Syed Mokhtar finally adds Penang Port to logistics empire

By Jahabar Sadiq
Editor

March 29, 2012

KUALA LUMPUR, March 29 — Tan Sri Syed Mokhtar Al-Bukhary’s officials are already running the Penang Port, adding it to his business empire some 15 months after the Cabinet approved the port sale to the tycoon who recently scooped national carmaker Proton Holdings and has a big share in the Klang Valley Mass Rapid Transit (MRT) system.

The Malaysian Insider reported in December 2010 that the Cabinet had approved the Ministry of Finance (MoF) sale of Penang Port Sdn Bhd (PPSB) to Port of Tanjung Pelepas (PTP), a unit of Syed Mokhtar’s logistics operations despite competitive bids from other businessmen and also the Penang government, which owns the port land.

File photo of Penang Port, whose debt has risen from RM148 million in 2004 to RM832 million in 2009 — a 462 per cent increase in five years. —Picture by Choo Choy May

“It is confirmed that PTP have been given the letter of offer to take over the port,” a source told The Malaysian Insider.

He also said that Syed Mokhtar’s key aide, Datuk Mohd Sidik Shaik Osman, has been in “PPSB talking to the staff and convincing them that the deal will not affect them”.

The source said Putrajaya has incorporated a requirement for dredging the port as part of the deal, costing some RM400 million.

“Everyone is sceptical that PTP will spend this money to dredge though,” he added, saying most shippers and freight-forwarders believe Penang Port will be turned into a feeder port for PTP in Johor.

PPSB is already carrying out dredging in the North Channel to ensure it goes from 11.5m to between 13.5m and 14.5m to ensure it remains the port of choice for shippers servicing the busy routes to southern Thailand and northern Sumatra.

The influential businessman already owns Port of Tanjung Pelepas and Johor Port via MMC Corp Bhd, whose joint venture with Gamuda Bhd was also named Project Delivery Partner (PDP) for the MRT project in Kuala Lumpur. The joint venture grabbed the RM8.2 billion tunnelling job for the MRT last week.

Sources said then Syed Mokhtar was the preferred contender as he already owned ports and airports although another Putrajaya-friendly tycoon Datuk Siew Ka Wei was keen to purchase PPSB through Ancom Logistics Bhd, whose chairman Datuk Abdul Latif Abdullah used to be PPSB chairman.

PPSB is a wholly-owned subsidiary of MoF Inc while the regulator, Penang Port Commission (PPC), also reports to Putrajaya through the Transport Ministry. Prime Minister and Finance Minister Datuk Seri Najib Razak had named MCA president Datuk Seri Dr Chua Soi Lek to head the PPC.

Penang Chief Minister Lim Guan Eng wrote to Najib 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.

It is learnt that cargo volumes have failed to match 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.

Syed Mokhtar’s Tanjung Pelepas port began in 1999 but now handles more than six million TEUs (20-foot equivalent units) a year, six times more than the one million TEUs in Penang.

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.