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Question 9 : Is there an good explanation as to why PKFZ is such a good deal ?

 

Malaysia is ranked 4th in the world for its logistics industry. With a large manufacturing base, it is expected to demand competitive and efficient logistic services with a forecast compound annual growth rate ( CAGR ) of 12.9%. Port Klang ( including North and West ports) and Port of Tanjung Pelepas ( PTP ) accounts for the bulk of sea traffic to and from the country.

Just for Port Klang alone, between 2001 and 2007 cargo handled ( by weight) , almost doubled. Ships calling to port were up 65 % with container traffic up almost 90 %. PTP, another free trade zone, was a success and attracted RM 3 billion to date in investments partly due to its cost advantage compared to Singapore’s Port and gateway to the Iskandar Development Region ( IDR ).

The logistics industry in Malaysia has been given priority under the Third Industrial Master Plan ( IMP3 ) due to its ability to enhance industrialisation and trade in and out  of the country. Therefore, efforts are aimed at developing the transport, logistics and supply chain management through improved productivity, efficiency and performances. Efficiency at the ports play an important role. Under the IMP3, the logistics industry is expected to contribute up to 12.1 % of the country’s GDP by 2020.

The Free Trade Zone provides for duty free storage, less restrictions on transhipment and re-export and simpler documentation and procedures.

At the macro level, total marine cargo for the country is expected to hit 751 million tonnes by 2020, up from 252 million tonnes in 2005, almost 3 times its 2005 level. The rationale for the infrastructure development of PKFZ is there. But what was lacking was the protocol in implementation.

 

 

Leow Kok Yuan

Mr Leow is our Managing Partner. He has worked as a consultant in multi-disciplinary development projects financed by the Malaysian Government and international development agencies such as the Asian Development Bank and the World Bank.

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