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This article first appeared in The Edge Malaysia Weekly on September 4, 2017 - September 10, 2017

THE government is “studying thoroughly” a plan to build a container terminal and an integrated maritime city, estimated to cost RM200 billion, on Carey Island in Selangor, according to sources.

The news, which could see the project being put on hold, came as Westports Holdings Bhd was given the green light about a week ago for the RM10 billion development of Container Terminals 10 to 19.

“The decision by the government on the Carey Island port is negative and indicates a reluctance on its part to pursue it,” says a source with a logistics company.

Another source, a port official who knows the details, says he is not the least bit surprised as there were many flaws in the plan to build the Carey Island terminal. “It didn’t make sense from the start.”

It seems there are many reasons for shelving the Carey Island plan.

For starters, MMC Port Holdings Sdn Bhd, a unit of MMC Corp Bhd, is partnering India’s largest private port operator, Adani Ports and Special Economic Zone Ltd (APSEZ), on this development. The other party involved is Sime Darby Bhd, which has large tracts on Carey Island.

Initially, it seems there was a search for a Chinese partner but the talks fell through as the Chinese only wanted to carry out the construction and little else without control of the terminal.

The attention then shifted to India, but terminals are not its strong point.  Last year, the throughput for the whole country amounted to a mere 12.53 million 20-foot equivalent units, or TEUs.

In contrast, Port Klang alone handled 13.17 million TEUs in 2016, and Malaysian ports collectively would have handled in excess of 16 million TEUs.

“So, there was a question mark over how APSEZ could assist MMC in the development of the Carey Island port ... it doesn’t even seem as qualified as Northport,” says one of the sources. Northport (M) Bhd is wholly owned by MMC, and together with Westports, makes up  Port Klang.

To recap, MMC, Sime Darby Property Bhd and APSEZ signed a memorandum of understanding to study the feasibility of developing an integrated maritime city on Carey Island in April this year.

The three companies, in a joint statement, said the maritime city was aimed at supporting the development of a new port on Carey Island, a greenfield site.

Others also questioned the choice of APSEZ, which is listed on the Bombay Stock Exchange and National Stock Exchange of India. While it has been successful in dealing with commodities, it has no experience in greenfield container ports.

A port official points out that shipping lines are already entrenched in either Singapore, Port of Tanjung Pelepas or Port Klang and getting them to shift would be difficult as it would involve dropping rates.

It also does not help that mixed signals are being sent by Melaka. Initially, there was talk of a container port being developed there, and later on, a cruise terminal. Now, a liquid cargo facility is being mulled.

The deepsea port for liquid cargo in Melaka, estimated to cost RM8 billion, is part of the larger RM30 billion Malacca Gateway project — a 1,350-acre mixed-use development project on three reclaimed islands and one natural island in the Strait of Malacca.

Some agreements, including with Powerchina International Group Ltd, have been inked, but most port executives agree that Pengerang in Johor would be the ideal choice for a liquid cargo terminal.

“Talk to any shipping company official and they will tell you it doesn’t make sense. The fact that the plans for the port switched from container initially to cruise, and now to liquid cargo, says a lot. Were any studies done to see what can be built?

“Clearly, the depth (about 20m to 25 m) makes it ideal for submarines, but the possible use of the port in Malacca for military purposes has not been addressed,” says the port official.

The Carey Island port development is just one of the handful of infrastructure projects that have drawn scrutiny.  Others include the RM55 billion East Coast Railway Line (ECRL), which would involve the construction of a 620km electrified rail link between Kuantan Port and Port Klang, and the expansion of Kuantan Port.

 

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