PETALING JAYA: While most have given the Kulim International Airport (KXP) project the thumbs down, a few have cautioned against dismissing it outright.
Critics have cited lack of cargo traffic and close proximity with the Penang International Airport (PIA) as reasons to ground the KXP project but others see potential for future growth.
If the KXP does materialise, there will be three airports within a 70km radius, counting Sultan Abdul Halim Shah Airport in Alor Setar.
Rosli Azad Khan, who has spent 30 years managing more than 100 consultancy projects in the transportation sector, has branded the KXP a politically motivated project.
He told FMT Business that Kulim would not have enough aircraft calls, just like Alor Setar, which has yet to meet its full capacity.
A logistics industry player said only 20% of air cargo that passes through Penang is from Kulim, making it difficult for companies to justify moving their warehouses north.
PIA handled 104,011 tonnes of cargo in 2022, of which just over 20,000 tonnes came from Kulim.
Rosli said this works out to only 54 tonnes a day. “This is less than what an aircraft as big as a Boeing 737 carries in each flight.
“We can’t spend RM7 billion to build an airport to serve only one aircraft a day,” he said.
However, Malaysia Aerospace Industry Association president Naguib Md Nor sees some logic in the project.
He told FMT Business that pairing KXP with Sidam Logistics and Aerospace Manufacturing (SLAM) would support the expansion of the electrical and electronics (E&E) sector to meet aerospace industry needs.
SLAM, to be located in Sidam Kiri in the Kuala Muda district, is an industrial park that will focus on high-value activities in manufacturing, logistics and aerospace.
Naguib said that if the SLAM project pans out, it would be a unique proposition for maintenance, repair and operations (MRO) services at KXP.
MRO is a growing sector in the region but in Malaysia, most of it is concentrated at KLIA and Sultan Abdul Aziz Shah Airport in Subang.
Another logistics service provider said KXP would gain from additional investments in the E&E sector in Penang.
The E&E sector accounts for 38% of Malaysian exports and most of it is located in Penang, earning it the moniker Silicon Valley of the East.
An average of RM100 billion worth of E&E products transit through Penang annually. Malaysia pulled in RM148 billion in new foreign direct investments in E&E in 2021.
The history
KXP is a project that has been struggling to take off for many reasons.
Cost overruns, political opposition and the unexpected withdrawal of the Kedah government’s strategic partner in the project are among the factors that have taken the wind out of the project’s wings.
The idea, first mooted in December 2014, was for KXP to be sited in Sidam Kiri, a 20-minute drive from the Kulim Hi-Tech Park (KHTP). The project was expected to cost RM3.89 billion.
The original plan was for a cargo-only airport but it got more lavish. A leaked 2020 report showed that the cost had ballooned to RM7 billion, of which RM2.5 billion would be spent on acquiring the 17 sq km of land for the project.
The construction costs, including for the two runways with cargo and commercial flows, would take up another RM2.5 billion.
Added to that is the RM1.8 billion for a Kulim-Sungai Petani highway to improve connectivity.
However, there was no clear information on funding and the public-private project model proposed by the government failed to pan out.
It fell apart when the Kedah government’s strategic partner, ECK Group, pulled out in July last year. The company did not respond to queries from FMT Business.
Most in the know agree that the time for KXP is yet to come, but its viability sometime in the future is still up for debate.
While a logistics expert said it made sense to have KXP given the congestion on the Kulim-Penang land route, Rosli questioned the rationale in not introducing a rail system, similar to the ERL that plies the KL Sentral-KLIA route, up north.
The debate continues. - FMT
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