Efforts to get more investors from S’pore, Taiwan and Mideast

KLANG: Foreign investors are still setting up factories in the Port Klang Free Zone (PKFZ) despite the global economic slowdown which poses the management of this integrated industrial and distribution hub with the challenge of having to search for new markets.

Visko Industries Sdn Bhd, a joint venture between Taiwanese and Indonesian companies, has just completed building and will soon commission its plant at the PKFZ.

A self-adhesive tape manufacturer, Visko was reported to have invested RM30mil to set up this plant which has a production capacity of about 35 million sq m a month. Out of this output, about 90% would be exported to South-East Asian countries and the Middle East.

Port Klang Free Zone Sdn Bhd executive chairman Lim Thean Shiang said the zone’s newest client is Dubai-based Oilfields Supply Centre Ltd (OSC), a oil trading group, which is renovating its offices of light industrial units (LIUs) in the area now.

OSC, which is locating its South-east Asian distribution hub in the zone, will start the construction of a factory next month on a 16.5-acre piece of land. The company has an option for an additional 41 acres, and 10 units of LIU with an option of another 10.

The oil trading group will also lease four levels of a ready-built office building in the zone.

Lim, who is also general manager of Port Klang Authority, said a Singapore-based commodity trading company was expected to re-locate its warehouses and trading operations from Singapore to the free zone next year. It might lease up to 100 LIUs in the zone for its warehouses.

In view of the global recession, Lim said he would broaden the company’s marketing strategy and look for investors from more countries.

“Some of the markets that we want to put more effort in are Singapore, Taiwan and the Middle East, given that the operating costs there are higher than in Malaysia,” Lim told StarBiz yesterday.

“We also want to get local companies to support the big foreign companies that are here in the PKFZ,” he added.

PKFZ’s biggest client, also one of its first, is Aker Kvaerner Sdn Bhd, a Norwegian oil and gas company which has invested about RM500mil in its plant in the zone.

THE Gemas-Johor railway project may not kick off in the Ninth Malaysia Plan (9MP) as the focus is on people-centric developments as announced in the 2009 Budget.

Transport Minister Datuk Ong Tee Keat said the project is still in the “infant stage” of planning, but did not elaborate.

He was speaking to Business Times during an official visit to Westports in Port Klang yesterday.

Business Times had reported that tenders for the RM8 billion project to lay new rail tracks from Gemas to Johor Baru may be called after the Mid-Term Review of the 9MP, that is, by the end of this year.

At a press conference later, Ong told reporters that it is a necessity for port operators to enhance the branding of their respective ports and also Malaysia to spearhead operation growth.

He said there should be improvement in cargo volume and efficiency of government apparatus at the ports from customs clearance to functioning of port authorities.

Port Klang’s container volume is expected to hit eight million TEUs (20-foot equivalent units) this year, compared with seven million in 2007 and three million in 2000.

By 2012 it expects to handle 12 million TEUs, driven by promotional works carried out by the Port Klang Authority (PKA) and Westports Malaysia Sdn Bhd to woo more shipping lines including feeder lines.

“We need to synergise our efforts with the various authorities. There is ample room for further improvement. Industry players need to be creative and innovative,” he said.

Meanwhile, Westports executive director Ruben Emir Gnanalingam told Business Times that it may call for a tender to build the RM60 million multi- purpose berth closer to the Port Klang Free Zone (PKFZ) by the end of this year or early next year.

Ruben said the matter is still in discussions with PKA, the manager and marketer of PKFZ, to build the 300-metre berth to increase productivity and occupancy rate at the free zone area.

He said it will support existing tenants at PKFZ like Norwegian oil and gas industry equipment maker Aker Kvaerner, which requires a special berth to roll out the completed oil rigs it makes.

Companies likely to put in a proposal for the berth are Putrajaya Perdana Bhd and Muhibbah Engineering (M) Bhd.

Ruben also said Westports is buying four twin lift cranes for RM120 million in 2009.

“We will buy more cranes as we expand our current berth line of 3.2km to 3.8km in the next two years due to surging demand and growth in global container volume,” he said.

SYARIKAT asing hanya mengambil masa kurang seminggu untuk menyelesaikan pelbagai urusan bagi memulakan operasi di Zon Bebas Pelabuhan Klang (PKFZ), sekali gus menolak dakwaan pihak tertentu bahawa urusan memulakan operasi di zon bebas itu membabitkan banyak birokrasi.

