Analyst: No need for RM200 billion Carey Island port

Port Klang Authority's plans to build giant port received with skepticism by observers who say it will not impact Singapore's port operations.

PETALING JAYA: Plans by Port Klang Authority (PKA) to build a giant port on Carey Island just to compete with Singapore has been criticised by analysts, The Straits Times reported.

The intended new port – to add to the capacity under the existing Port Klang operations which has reached almost maximum levels – is expected to cost RM200 billion according to PKA chairman Kong Cho Ha.

Yesterday, Kong told The Star that a new port was necessary to compete in the industry and also to vie for a bigger share of the container cargo trade from Singapore.

Following the announcement, analysts the Singapore daily had spoken to said there was no need for a new port, especially one intended to compete with Singapore.

“Creating another port that runs separately (to Port Klang) does not make sense. That is just bringing about excess capacity,” ST quoted G Durairaj, managing director of maritime and logistics consultancy PortsWorld, as saying.

He added that in a report by the World Bank that was commissioned by the Singapore government in 2015, it was stated that Malaysia did not need any new ports, especially on the west coast of the peninsula, because existing facilities have still not reached its capacity.

Besides that, Durairaj believes that such a move will have “minimal impact” on Singapore’s shipping sector.

“There is little chance that a new port would draw clients away from Singapore, pointing to factors such as critical mass and customer loyalty incentives,” he was quoted as saying by ST.

As a point of note, analysts said even the current ports in Johor, which are closer to Singapore, have not managed to make too big of a dent, adding that the global container-shipment industry has reached a plateau.

The bigger picture according to observers is that the west coast of the peninsula already has two major projects that will be taking off soon.

The ST report cites the RM12.5 billion Kuala Linggi International Port in Malacca, that will start construction in a few months, and the upcoming RM43 billion Melaka Gateway, that will include a deep sea port and cruise terminal, as reasons why even the Malaysian ports stand to suffer from intra-port competition.

“There will be excess capacity in a competitive environment, and that will eat into the current market share,” Durairaj told ST.

Meanwhile, the daily reported that the movers behind the Carey Island project are past and present MCA leaders, including Kong who had also served in the cabinet as transport minister.

It was reported last year that Transport Minister Liow Tiong Lai said his ministry was in talks with the China Merchants Group to discuss an investment into developing a deep-sea port in Carey Island. -FMT