Lim, who was hired to make improvements to the Port Klang Authority (PKA), apparently did not bring in a substantial number of tenants although he had been on the job for almost a year.

The occupancy rate at PKFZ remains at 14% and the port has a long way to go before more tenants could be convinced to take up leases.

His resignation comes in the wake of his unauthorised briefing of government backbenchers even before the Cabinet was briefed on the audit report on PKFZ.

Ironically, Backbenchers Club chairman Datuk Seri Tiong King Sing’s company, Kuala Dimensi Sdn Bhd, was the turnkey developer of PKFZ.

Lim’s action was said to be viewed by Transport Ministry officials as insurbordination as the Prime Minister and the Cabinet were not privy to the report yet nor had they deliberated on its contents at that time.

The general perception was that PKFZ’s performance was far from satisfactory and that a stronger team needed to be in place if the port authority was seriously considering improving its financial position.

It is believed even before Lim’s resignation, there was already talk that he might be removed due to his unauthorised action which ministry officials regarded as highly serious.

Lim’s resignation from both posts had been accepted by PKA chairman Datuk Lee Hwa Beng and endorsed by the board on Thursday.

His resignation would take effect on June 5. His critics said the lobbying for him to stay by certain quarters might have been orchestrated.

It was reported that the Malaysian Anti-Corruption Commission had started investigations into the PKFZ report.

Sources said the project would swell to RM7.5bil, partly due to interest costs over a 20-year period. They also said there was a lack of governance of the project.

The company had to purchase the land from the owner, Kuala Dimensi Sdn Bhd, at the prevailing market prices because it could not obtain it through the Acquisition of Land Act 1960.

The land was issued with a development order and it therefore had economic value. Land acquisition under the Act can only be made for public purposes whereas the company had earmarked it for economic purposes. The land, therefore, could not be acquired under the Act, said PKFZ Sdn Bhd executive chairman Lim Thean Shiang yesterday, clarifying media reports published on Monday.

On Sunday, Transport Minister Datuk Seri Ong Tee Keat released the PKFZ chronology to the media.

Lim said PKFZ Sdn Bhd agreed in 1999 to a price of RM25 per sq ft, a total of RM1.088bil, for the land with its development order and with infrastructure that is now completed.

The total cost of the PKFZ project, including this land cost, office complexes and other construction costs, is RM4.6bil.

The payment terms, somewhat similar to that of private finance initiative or PFI, are to be paid over a 15-year period. The payments are made to bondholders, mainly financial institutions.

Lim said that so far, PKFZ Sdn Bhd had paid RM1.38bil to bondholders under the scheduled payment terms.

That leaves a balance of about RM3.22bil to be paid under the schedule.

PKFZ Sdn Bhd funds this projectthrough a long term soft loan at an interest rate of 4% from the Ministry of Finance.

On the termination of Dubai-based Jebel Ali Free Zone International (Jafza) as the manager of PKFZ last year, Lim said it was over differences of its corporate policies and Malaysia’s tax regulations and national interest.

Jafza proposed tax incentives for 50 years but Malaysia’s tax regulations allow for such incentives if approved by the Ministry of International Trade and Industry, for 10 years only, Lim said.

Jafza’s role at that time was to promote and market PKFZ which was then modelled after the Jebel Ali Free Trade Zone in Dubai. Following the parting of ways, PKFZ Sdn Bhd took over that role for the zone in Port Klang.

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.

Former transport ministers Tun Dr Ling Liong Sik and Datuk Seri Chan Kong Choy issued four support letters to the Malaysian International Merchant Bankers Bhd, Pacific Trustees Bhd and Malaysian Rating Corporation confirming the purchase of land by Port Klang Authority (PKA) and four development agreements.

The issuance of these letters had been questioned in Dewan Rakyat by members of parliament who asked whether it was proper conduct for ministers.

Ong reiterated yesterday that a letter of support merely confirmed that a contract exists and was not a letter of guarantee.

“You are asking me to comment on my predecessors. In all fairness, this was at their discretion at that time, perhaps due to whatever reasons or circumstances.

“If you were to ask me, I might have my own views. I might not do it but that doesn’t mean that what I said or what I chose is the Gospel truth,” Ong said.

On May 28, 2003, Dr Ling issued a letter of support confirming the purchase of land by PKA for Mega Distribution Hub project to the Malaysian International Merchant Bankers Bhd and Pacific Trustees Bhd.

