If nothing is exacted, the sleepy Malaysian port of Pulau Pinang will spring to life if and when, China muscles through an ambitious S$2billion plan aimed at reviving it and its surrounding environs.
The project to begin in 2017 is backed by the Chinese investors Shenzhen Yantian Port Group Co and Rizhao Port Group Co in a joint venture with a local Malaysian company, KAJ Development. Much of the new port’s promise is to meet rising demand at other Malaysian ports and relieve congestion . It is hoped that the port could handle up to 100,000 ships annually; a figure to date was only accomplished by Singapore.
The new announcement comes on the heels of yet another major plan by Malaysia last year, to revive its slumbering shipbuilding industry which if and when it does come to pass, is the promise of some 55,000 jobs between now and 2020.Malaysia’s International Trade and Industry Ministry argues that shipbuilding revenue is is also sorely needed to pick up the slack following the fall in oil and commodity prices which the nation depended on heavily in the past to draw its keeps.
Not since the 1980s when Kuala Lumpur adopted its controversial cabotage policy – which it still retains against better counsel – has the nation turned its head to look at shipbuilding
that either by accident or default has remained, too dormant for too long.
“The country (meaning Malaysia) is the right choice to invest in, as it has a promising future based on its strategic location, competitive cost, a skilled and talented workforce, advanced infrastructure and extensive trade agreements regionally and globally”, told the nation’s International Trade and Industry Minister, Datuk Seri Mustapa Mohamed eureka-like as if he was discovering a magic bullet on how to re-brand shipbuilding.
Though China has expertise in building ports, it may not be as legendary as how Singapore’s PSA International is, in managing ports across the globe. Port management means more than just planting stakes in a cleared out land filling. It means understanding the modern-day’s threat of cyber security to containers and port security, box turnaround when ships call, the ability to run unvarnished environmental impact assessment (EIA) audits and adherence to internationally sanctioned ISPO codes etc. Though China does in all fairness, have experience in port building what it committed at the Sri Lankan port of Hambantotta has left her reeling and sometimes smarting.
Still to understand Malaysia shipbuilding imperatives it becomes that much crucial where its comparative advantages lay. Resorting to the large-scale building of container vessels is tantamount to some self-imposed harakiri for the word across the world is that Malaysia will never stand a chance against the stronger Korean and Japanese yards.
If prescience was to have anything to do with business decisions, they ought not to tread where fools once had been but, instead head to what the angels are now seeking.
Out of a new narrative was the need to leverage on offshore craft arising not just out of prudence and accrued wisdom but also importantly of a razor-like business acumen to where it needs to turn its focus to.
The right focus within the subtext of the commercial imperatives for offshore craft is for, Malaysia to import large, ocean-going vessels it needs and just continue to focus on building and repairing small-medium size vessels.
Malaysian yards are noticeably small. With limited capacity there is none of that urge to head recklessly into building large ocean-going vessels and compound an already existing glut in global shipping capacity. Even so, as desperate as Malaysia may seem to want to sever all foreign links, the quality of its ship design skills may just hold it back into any kind of a brash, go-it-alone scheme.
There are just six large shipyards in the country with the biggest being MMHE. The remaining yards fanned out across the country take all of the nation’s yard holdings to 100.
But even with that, all eyes will be on SapuraKencana Petroleum Bhd and Nam Cheong, both of whom specialise in offshore craft. The latter recorded a record US$29million in revenue just solely for second quarter of 2016 says its website and counts itself as the second largest builder of OSV east of the Suez Canal.
Even as Malaysia’s plans may seem modestly grandiose for now, the largely overlooked question is the growing abundance of the US-inspired shale gas exports and what the larger stratagem of the Chinese interest and entreprise of their Chinese patrons truly are.
A major port in Pulau Pinang at the entrance of one of the world’s busiest waterways is by all means a noticeable game changer.
The larger question is why did China choose Pulau Pinang and not some of the strategically located Vietnamese ports like Van Phong or Cai Mep Thi Vai that are close to its borders than for it to vault over the South-East Asian landmass to finger out Pulau Pinang?
Like its port investments in Pakistan’s Gwadar, Myanmar’s Sitwe and Sri Lanka’s Hambantotta, there appears something larger than what meets the eye. Are these investments much about commercial imperatives or is there something else that is testing the waters of the Malacca Straits?
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