Pengalaman itu dialami dan diakui sendiri pengarah syarikat pembekal peralatan paip untuk industri minyak dan gas, KGT yang berpangkalan di Dubai, minggu lalu.

“Dalam masa enam hari segala-galanya siap… pejabat berdaftar dengan talian telefon dan faksimili serta akaun bank. Malah, saya juga mendapat satu set kad perniagaan juga siap tertera nama KGT Sdn Bhd.

“Adalah mudah untuk berniaga di PKFZ. Cuma pengkhabaran ini belum tersebar luas ke dunia luar,” kata Heidar Jouyaeyan dalam satu temu bual di Pulau Indah, Jumaat lalu.

Hadir sama Pengurus Besar Pembangunan Perniagaan Port Klang Free Zone Sdn Bhd, Chia Kon Leong, serta Pengurus Besar Pemasaran dan Komunikasi Korporatnya, Helen How Mei Leng.

Jouyaeyan berkata, kakitangan syarikat itu dari Dubai akan ditempatkan ke PKFZ dua minggu lagi.

Katanya, KGT memerlukan tapak perniagaan di rantau ini, susulan peningkatan permintaan terhadap peralatan paip minyak dan gas di Asia Barat, memandangkan satu daripada pembekal utamanya berpangkalan di Jepun.

Selain Malaysia, beliau berkata, syarikat juga meninjau untuk bertapak di kawasan berhampiran Jepun, khususnya China, tetapi akhirnya memilih PKFZ.

“Salah satu faktor pendorong ialah kami melihat kejujuran dan komitmen tinggi yang ditunjukkan kakitangan pengendali PKFZ…Kejujuran amat penting bagi orang Arab,” katanya.

Mengenai Zon Bebas Jafza di Dubai, Jouyaeyan berkata ia sudah menjadi terlalu kompetitif berdasarkan senarai menunggu yang panjang untuk memulakan perniagaan di sana.

Sementara itu, Chia berkata, walaupun hanya memulakan operasi 1 November tahun lalu, PKFZ berjaya menarik 39 pelabur dengan nilai pelaburan RM729 juta dan menawarkan 888 peluang pekerjaan.

Pelabur terbesar ialah Aker Kvaerner, pengeluar peralatan laut dalam dengan pelaburan kira-kira RM400 juta.

Beliau berkata, indeks prestasi utama (KPI) PKFZ memberi sasaran mampu berdikari selepas tiga tahun beroperasi dengan menjana pendapatan RM40
juta setahun dan melebihi operasi sekitar RM22 juta.

“Sasaran kami ialah 80 peratus kawasan di PKFZ seluas 400 hektar akan dihuni dalam tempoh lima tahun dengan pendapatan tahunan RM88 juta,” katanya.

THE RM4.6 billion Port Klang Free Zone (PKFZ) project is facing criticism, with players in the logistics sector saying that the 405ha facility in Pulau Indah risks becoming a white elephant.

PKFZ is owned by the Port Klang Authority (PKA).

Port Klang Free Zone Sdn Bhd’s (PKFZSB) newly-appointed general manager of business development, Chia Kon Leong, said as manager and marketeer of PKFZ, the company was working overtime to make sure that the free zone is a success.

“PKFZ will not be a white elephant as has been said of Westports and Port of Tanjung Pelepas (PTP) in the past (when they were newly set up). Jafza International (Jafza) took about 10 years to get its (Jebel Ali) free zone going, and today investors are queuing to get in. With our free zone better positioned, our journey (to success) will be shorter,” said Chia via the short message service.

Jafza is operator of the Jebel Ali Free Zone but the company recently pulled out of a 15-year contract to manage PKFZ, citing a change in business strategy.

Critics of the project, however, have raised numerous issues, with some saying that it is overly ambitious. It comprises building 512 warehouses of 5,487 sq ft each, 2,000 covered parking bays, four eight-storey office buildings, a three-storey exhibition centre and a four-star hotel.

They also questioned the project’s development cost which has ballooned from an original estimate of RM100 million to RM3.6 billion.