Chan issued three support letters from 2004 to 2006 to the Malaysian Rating Corporation to confirm the development agreement.

“Like I said in Parliament, a support letter is just to confirm that there is such a project.

“My job is not to comment on past value judgments but to enumerate exactly what had taken place,” he said.

PKFZ executive chairman Lim Thean Shiang said: “Having gone through the letters, they basically confirmed the contract entered into by relevant parties and gave no guarantee at all.

“I’m sure only the Finance Ministry has the authority to do so (issue letters of guarantee).”

PORT KLANG: After nearly 20 months of silence, Port Klang Free Zone yesterday defended the “high” purchase price of land and the termination of the previous managers, Jebel Ali Free Zone (Jafza).

PKFZ executive chairman Lim Thean Shiang said at a press conference here that the price of RM25 per square foot paid to Kuala Dimensi Sdn Bhd for the project’s 404.7 hectares was “justified”.

Kuala Dimensi had reportedly bought the land for RM3 from a fisherman’s cooperative.

“The initial offer was RM28 per square foot but we brought it down to RM25.

“We feel that it is a reasonable price as it includes infrastructure and given the holding period.

“If you look at the land price in the surrounding area, it is about RM21 per square foot,” Lim said.

Transport Minister Datuk Seri Ong Tee Keat, who was at the press conference, said whether the government paid too much for the land would only be known once PriceWaterhouseCooper’s (PWC) cost analysis was done.

PWC was appointed independent auditor for the PKFZ project, including the land purchase, whose pricing became an issue when it became public.

On the termination of Jafza as project managers, Lim said it was due to “different expectations” between the Dubai company and Port Klang Authority.

Jafza, he said, was hired to help promote and market the PKFZ, and to capitalise on its expertise and contacts to bring in investors.

“Sadly, the investors did not come in even after two years and we decided to take over promotion and marketing.”

He said Jafza was also not aware of the government’s policies.

“For example, they wanted to give a tax holiday of 50 years to investors but Malaysia’s policy is only to give 10 years.

“They also wanted full autonomy to run PKFZ but this clashed with the government’s intentions as we are subject to certain procedures, such as going through the Customs Department and other agencies.

“Jafza thought that they could duplicate Jebel Ali (in Dubai) here at PKFZ but that cannot happen so we decided to terminate our contract with them.”

He denied accusations that the project was hamstrung by political interference, excessive red tape and vested interests as alleged by Jafza.

Lim insisted that they parted ways amicably.

Ong said claims of tax evasion attempts, and abuse of power by politicians and officials overseeing the project would also only be answered after PWC submitted its report.

He, however, defended the conduct of his predecessors, Tun Dr Ling Liong Sik and Datuk Seri Chan Kong Choy.

To counter accusations that PKFZ was a white elephant which tax payers had had to bail out, he released figures to show that it had been steadily getting investors since March.

Ong said his ministry was confident that the project would re-coup its RM2.94 billion cost (for land and construction) and that PKFZ could service its RM4.632 billion loan.

After a change of management in May and up to last month, he said, PKFZ had signed on 58 clients who had brought in RM974 million in investments.

Menteri Pengangkutan, Datuk Seri Ong Tee Keat, berkata, pencapaian itu lebih baik berbanding Jebel Ali Free Trade Zon (Jafza) di Dubai yang mampu menarik pelaburan 40 peratus dalam tempoh enam tahun.

“Ini permulaan yang baik kepada PKFZ walaupun baru dibuka dua setengah tahun. Prestasi ini diharap menangkis tohmahan yang menuduh PKFZ sebagai projek gajah putih,” katanya pada sidang media mengumumkan kronologi pembangunan PKFZ di sini, semalam.

Hadir sama, Pengerusi Lembaga Pelabuhan Klang (LKP), Datuk Lee Hwa Beng dan Pengerusi Eksekutif PKFZ, Lim Thean Shian.

Ong berkata, setakat bulan lalu, PKFZ mencatatkan pelaburan RM974 juta dengan 58 pelabur tempatan serta asing dan menyediakan 1,659 peluang pekerjaan.

Katanya, 46 hektar daripada 77 hektar tanah kosong disediakan PKFZ disewa 14 pelanggan, manakala 34 daripada 60 Unit Industri Ringan (LIU) disewa dan 95,033 daripada 25,000 kaki persegi ruang pejabat juga disewa.

