Save ‘No’ to privatisation of Penang Port

— Francis Loh
The Malaysian Insider
Aug 03, 2012

AUG 3 — We are deeply distressed to learn that Penang Port has been privatised to Seaport Terminal (Johor) Sdn Bhd.

Penang Port, Malaysia’s first port, is a valuable cultural and economic heritage of Penangites, indeed of all Malaysians. It has been a part of our history since colonial times, providing ferry services that linked the island to the peninsula, and serving as an important free port and port-of-call for ships from the East and West.

In no small way, the port has contributed towards the economic dynamism and the cosmopolitanism of Penang and in turn towards our Unesco Heritage listing.

Not surprising, Penangites from all walks of life — the Penang Pakatan Rakyat government, business groups, port workers, port contractors and especially the rakyat have rejected the privatisation proposal. Even the Penang Barisan Nasional has urged the federal government to review its decision, not least because of popular sentiments against Seaport’s takeover on the eve of the 13th general election.

In fact, there are three other major concerns regarding the proposed takeover.

First, Seaport Terminal, owned by tycoon Tan Sri Syed Mokhtar Al-Bukhary, already controls Pelabuhan Tanjung Pelepas (PTP) and Johor Port. Opened in 1999, PTP handled about 6 million TEUs last year, five times more than Penang Port.

Consequently, concern has arisen that Seaport Terminal will not be interested in developing Penang Port to any considerable extent and that the takeover will relegate Penang to a feeder port for PTP. The cranes in Penang Port, a mainstay of our harbour view for more than a century, might even be dismantled and transferred to PTP, which is being geared for even greater growth.

Indeed, if such plans are in the offing, some have suggested that Seaport’s acquisition of Penang Port could be against the Competition Act 2010, potentially an anti-trust violation.

Seaport Terminal director Datuk Mohd Sidik Shaik Osman has denied the allegation that Penang Port’s status will be diminished following their takeover. Rather, he declared, Penang Port’s capacity will be increased and it will be turned into a regional port. He has also assured that the necessary dredging of Penang Port will be conducted.

Indeed, our second major concern about Seaport’s takeover is with regards to the dredging of the North Channel — but not about whether it will be conducted but who will be doing the dredging and how accountable they are.

Apparently, this work has been conducted by local dredging firm Inai Kiara Sdn Bhd, which together with Seaport Terminal had set up a joint venture called Integrated Marine Works (IMW). Subsequently IMW signed an agreement with Ballast Ham dredging (BHD) of Netherlands.

We understand that IMW-BHD, in 2004, acquired a 15-year concession agreement with the Malaysian government to carry out the dredging of all ports and harbours under federal jurisdiction.

In other words, the dredging of the North Channel might come under the control of IMW, just like all the major ports under federal jurisdiction in Malaysia. Who really owns IMW and its parent companies?

Our third concern arising from that Seaport’s acquisition of Penang Port is that it will further facilitate Syed Mokhtar’s tightening of his grip over logistics in the country.

Apart from a couple of ports and related activities, he already has interests, whether directly and indirectly in Pos Malaysia, Proton, and DRB Hicom and is reportedly working on a takeover of national railway KTM and stakes in a sewerage system and national water assets.

Such control can only lead to a monopoly which cannot be healthy for our country that, under the still-born New Economic Model, is striving to rise from a middle-income to a high-income nation. Where will there be the necessary competition and the competency?

Confused and annoyed like us?

We therefore demand to know all the terms and conditions for the takeover of Penang Port including the dredging (and the parties that stand to profit from it).

The facts and figures of Seaport Terminal’s future plans for Penang, the amounts of money that they will invest in Penang Port, when these are forthcoming, employment with regards to port workers, the charges they will be imposing, etc, must be available for public scrutiny.

Since news of the proposed privatisation reached the public, there have been two other parties that have declared that they are interested in taking over Penang Port, namely the Penang state government and the Penang Chinese Chambers of Commerce that intends to set up a consortium involving the other Chambers.

It is preferred that the Penang Port not be privatised, certainly not if it leads towards the monopoly by an individual with vested interests over the country’s logistics industry or control by those with vested interests over its land banks.

The advantage of transferring the Penang Port Commission which controls Penang Port to the Penang State government is that the latter, whether PR (or BN, as some hope after GE13), is that we can hold the port authorities accountable. After all, if they do not perform competently, we can always remove them in GE14.

We demand therefore that the Cabinet revoke its decision to privatise Penang Port to Seaport Terminal. The Penang state government, on behalf of the people of Penang, should then be allowed to put in a bid.