“How did they (PKA) decide to invest that amount (RM3.6 billion)? Why 512 warehouses? Did PKA conduct a feasibility study to determine what type of infrastructure would be required before starting construction? As it is, the take-up rate for space at PKFZ remains low,” an industry source told Business Times.

The source pointed out that other free trade zone operators in the country usually build their facilities based on demand to reduce risk.

“For example, PTP will only develop the land in its Pelepas Free Zone when there is investment.

“To date, the port has spent some RM300 million to develop infrastructure in Pelepas Free Zone which is similar in size to PKFZ,” the source added.

Eyebrows were first raised when PKA bought the land in 2002 for RM1.05 billion or RM25 per sq ft from Kuala Dimensi Sdn Bhd, a subsidiary of Wijaya Baru Global Bhd, as many said the land was over-priced.

It has been reported that Kuala Dimensi bought the land in 1999 from the Pulau Indah Malay Fishermen Cooperatives for RM95 million or RM3 per sq ft.

Concerns were also raised over the government body’s move into property
development and free zone operations.

PKA further infuriated the industry with its decision to appoint Kuala Dimensi as a turnkey contractor to develop the PKFZ.

According to sources, Kuala Dimensi had issued bonds to finance the development costs, but is now having difficulty repaying its first bond payment totalling some RM570 million, which is due this year.

“The Government initially approved a cost of RM100 million to develop PKFZ, after which any additional cost had to be approved first by the Ministry of Finance. However, Kuala Dimensi has flagged a RM3.6 billion in cost overruns since starting the project in 2003,” said a source close to the matter.

“About one-and-a-half months ago, the company had asked the Government for a soft loan amounting to RM3.6 billion, being the sum spent to develop PKFZ.

“It is understood that the Government has approved it, which brings the total project cost to RM4.6 billion, including for land acquisition,” the source added.

Since its soft launch in November last year, PKFZ has attracted RM468.3 million worth of investments from six companies for prepared land to build manufacturing facilities, eight companies for the light industrial or warehouse units and seven companies for the leased business complex.

Norway’s Aker Kvaerner, Salarium Argentum Inc and Pantech Group Holdings Bhd are among the companies that have or are setting up their base there.

However, industry executives are still not so optimistic.

“Even if they get the investors, how are they going to recover the RM4.6 billion spent? Now they (PKFZ) are probably giving very low lease rates just to fill up space, sparking a price war among free trade zone operators in the country,” said one industry source.

Northport (Malaysia) Bhd managing director and chief executive officer Datuk Basheer Hassan Abdul Kader said so far, Northport has yet to get much benefit out of the development of PKFZ, which is situated in close proximity to Westports.

He said instead, the project might pose a threat to Northport’s own free commercial zone.

“So far, we are competitive (in terms of rates offered among free zones), but we are watching (with the entry of PKFZ),” he said at a media workshop on Thursday.

Salarium Argentum Inc, one of the first foreign trading companies to sign up with PKFZ, said that the facilities and location of PKFZ were the main reasons for it to do business here.

“We are interested in turning our facility in PKFZ into a distribution hub because of the infrastructure and trade facilitation such as the import and export process as well as its close proximity to Westports,” Gary J. Nichols, its managing director, said.

He added that it is a conducive area for the company to bring its products to be repackaged and dispatched to it distributors worldwide, as Malaysia is strategically located in the middle of Asia.

“It is viable to ship our goods to the West, Europe, Australia, Singapore, the UK and the US via Port Klang. PKFZ is also the ideal place for new companies to utilise its services, facilities and infrastructure that offer a complete package,” he said.

Norway’s Aker Kvaerner, which manufactures subsea equipment used to pump oil and gas, has also set up base in PKFZ. It has taken up 17.8ha under phase one, with an option for a further 10.11ha later.

PKFZ offers investors the option to build their own facility or to lease pre-built facilities.

There are 512 pre-built Light Industrial Units of 5,487 sq ft each, with a tenancy of one to three years.

PKFZ’s office complex comprises four eight-storey blocks with a flexible tenancy of one to three years. A three-storey exhibition centre offering 9,000 sq ft of display space is also available.

PKFZ is envisaged as a complete one-stop centre that will be equipped with a Customs centre, trade offices, forwarding agents, and government agencies such as health and veterinary services to provide easier co-ordination for products and services to be exported and imported.

