CEO Morning Brief

PTP to Spend RM3 Bil Over Next Five Years to Expand Capacity by 3.5 Mil TEUs

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Publish date: Thu, 23 Mar 2023, 08:42 AM
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TheEdge CEO Morning Brief
Pelabuhan Tanjung Pelepas Sdn Bhd Chief Executive Officer Marco Neelsen

JOHOR BAHRU (March 22): Pelabuhan Tanjung Pelepas Sdn Bhd, which operates the Port of Tanjung Pelepas (PTP), plans to spend RM3 billion as capital expenditure (capex) over the next five years to expand its capacity by 3.5 million TEUs (20-foot equivalent unit) to 16.5 million.

The capex is mainly to grow PTP's footprint in free-zone and terminals “to keep abreast with competition along the Strait of Melaka,” its chief executive officer (CEO) Marco Neelsen told reporters who visited PTP on a media familiarisation tour on Tuesday.

The port handled 10.5 million TEUs last year — down from 11.2 million TEUs in 2021, but still more than the 9.85 million TEUs it handled in 2019 — amid an overall downturn in global demand.

From 2019 to 2022, it recorded a compound annual growth rate (CAGR) of 5.5%, with the CAGR coming in at 6.6% for the past three years of 2020 to 2022 since the pandemic struck — in contrast with Singapore's 1.2% and Port Klang's 0.7%.

The capex will also be used to fund the remaining 15% of the Phase 2 Tanjung Adang expansion, which is expected to be completed by the second quarter of 2023. The port also plans to start on its 168-acre Free Zone 3 development in 2025, to be completed in 2028, though this is not included in the capex planned.

Besides the infrastructure needed for the capacity upgrade, the capex spending will also be used to increase automation and digitalisation, Neelsen said.

PTP is a joint venture between MMC Corp Bhd (70%) and APM Terminals (30%), a global ports group with 67 port and terminal facilities.

The media also visited Senai Airport City, a 2,718-acre integrated industrial development that operates as a gazetted free zone area that was developed by Senai Airport City Sdn Bhd (SACSB), an indirect subsidiary of MMC.

SACSB said the allocation for the Senai Desaru Expressway under the revised Budget 2023 will help in easing the congestion in the area.

"We are pleased to see the federal and state governments upgrading the PLUS North South Expressway (NSE) and the Senai Desaru Expressway, which are the main arteries to the Senai Airport City development and to the ports," said SACSB CEO Gan Seng Keong.

"During daily peak hours, there is a lot of congestion, not just from public passenger traffic but also commercial traffic. So with this upgrade that will widen the PLUS highway and the Senai Desaru Expressway, it will help in easing the logistical flow," said Gan.

Under the revised Budget 2023, the government plans to upgrade the NSE from Yong Peng Utara to Senai Utara by expanding it from four lanes to six, in stages, at a cost of RM525 million, while the Senai Desaru Expressway will get an extra overtaking lane.

"[The upgrade] will also help Senai Airport's own infrastructure upgrade, [as it plans] to have a dedicated interchange into the Senai Desaru Expressway," he said, adding that construction of the interchange is scheduled to begin in the second half of this year and will be completed by end-2024.

The interchange will serve as a direct access from Senai Airport City to one of major highways in Johor that leads directly to Johor Port.

Senai Airport City eyes RM250m FDI this year

The group expects to attract investments worth about RM250 million from several companies in Taiwan and Germany which are expected to take up 100 acres in the airport city this year.

“For SAC, we only focus on the clean and hi-tech sectors, and we are building the ecosystem,” said Gan, adding that the companies are finalising their investment decisions.

The SAC, with an estimated gross development value of RM5 billion, is being developed in five phases. Phase 1 of the project, comprising 1,150 acres, has been completed, while Phase 2 is in progress.

SAC also has Free Industrial Zones and Free Commercial Zones, which make up about 400 acres of the development. About 50% of the plots are now occupied.

Gan said that in terms of labour, it expects the first phase of the project to attract about 3,000 skilled workers, of whom some 90% are expected to be locals.

While there is competition with Singapore in terms of attracting workers, he believes that local talents will still be attracted to come here given that more foreign investors are coming into Johor.

“These clean and hi-tech industries are mostly automated so the workers that are employed are mostly skilled workers,” said Gan.

Source: TheEdge - 23 Mar 2023

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