trade war, having recorded an increased movement, with Port Klang expected to see double-digit growth in cargo capacity handling for 2019.

Transport Minister Anthony Loke (picture) said the China-Malaysia trade in value terms is expected to reach a “record high” this year, after having reached RM238 billion in the first half of 2019 (1H19).

In his keynote address at the Fourth China-Malaysia Port Alliance (CMPA) annual meeting in Kuala Lumpur yesterday, Loke said Malaysia’s trade with China in 2018 rose by about 8% to nearly RM314 billion or almost 17% of Malaysia’s total trade.

The positive growth in 1H19 bilateral trade was partly due to the ongoing US-China trade tensions, Loke said when speaking to reporters afterwards.

“A lot of containers and some of the cargoes and goods are transported through Malaysia to other parts of the world. That’s why the US-China trade war has indirectly benefitted Malaysia to a certain extent and we saw in Malaysian ports, especially Port Klang, there is a very marked increase and we’re looking forward to strong growth in Malaysian ports,” he said.

China has been Malaysia’s largest trading partner for 10 consecutive years since 2009. Exports to China expanded over 10% while China is Malaysia’s largest import source, accounting for nearly 20% of the total imports in 2018.

Following the positive bilateral trade numbers seen in 1H19, the total Malaysia-China trade for 2019 will be “about 5% more than (last year’s RM314 billion)”, Loke said.

Apart from the trade value, cargo handling numbers at local ports are also expected to improve, with Port Klang in particular to see higher twenty-foot equivalent units (TEUs) this year.

“We’ve recorded a 12% growth in TEUs at Port Klang for 1H19, so by year-end, we’re projecting about 13.2 million TEUs. That’ll be about a 12% growth over last year, which is a good recovery,” Loke stated.

He said Port Klang experienced less growth in 2017 due to rationalisation across the shipping industry, which saw many shipping companies leaving the port for other hubs.

“But over 2018 and this year, especially in 1H19, they’ve started to come back, partly because of the growth in the local economy, and also because there’s a need for shipping lines to use Port Klang and Pelabuhan Tanjung Pelepas (PTP) as a secondary hub as well,” Loke explained.

Despite the improved growth, regulations continue to be a barrier preventing companies from industries such as aerospace and car manufacturing from making Malaysia their distribution hub.

“We’re talking to some major companies to make Malaysia their distribution hub. What is important is to facilitate these private investments. Sometimes, a lot of factors are positive for investors, but the red tape and bureaucracy do not attract them to come here,” Loke said.

To that end, the ministry has identified several regulation and red-tape issues that need to be dealt with in order to attract more foreign investors and achieve Malaysia’s goal of becoming a regional transshipment hub.

“All these are ongoing processes that we are reviewing. I will make further announcements in the next couple of weeks in terms of making our ports more competitive. One way to do so is to cut down regulations and barriers,” Loke said.

The government is looking to secure more investments from the private sector to facilitate the expansion of local port operations at Port Klang and PTP, as well as the free zone area at Port Klang and PTP.

Westports Holdings Bhd has already set aside up to RM15 billion to double its container handling capacity to about 30 million TEUs by 2040, while PTP Sdn Bhd is working towards expansion plans. The Port Klang Authority is also currently studying the possibility of turning Carey Island into the third port at Port Klang.