THE Port Klang Free Zone (PKFZ) in Pulau Indah is expected to bring in another 20 to 25 investors in the next couple of months, investing more than RM100 million in the area.

PKFZ general manager Noel Gulliver told Business Times that the project is on schedule and that there is a healthy interest from investors to set up there.

“I think we’ll get past 20 investors quickly,” Gulliver said.

The free zone’s customs checkpoint is also to be fully operational soon, with the key handing over ceremony to customs officials happening this week.

“It is a small but important milestone as this would be the point where investors’ interest in the free zone will accelerate,” Gulliver said.

He said so far PKFZ has signed up seven new tenants, bringing the total to eight.

The seven have taken up 28.4ha of land, and ten warehouses.

Industry sources have said that operations in the free zone have been slow and investor interest waning.

Gulliver said there had been a minor glitch in the lease agreement that the free zone had rectified and expects to come out with by today.

The revised lease agreement leaves out a paragraph which Gulliver said the free zone was not very comfortable with. He did not elaborate.

He also said some of its clients like Aker Kvaerner have even started shipping containers in and out of the free zone bearing its equipment.

Norwegian oil and gas company Aker Kvaerner was the first company to take up a lease at PKFZ.

Gulliver said the free zone has seen increasing interest from the oil and gas industry as well as trading companies.

He said even warehousing and storage is starting to pick up.

Port Klang Authority, the sole owner of the free zone, has allocated RM2.2 billion for the development of the free zone.

PKFZ is the first free zone in Asia-Pacific to be managed by Jafza International, the consulting and management division of Jebel Ali Free Zone Authority in Dubai.

Jafza International will manage the free zone for 15 years in which time PKA hopes to develop the right local expertise to take over the management of the free zone.

FREE trade zones – nearly every country in the world has several of these areas where tariffs and quotas are eliminated, bureaucratic requirements lowered and incentives offered to attract companies to do business there. PRESENNA NAMBIAR finds out how the Port Klang Free Zone seeks to set itself apart from competitors.

THE Port Klang Free Zone (PKFZ) is set to emulate the achievements of Dubai’s Jebel Ali Free Zone, reputedly the world’s most successful free zone.

Jafza International, which has been awarded a management contract to operate and market PKFZ, plans to make it South-East Asia’s trading and logistics hub and is taking on multiple roles to make this happen.

Instead of being only the authority in the free zone, Jafza sees itself as its facility planner and manager, business facilitator, operations manager, security manager, supervisor and enforcer.

“At Jafza-run free zones we see our role very very differently. All of the elements are brought together, and this way we control the activity, quality of business and the impact on local and regional economies,” said PKFZ managing director Noel Gulliver, an Australian logistics executive with 14 years experience in Asia.

“That is really the way Jafza brings serious value to what it has done in the past,” Gulliver said.

Jafza will be managing PKFZ for 15 years for the Port Klang Authority which wholly owns it. The job is expected to be later handed over to locals.

PKFZ is a 400-hectare area adjacent to Westports and located near Northport. It is the only free zone in Malaysia that combines commercial and manufacturing facilities under one roof.

PKFZ had a soft launch early this month to mark the completion of phase one of its development with basic amenities like water and electricity in place.

Its first major tenant is Norway’s Aker Kvaerner, which makes subsea equipment used to pump oil and gas.

The investor chose PKFZ to be the home of its manufacturing centre after 18 years of operating in Malaysia.

“Malaysia’s well-developed infrastructure and the support extended by the authorities for such high-technology developments in the country were other important factors,” Aker Kvaerner vice-president Raymond Carlsen said recently.

PKFZ is targetting logistics companies to take up 50 per cent of available facilities, manufacturing 25 per cent, value-added activities 15 per cent and commercial activities 10 per cent.

The free zone is to officially open in the first quarter of next year. PKFZ is a strategic national project designed to generate cargo throughput for Port Klang.

Selangor Freight Forwarders Association president Tan Ah Beng said that PKFZ is a good beginning to boost activity at Port Klang.

He said the frequency of vessels in Port Klang makes it the perfect choice for such an integrated zone, as importance is given to how many countries investors can ship out to.

“A general view on PKFZ is that it has to be successful, but how soon depends on the players,” Tan said.

