AS transport minister, Datuk Seri Liow Tiong Lai oversees air, rail, road and sea and river transportation and transportation issues. Just about anything that moves in Malaysia is touched by his ministry.
But his next game plan is to beef up Malaysia’s logistics sector, key in driving the country’s trade-dependent economy.
The link between economic growth and demand for product-transporting services is the result of various effects. These effects can clearly show the growing significance of the economic sector of goods distribution.
Speaking on the 9th floor of the MCA head office in Kuala Lumpur, Liow, who is also MCA president, talked about the progress being made by the National Logistics Task Force, which he chairs.
The task force oversees the Logistics and Trade Masterplan, a roadmap rolled out by the government to tackle the so-called “bottlenecks” at ports and airports that hinder the smooth flow of goods for exports and imports.
The 54-year-old Liow, who holds a Bachelor of Science (Nutrition) from Universiti Kebangsaan Malaysia and a Master of Business Administration from the University of Malaya, is a strong advocate of healthy eating. He has made a special appearance in a short film, Healthy Paranoia, playing himself.
Next to his desk is a book titled Global Economy in Turbulent Times, written by former Bank Negara deputy governor and Harvard-trained economist Tan Sri Dr Lin See-Yan.
Liow is still quite excited on how Malaysia’s international trade will prosper in the coming years. He even talked about the possibility of developing a third container port in Port Klang, next to West Port and North Port.
The following are excerpts of the interview:
On the progress of the implementation of the Logistics Masterplan
The masterplan has five strategic thrusts and 21 action plans with very clear KPIs (key performance indicators) for the (transport) ministry as well as for all the relevant agencies. Under the Logistics Masterplan, we created the National Logistics Task Force, which is championed by the ministry. I chair this meeting.
Under this masterplan, we focus on these key areas: national transport infrastructure, service competence and trade facilitation.
Under transport infrastructure, we talk about de-bottlenecking the situation at the ports, at the warehouse. We have very narrow roads to the ports, the need to upgrade the railway lines (to the ports) and the problem of the systems themselves.
As such as need to decongest our ports, especially Port Klang. In Port Klang, we are upgrading the junction at Bandar Sultan Sulaiman and North Port Gate 2, we are building a bridge across the railway track at Jalan Pelabuhan Utara and upgrading the Pulau Indah highway phase one and two. The total cost would be RM1.13 billion.
Under the de-bottlenecking of the logistics sector, we have 11 action plans. The deadline is 2015 and 2016. I am happy to note these plans are already in progress. On top of this, we are also planning for the future.
We are proposing to build the Pulau Indah Ring Road, costing about RM4 billion. We need a ring road to decongest the traffic gridlock in that area.
We also need to build the Serendah-Port Klang railway line, so that we can decongest the railway line. We shall not allow freight trains to pass through KL Sentral. The project is under study and is likely to cost a few billion ringgit. These will help our ports be more efficient.
We are also addressing the congestion at Padang Besar because of the cargo coming from southern Thailand. We have a lot of freight trains coming down to Padang Besar to Penang Port and Port Klang.
The area at our Padang Besar railway station is too small for us and we are upgrading it at a cost of RM15 million. We are also proposing to build an inland port in Chuping in Perlis in order to attract more Thai cargo to Malaysia.
On system improvements in the import and export process
According to Frost and Sullivan’s 2014 study on ease of doing business, Malaysia was ranked fifth, Hong Kong second and Singapore No. 1. But when we study the efficiency of ports, there are four documents required to enter Malaysian ports. This compares with three in Singapore.
The time required to export is about 11 days, whereas in Singapore it is only six days. On imports, we require four documents. Singapore requires only three documents. Time required to import in Malaysia is eight days, but it is only four days in Singapore.
As such, we are looking at ways of improving these processes, say from 11 days to six days. We should strive to match, if not, (be) better than Singapore. This is going to be our benchmark. Even Hong Kong is six days.