Beliau berkata, jumlah pergerakan kargo kontena di PKFZ meningkat 495 peratus dengan 8,015 TEU bulan lalu berbanding hanya 809 TEU pada Mac, manakala bukan kontena meningkat 307 peratus dalam tempoh sama.

Ong berkata, penamatan kontrak Jafza yang bertanggungjawab mengurus dan mempromosikan PKFZ pada Julai tahun lalu tidak menjejaskan usaha menarik pelabur dari Timur Tengah.

Sementara itu, Lim berkata, kontrak Jafza ditamatkan kerana polisi syarikat berpangkalan di Dubai berbeza dengan PKFZ yang tertakluk di bawah Kementerian Pengangkutan selain perlu mematuhi syarat pelaburan yang ditetapkan Kementerian Perdagangan Antarabangsa dan Industri (Miti).

KLANG: The Port Klang Free Zone (PKFZ) has shown improvement in terms of the number of investments, jobs provided and total cargo moved.

According to statistics released together with the PKFZ chronology yesterday, the zone has shown a 30% increase in proposed investments over the past six months from RM720mil to RM916mil.

This figure is derived from an increase of 18 clients from 40 to 58 and has led to greater rental revenue and the creation of 687 more jobs.

“I can still remember when I first set foot in the area. People said this was a ghost town,” Transport Minister Datuk Seri Ong Tee Keat said during a press conference here yesterday.

As for the total cargo moved, there was a growth of 6,668 TEUs (container units) and an increase of about 227,000 freight weight tonnes over the past six months.

Ong, who fielded questions about the chronology, said it was in this context that allegations of the RM4.6bil soft loan for PKFZ being wasted were off-target.

“Whether or not the project was handled professionally, cost-effective or exorbitant, that is what I’ve been harping on and it is what will appear in the PriceWaterhouse-Coopers (PWC) report,” Ong said.

PWC had been appointed by the Port Klang Authority (PKA) in October to audit the PKFZ project.

Ong said people sometimes hit at the wrong target and that the argument that all the money was given out without any returns being realised was inaccurate.

“Collection of rental for the leasing of buildings obviously gives returns.

“However, the cost of the interest is indeed a big burden to the Government,” he said.

PKA general manager and chief executive officer Lim Thean Shiang said the RM4.6bil was given in intervals of 10, 15 and 20 years.

Asked to clarify whether the amount of interest being paid would be in the range of RM1.3bil, Lim said that the interest rate was 4% per annum over 15 years.

Lim was also asked why events surrounding the entry and exit of Jebel Ali Free Zone in the PKFZ project was not included in the chronology.

To this, Ong said it would be in the PWC report as it fell in the area of project governance.

Lim also clarified that Jebel Ali and PKA had terminated their agreement mutually after both parties realised that Malaysian policies would not allow Jebel Ali to manage PKFZ the way it wanted to.

The PKFZ was set-up in a joint venture with Dubai-based Jebel Ali Free Zone International (Jafza).

KLANG: The Port Klang Free Zone (PKFZ) has shown improvement in terms of the number of investments, jobs provided and total cargo moved.

According to statistics released together with the PKFZ chronology report Sunday, the free trade zone has shown a 30% increase in proposed investments over the past six months from RM720mil to RM916mil.

This figure is derived from an increase of 18 clients from 40 to 58 and has led to greater rental revenues and the creation of 687 more jobs.

As for total cargo moved, there was a growth of 6,668 20ft equivalent units (TEUs) and an increase of about 227,000 freight weight tonne over the past six months.

Transport Minister Datuk Seri Ong Tee Keat, who fielded questions about the chronology, said it was in this context that allegations of the RM4.6bil soft loan for PKFZ being wasted were off-target.

“Whether or not the project was handled professionally, cost-effective or exorbitant, that is what I’ve been harping on and it is what will appear in the PriceWaterhouseCoopers (PWC) report,” Ong said.

PWC had been appointed by PKA in October to audit the PKFZ project.

Ong said people sometimes hit on the wrong target and that the argument that all the money was given out without any returns being realised was inaccurate.

“Collection of rentals for the leasing of buildings obviously gives returns. However, the cost of the interest is indeed a big burden to the government,” he said.

PKA general manager and chief executive officer Lim Thean Shiang said the RM4.6bil was given in intervals of 10, 15 and 20 years.

When asked to clarify that the amount of interest being paid would be in the range of RM1.3bil, Lim said it was adding that the interest rate was 4% per annum over 15 years.