The success of PKFZ as a global logistics centre will be dependent on both Westports and Northport terminals, as its logistics connects mainly to sea transport and others such as rail and air.

For Northport and Westports, meanwhile, the PKFZ development will also help spur the growth of their own distribution parks or Distriparks.

Westports executive chairman Tan Sri G. Gnanalingam told Business Times that he hopes the PKFZ will emulate the Jebel Ali Free Zone which has around 3,500 Distriparks.

A spokesperson from Northport also said it plans to capitalise on PKFZ by creating a seamless environment within Port Klang for the establishment of a cargo distribution hub by global logistics operators.

“We plan to make the PKFZ an extension of our Northport Distripark in the near future,” the spokesperson said.

He said Northport, PKFZ and Westports are important entities in Port Klang which have a role in ensuring the success of the port.

“Each entity to a certain extent will be inter-dependent,” the spokesperson said, adding that in creating a seamless environment within the free zone, the Government’s support in taking away bureaucratic procedures is vital.

“Besides facilitating hassle-free documentation, there is also a need to facilitate easy and free flow of cargo and container movements between PKFZ and the two terminals.

“PKFZ on its own will not be able to do it, not only due to lack of resources, but also the ability to execute the plans independently. The Government, therefore, has a key role to play in trade facilitation,” the spokesperson said.

INVESTMENT CATALYST
* Port Klang Free Zone operated by Jafza International
* A 400-hectare site adjacent to Westports and located near Northport
* Only free zone in Malaysia that combines commercial and manufacturing facilities under one roof
* First major tenant is Norway’s Aker Kvaerner
* Targets logistics, manufacturing companies and aims to attract value-added and commercial activities
* To officially open in first quarter of 2007
* Strategic national project designed to generate cargo throughput for Port Klang

NORWEGIAN oil and gas industry equipment maker Aker Kvaerner ASA’s new integrated production facility at Port Klang Free Zone(PKFZ), next to Westports in Pulau Indah, is expected to be ready in April 2007.

The US$100 million (RM365 million) facility, whose construction began in February 2006, will be able to make the entire range of products for the sector at a single location to fulfill regional and global demand for Aker Kvaerner’s offerings.

“The integrated subsea hub will enable the entire range of equipment and services for the growing number of deepwater projects in the region to be provided from one single point.

“The hub is not only important for us in South-East Asia, but also our activities around the world,” Aker Kvaerner executive vice-president Raymond Carlsen told reporters in Kuala Lumpur yesterday.

Aker Kvaerner whose offerings include subsea equipment and systems, drilling risers, besides manifolds and structures, will occupy 27.6ha of open land at the 400ha PKFZ.

Its Malaysian unit is currently engaged in the Murphy Oil Kikeh Development project off the coast of Sabah, besides supplying subsea structures to India’s Reliance Industries Ltd.

In terms of production capacity, Carlsen said the hub, upon completion, will be able to make up to 100 units of subsea Christmas trees per year, but the manufacturer will initially produce some 50 units per year due to insufficient trained manpower.

Subsea Christmas trees are valves which control the flow of oil and gas derived from offshore operations.

As a result of Aker Kvaerner’s expansion in Malaysia, the group’s workforce of some 500 employees here is expected to double by 2008.

AKER Kvaerner, syarikat kejuruteraan minyak dan gas Norway, akan menggunakan kemudahan operasi bersepadunya di Zon Bebas Pelabuhan Klang (PKFZ) sebagai pusat pertumbuhan perniagaan di Asia Pasifik.

Pusat bersepadu pertama seumpamanya di dunia itu akan mengeluarkan sistem dan peralatan cari gali minyak laut dalam, termasuk kerangka penggerudian minyak laut dalam, sistem kawalan pengeluaran laut dalam, struktur penggerudian dan sistem pengujian di tapak pengeluaran.

PKFZ turut mengendalikan perkhidmatan pengurusan bagi projek Kejuruteraan, Pemerolehan dan Pembinaan (EPC) serta khidmat sokongan projek laut dalam.

Naib Presiden Eksekutif Aker Kvaener (Laut Dalam), Raymond Carlsen, berkata pusat di kawasan seluas 150,000 meter persegi dengan pelaburan AS$100 juta itu akan mula beroperasi pertengahan bulan ini.