Some of our freight forwarders still use the old system of using motorcycles. Office boys carry documents from one department to another using the manual process. We are cutting all these.
We are asking them to use Port Klang.net, using computer-assisted tools to facilitate these transactions. Firstly, it will be more transparent and we don’t need motorcycles to commute from one department to another.
On improvements in the air cargo sector
In the past, it took days to approve chartered cargo flights, and we have managed to reduce it to about two days. We have further improved it and cut it down to just hours, not days. We should be able to approve, within hours, chartered flights carrying cargoes.
We also want a system where the inspection is done at the airport of departure to ensure speedier clearance at the KLIA (Kuala Lumpur International Airport) cargo hub. This is mainly for perishable goods.
On making Port Klang a top 10 port in the world
I am more concerned about Port Klang. How to make Port Klang more efficient? It currently handles 12 million TEUs. (TEU stands for Twenty-Foot Equivalent Unit, used to measure a ship’s cargo carrying capacity).
We hope to increase to 20 million TEUs before 2020. We are No. 12 in the world, next year it will move to No. 11 and we hope to be top 10 by 2020.
On the logistics sector’s growing contribution to the GDP
The logistics sector now contributes 3.6 per cent to the GDP (gross domestic product). We hope to grow to 4.3 per cent by 2020. We are pushing for growth and it is a very important growth for us.
The government is very focused in strengthening the logistics sector by enhancing human capital development. We will give more incentives, especially in the training of skilled workers. We will see an increase in cargo volume by eight per cent a year, an increase in labour productivity by five per cent a year.
On the entry of new logistics players
I welcome new players. The industry is not saturated. Our ports are expanding fast. We have good maritime laws. We work with China. China wants to tap on our laws and also our strategic (shipping) position. We have opened up the Kuantan port and will expand it into a deep-sea port by 2017. We invested about RM3 billion. We are building Melaka Gateway port, with an investment of RM30 billion. We need more people to come into this sector.
We are also ensuring the growth of our vessels and our maritime sector, including shipyards, bunkering and maritime industrial parks.
On plans to expand Port Klang’s capacity and building a third port
We are thinking of expanding West Port and North Port. The West Port berths are quite congested. A lot of big ships coming in, so certain ships may have to wait one or two days before they can berth, so there is a request to extend the berths. We have agreed to it.
But the ministry and the EPU (Economic Planning Unit) are studying the whole Port Klang activities. While waiting for the results of the study, we have asked West Port to hold on to its expansion plan.
But we want an overall plan, including whether we need the third port on Carey Island, whether we can build another port at Carey Island. So Carey Island, North Port and West Port. Carey Island is near West Port. It is 13 sq km.
(The consultants have submitted second interim report. A third interim report is still pending).
Even if we extend the berths at West Port, we can go for 20 to 25 million TEUs.
Singapore is building the Tuas port with 60 million TEUs. Singapore is doing about 30 million TEUs now. Malaysia cannot rest on its laurels. We have to work hard now.
The whole of Malaysia handled 23.9 million TEUs in 2015, up from 22.4 million in 2014 and 20.9 million in 2013.
On why prices of some goods are higher in Sabah and Sarawak
Why higher? They always say it is due to the cabotage policy (the restriction of the operation of sea, air, or other transport services within or into a particular country to that country’s own transport services). I want to mention it is not the cabotage policy. It is actually due to the efficiency of the ports and the cost of transportation within the states. In semenanjung (the peninsula), the transportation cost is much lower and the ports are more efficient. For example, in Port Klang, a container can have 25 to 27 moves per hour. In Kota Kinabalu or Sarawak, it is about six to seven moves per hour. The turnaround must be fast enough so that we can actually cut down the cost. We have to ensure these can be further enhanced.
On investments in logistics infrastructure
The infrastructure projects that are ongoing now are valued about RM12.75 billion. The projects that are under planning or under study are valued at around RM34.03 billion. At the end of the day, we want our logistics sector to become a regional footprint. We want to be a regional hub.