Lim was also asked why events surrounding the entry and exit Jebel Ali Free Zone in the PKFZ project was not included in the chronology.

To this, Ong said it would be in the PWC report as it fell into the area of project governance.

Lim also clarified that Jebel Ali and PKA had terminated their agreement mutually after both parties realised that Malaysian policies would not allow Jebel Ali to manage PKFZ the way it wanted to.

The RM660 million is part payment for the RM4.6 billion PKFZ project, of which Kuala Dimensi, a subsidiary of Wijaya Baru Global Bhd, is the turnkey contractor.

In June this year, PKA general manager and chief executive officer Lim Thean Shiang said that the RM660 million payment was pending the release of audit findings by the Ministry of Finance and conducted by PricewaterhouseCoopers.

Meanwhile, Lim said the current economic situation provides PKFZ an opportunity to attract firms that are looking for low-cost free trade zones in Southeast Asia.

He said the economic crisis has made companies operating in places like Dubai’s Jebel Ali Free Zone that command high rental charges, to consider relocating to other low-cost free zones.

PKFZ has been seeing an incremental rise in revenue through its tenancy agreements since last year, he said.

It recorded some RM7.6 million in rental revenue to date, almost double that of the RM3.7 million it collected last year. “We foresee a growth to RM14 million in 2009,” Lim said.

PORT Klang Authority, regulator of Northport and Westports, plans to build a multi-purpose berth to help increase the port’s occupancy rate to 65 per cent, said its general manager and chief executive officer (CEO) Lim Thean Shiang.

“The multi-purpose berth, which should be built in the next 1 1/2 to two years, is crucial and is in our national interest.

“Whether Westports will do it or we get someone else – shipping lines or international operators – to do it as a concession, will be looked at soon,” he told Business Times in an interview in Tokyo last week.

Lim, who is in his second month as CEO, said the lack of the berth is one of the main reasons why companies like Technip, Dialog and a lot of Middle East oil and gas companies are not entering the port.

A multi-purpose berth could cost up to RM60 million.

Orient Overseas Container Line Ltd, a Hong Kong shipping line, has enquired if PKA was willing to provide a dedicated berth for which it would consider bringing one million TEUs (twenty-foot equivalent units) first.

“It is important to make Port Klang a gateway to Malaysia – being nearest to Europe-bound shipments. If we don’t make it now, we stand to lose to Vietnam and in the next 20 to 30 years, India as well as Africa,” he said.

Another potential area of growth is in the warehousing of dangerous goods, he said.

PKA is the manager and marketer of the Port Klang Free Zone (PKFZ), which enjoyed 6,000 TEUs last year compared with 4,000 TEUs in 2006.

Lim said the entrance of the port, which is the last area to be developed, is targeted for completion by the end of July.

Dubai-based Oilfields Supply Centre Ltd, which is developing part of PKFZ as an oil and gas hub in the Asean region, is already opening up office and is expected to construct its own centre in December.

Under the Mid-Term Review of the Ninth Malaysia Plan, PKA was to dredge the north channel but Lim said the move would have to be relooked as it will not improve throughput.

“It would be better to expand the width of the south channel by 500m from the current 365m to enable two big vessels to use instead of having to anchor outside the channel,” he added.

Lim, who is on a two-year contract, is also determined that the port authority improve the overall efficiency of Port Klang in terms of services, infrastructure and haulage companies to woo shipping lines which have shied away before.

To achieve this, PKA has submitted several initiatives to the Transport Ministry for approval.

PKA has only two operators, but foreign ports like Yokohama has over 100 and Osaka has 268 operators.

“They have dedicated port operators, which is one of the areas I will explore in opening up Port Klang.”

He has suggested to the Economic Planning Unit that Northport and Westports contribute a portion of their revenue or net profits to enable it to undertake the promotion of the port, as is being done in Yokohama and Osaka in Japan and Hong Kong.

“PKA should be promoting the port (and the country) to the world as we have facilities, rail, road system and expansion plans for the next 15 years.”

Lim, who visited Osaka and Yokohama port cities while accompanying International Trade and Industry Minister Tan Sri Muhyiddin Mohd Yassin on a trade and investment mission last week, said PKFZ can do the same with a free trade zone.

It is still talking to the highway authority on a two-year plan to build another road to Pulau Indah to enable the port to be a supportive feeder for air cargo.