Save Penang Port! —

* Dr Francis Loh is president of Aliran

  1. #1 by sheriff singh on Sunday, 5 August 2012 - 12:13 am

    Is it possible that UMNO now has a new ‘Trustee’ who is to hold all these assets in trust for its benefit?

    I do recollect rumours that in the past decades some high profile names have been used as ‘Trustees’ and some unfortunate cases have ended up in court and the government had to step in to hush things up ?

  2. #2 by yhsiew on Sunday, 5 August 2012 - 7:44 am

    It is a known fact that there is a hidden agenda in most UMNO privatization programs. Such privatization is for the benefit of its cronies and rarely for the benefit of the rakyat.

  3. #3 by Bigjoe on Sunday, 5 August 2012 - 8:24 am

    In general, I am not against the privatization of port although its clear from examples all over the world, its possible for a good government to run a port profitably and efficiently to the state economic advantage e.g. Singapore, Taiwan, Rotterdam, China, etc..

    A larger issue really is the domination of the Syed Mokhtar Bukhary group in a number of key sectors of the economy – port in particular. Its simply de facto monopoly and long term wise unhealthy for the economy and its citizens. If we are going to privatize the ports and other services such as water then there must be healthy competition..

    In particular, if we are going to have GLCs (government linked companies) in general, a wiser and healthier policy is for a GLC to compete successfully in this sector as other countries have simply as a benchmark of GLC management and governance standards..

  4. #4 by negarawan on Sunday, 5 August 2012 - 9:54 am

    This is another corrupted and disgusting case of UMNO enriching itself and its cronies at the expense of serving the rakyat with efficiency and productivity.

  5. #5 by Kampong Orang on Sunday, 5 August 2012 - 11:16 am

    Privatisation means increase price and cronism. Promoted and bred by previous prime minister mathir.

  6. #6 by waterfrontcoolie on Sunday, 5 August 2012 - 12:09 pm

    Many Gomen around the world privatize their ports purely for economic competitiveness whereas, here based on past “piratization” acts, they are meant to ensure that the cronies will continue to support them under the guise of such actions. When privatization was instituted, the local authorities were supposed to regulate their actions to ensure that the general users are not be held captives but through the various changes , normally through the Minister concerned, they quietly change the rules to increase their revenues. While, the ports around the country are seen as easy money for their cronies, they have forgotten that the logistics scenario is being changed, especially by China who will force the rest of the Asia, through trade, to adjust themselves based on her plan. Without doubt, their plan will also affect Penang long term ‘interests’ from logistics point of view. It must be noted that Penang will remain a port to serve only its hinterland with the occasional volumes from around the nearly by industrial sites. For a start, it cannot compete with Port Klang because volume is the only factor the shipping lines respect! As container ships become larger because of economic advantages in operations, they will visit only ports with the available volume.
    In the case of China, with her plans to develop her Western region to trade with Asean region as well as India, railway is the most optimal mode both for trade and geopolitical reasons. The rail line coming from central -Western China through either Thailand or Myanmar is equivalent to sending the cargo to Shanghai! A saving of some 2,000 km of distance; a saving by any mean. At least to their national economy. In this respect, they will make full use of this mode and their resources to improve her position in reducing her overall logistics cost as a nation. Our transport system has been plagued with internal man-made constraints for which we will have to pay a huge cost soon. Whether the ports are owned by the State, preferably as the industries within its hinterland will be affected by any decision on local rates by the terminal operators will affect the SMIs more than the MNCs who are normally protected by their international shipping contracts. From this perspective, it would serve the State to control the port. As for the current privatized ports, are those managements able to compete in the management of international ports through pure competition. Search me! They can only mange local ports whose tariffs are controlled by the Minister through the Parliament! And that is their version of competitive and world class ports!

  7. #7 by Kampong Orang on Tuesday, 7 August 2012 - 5:13 pm

    Penang Be End chairperson said support DAP means support DAP to let PAS be prime minister. This is a short sighted baseless accusation.

    Who would be the coming prime minister would depends on how many parliament seat won by the political party. I guess PAS number would be less than Keadilan.

    But I would see PAS as the prime minister is also not a problem. Drinking alcohol is already confirmed as class 1 carcinogenic. So, nothing is wrong to ban alcohol. Alcohol is an evil drink.

    Gerakan asked for giving them a chance again in Penang. For us, normal citizens, we want to see Be End gone and let Anti Corruption Commission be changed and get them (Be End politicians) into jail for their corruption and bribe.

    We want to see judgement on murder of Teoh Beng Hock, Atantuya, Ahmad Sarbani Mohamed.

    We want to see all property of Taib in overseas ( to be sold and confiscated and bring those money back home.

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