This article first appeared in The Edge Financial Daily on October 26, 2017

SEPANG: Revenue contribution from the logistics hub within the 45ha KLIA Aeropolis here is expected to come in one-and-a-half to two years, said Malaysia Airports Holdings Bhd (MAHB) managing director Datuk Badlisham Ghazali.

“In the airport business, whether we’re handling passengers or cargo, it (the returns) is usually long-term. Obviously, there will be a slight jump in terms of rental for use of the land but that is small compared to what we do as a group,” he told a press conference yesterday.

Badlisham said there is an opportunity for MAHB to tap the growth potential of the supply chain and logistics sector, driven by the e-commerce activities as a result of the government’s initiative for the Digital Free Trade Zone (DFTZ).

“Some of these [logistics] players want to partner with us. So, we are constantly talking to them on whether we will participate on a joint venture basis or just outright lease the land and provide services to them,” Badlisham said, adding that MAHB also benefits from the increased air cargo volume handled through the Kuala Lumpur International Airport (KLIA).

According to Badlisham, the e-fulfilment hub at KLIA Aeropolis is expected to drive the growth in cargo volume in Malaysia through airfreight shipping from the current level of 750,000 tonnes a year to 3.5 million tonnes a year by 2050. In the shorter term, MAHB hopes to double the current figure in less than 10 years after remaining flat for the last 10 years.

“This is important for us because we want to enhance the transport and logistics sector by increasing cargo traffic so that e-commerce players can then expand their capabilities, in support of the government’s efforts for the DFTZ,” he said.

The number of freighters operating out of KLIA is expected to double in the next 10 years from the current 14, he added.

“Current operators such as MASkargo Bhd can increase not only their current and future volume, but new players can be introduced because we forecast that we need to double the number of freighters to Malaysia,” he said.

Within the next 10 years, Badlisham said the logistics sector is targeted to contribute about RM15 billion in terms of gross domestic product (GDP) contribution to the country and provide approximately 200,000 direct and indirect jobs.

He added that in terms of efficiency, the government has set some goals for the productivity of the cargo and logistics industry, specifically for e-commerce business coming into Malaysia. This includes reducing the time taken for customs clearance processing from six hours to three hours, as well as reducing cargo time in terminal operators from four hours to 90 minutes.

“That’s a commitment that the government is driving towards with a joint task force made up of the ministry of international trade and industry, the Malaysia Digital Economy Corp, MAHB, the customs and immigration departments and cargo industry players,” he said.

Badlisham said out of the 90 acres (36.42ha) allocated for the e-fulfilment hub, 30 acres has been designated for existing e-commerce players and the rest will be opened up to new companies coming into Malaysia. “Existing players can take advantage of this to expand their business activities or enter into new ventures as foreign investments start to come into the hub,” said Badlisham.

“We are expecting the e-fulfilment hub at KLIA Aeropolis to serve the logistics need of e-commerce business not only in Malaysia, but also the region, if not the world. We are not just offering land for their warehouse, but also connectivity and efficiency,” he added.

The KLIA Aeropolis would be developed through three major clusters — air cargo and logistics (200 acres); business and aviation parks (400 acres); and meetings, incentives, conferences and events, and leisure (400 acres).