By Lee Wei Lian
Malaysian Insider, July 10, 2012
KUALA LUMPUR, July 10 — A group of manufacturers and port workers have rejected Putrajaya’s proposal to privatise Penang Port which could spell trouble for any plans for a smooth takeover by tycoon Tan Sri Syed Mokhtar Al-Bukhary.
Both state Pakatan Rakyat (PR) and Barisan Nasional (BN) leaders have also voiced their disapproval to the Finance Ministry plan to sell the port to Syed Mokhtar’s Seaport Terminal, which also runs the Port of Tanjung Pelepas and Johor Port over fears that Penang could be reduced from a northern shipping hub to a minor role.
The statement from the Penang state government said the Malay, Indian, Chinese Chambers of Commerce, the Federation of Malaysian Manufacturers (FMM), the Malaysian International Chamber of Commerce and Industry (MICCI), Frepenca (the Free Industrial Zone, Penang, Companies’ Association), logistics providers, freight forwarders, importers and exporters, shipping companies and agents as well as stevedores and port employees had rejected the port privatisation plan which they say would reduce the 220-year-old port to feeder status.
The rejection of the planned privatisation was one of five resolutions adopted after the various groups had met with the state administration which had initiated a roundtable discussion.
The other resolutions included calling for the immediate deepening of the port channel to accommodate larger vessels, the rejection of any proposal to relegate the port to feeder status, the revamp of the iconic Penang ferry service and that the port be returned to the state.
Penang Chief Minister Lim Guan Eng had come out strongly against the deal, saying that it was unlikely that Seaport Terminal would channel resources into Penang Port as the latter would prefer to boost his main transshipment hub Port of Tanjung Pelepas in Johor while “condemning” Penang Port, which is closely tied to the identity and economy of the state, into a “feeder port.”
Penang BN chairman Teng Chang Yeow had also urged the federal government to review its decision to privatise the island’s port, saying that many industry groups were opposed to the move and it was also counter to the sentiment of Penang folk.
MCA president Datuk Seri Dr Chua Soi Lek, who is also Penang Port Commission chief, said however that any attempt at non-co-operation by the state administration was akin to self-sabotage as the move to sell the port was made with an eye on enhancing efficiency.
“The privatisation is not to sabotage but to improve the efficiency of the port. They can fight the federal government or try to derail it but if they refuse to co-operate they will be sabotaging themselves,” he had said.
It is unclear however if political and industry resistance would be able to scupper the deal, which was confirmed by the Transport Ministry last month, especially if Syed Mokhtar’s track record is anything to go by.
The media-shy businessman has in recent years managed to assemble a vast empire of strategic assets spanning from ports to power plants, from rice and gas distribution to national carmaker Proton.
His logistics empire includes Pos Malaysia, the two ports in Johor, an airport, and his flagship enterprise MMC was reported to be evaluating the takeover of national railway KTM Berhad. MMC is also part of a joint venture working on the country’s largest infrastructure project, the My Rapid Transit (MRT) in the Klang Valley.
The acquisition spree has come at a heavy cost however and opposition lawmaker Tony Pua estimated that Syed Mokhtar’s companies have a combined debt of RM34.3 billion or more than 10 per cent of all local corporate bonds as of 2011.
Analysts said that a takeover of Penang Port by Syed Mokhtar could potentially see the port being grouped together with Johor Port and Port of Tanjung Pelepas in a new corporate entity and listed on the stock exchange.
Penang Port has declined from its once premier status ever since its free port status was taken away in the 1974.
In contrast, newcomer Port of Tanjung Pelepas started operations in 1999 but now handles more than six million TEUs a year, five times more than Penang Port.
Penang also saw cargo volumes growing only 5.8 per cent a year between 1995 and 2009 compared with Port Klang which grew 14.2 per cent annually.
The PR-controlled state administration 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.
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