Katanya, kegiatan cari gali minyak laut dalam sedang giat berkembang di rantau ini berikutan permintaan tenaga yang tinggi.

“Sebagai penyedia peralatan dan kejuruteraan dalam bidang itu, ia menyediakan pasaran yang besar kepada syarikat,” katanya pada sidang media di Kuala Lumpur, semalam.

Aker Kvaener adalah pelabur pertama beroperasi di PKFZ bagi mendirikan pusat pembuatan untuk menyokong aktiviti penerokaan minyak dan gasnya di Asia Pasifik.

Carlsen berkata, syarikat ketika ini terbabit menyediakan 16 kerangka penggerudian laut dalam dengan kontrak bernilai kira-kira AS$100 juta bagi kegunaan di lapangan minyak Kikeh yang terletak di luar pantai Sabah yang dijadual memulakan pengeluaran pada 2007.

Lapan daripada kerangka itu akan dihasilkan di Pelabuhan Klang, manakala selebihnya didatangkan dari Norway.

“Setakat ini tiga kerangka ditempatkan di telaga minyak berkenaan,” katanya.

Lapangan minyak Kikeh ditemui pada Julai 2002 oleh Murphy Oil Corporation yang berpangkalan di Amerika Syarikat dan pada masa itu ia adalah penemuan minyak terbesar di Asia Tenggara dalam tempoh 10 tahun.

Aker Kvaener ketika ini juga terbabit dalam penyediaan 11 kerangka laut dalam kepada Reliance Industries Limited dari India dengan kontrak bernilai AS$430 juta.

Carlsen berkata, syarikat turut mengemukakan tender bagi projek lapangan minyak Gemusut di luar pantai Sabah, membabitkan pembangunan bersama kerja cari gali laut dengan kerjasama Petronas-Shell.

Syarikat itu yang mengemukakan bidaan bulan lalu, menjangka mengetahui keputusannya menjelang suku pertama tahun depan.

“Kontrak ini agak sama dengan apa yang kami lakukan di projek Kikeh,” katanya tanpa mendedahkan nilai kontrak berkenaan.

Lapangan minyak Gemusut ditemui Shell dengan rakan kongsinya, Petronas Carigali dan ConocoPhilips di luar pantai Sabah pada 2004.

Difahamkan lapangan minyak Gemusut mempunyai kira-kira 19 telaga minyak.

Paling menarik, PKFZ seluas 400 hektar itu sudah menerima pelabur pertama, Aker Kvaerner, sebuah syarikat kejuruteraan minyak dan gas Norway yang mengambil kawasan perindustrian yang dibangunkan seluas 27.6 hektar.

Aker Kvaerner akan melabur RM400 juta membina sebuah pusat pengeluaran yang memainkan peranan penting menyokong kerja cari gali minyak dan gas mereka di Asia Pasifik.

Pengurus Besar PKFZ, Noel Gulliver, berkata pihaknya kini sedang dalam proses memuktamadkan perbincangan dengan lima lagi pelabur untuk menyewa kira-kira 28 hektar kawasan di situ.

“Sepuluh lagi pelabur sudah menyatakan minat untuk menyewa 14 unit bangunan industri ringan manakala empat syarikat lagi berminat untuk menyewa kompleks pejabat,” katanya dalam satu kenyataan yang dikeluarkan di Kuala Lumpur semalam.

PKFZ yang terletak di sebelah Westports di Pulau Indah diwartakan sebagai zon bebas yang membolehkan aktiviti komersial dan pembuatan dapat berjalan serentak.

Ini bermakna kilang dan firma logistik dapat ditempatkan dalam zon yang sama untuk memudahkan penyelarasan dan melancarkan pengurusan rangkaian bekalan, menjadikan PKFZ sebagai projek pembangunan pertama seumpamanya di Malaysia iaitu sebuah zon perindustrian dan komersial bebas bersepadu.

“PKFZ akan menjadi penggerak pertumbuhan Pelabuhan Klang, yang juga Pusat Muatan Negara sementara ia akan berkembang menjadi pusat perdagangan import-eksport dengan menyediakan kemudahan setempat bagi memproses dan menambah nilai barangan dan perkhidmatan, sebelum dieskport,” kata Gulliver.