Malaysia

No privatisation plan until Soi Lek made Penang Port chief, says Tee Keat

By Shannon Teoh
June 02, 2012

KUALA LUMPUR, June 2 — The controversial decision to privatise Penang Port only materialised after MCA president Datuk Seri Dr Chua Soi Lek was appointed chairman of its regulatory body, says Datuk Seri Ong Tee Keat. 

Ong (picture), who was transport minister from March 2008 to June 2010, told The Malaysian Insider that “there was never any plan to privatise Penang Port during my time” despite several private players submitting bids to take over its operations. 

“Yes, because the government had no plans to privatise when I was transport minister,” Ong said when asked further if plans to privatise the port, which has seen the federal government pour in RM1.1 billion in capital expenditure between 2004 to 2009, only came about after Dr Chua’s appointment. 

Dr Chua, who ousted Ong as MCA president in March 2010 after a bitter rivalry that escalated since they were elected as the party’s top two in October 2008, was appointed Penang Port Commission (PPC) chief in November 2010. 

Ong also said that he repeatedly requested for funds to dredge the port’s channel, reported to cost over RM350 million, but the finance ministry had rejected the project which is crucial for the harbour’s expansion plans. 

“Dredging is a must. You have to do it to make the port competitive. Now if we are going to privatise it, it must be part of the terms of the concession that the channel must be dredged,” the Pandan MP said. 

Several DAP lawmakers from Penang had accused Dr Chua earlier this week of a “sinister” plot to stifle the economy of the island state controlled by their party. 

Three MPs, including Penang DAP chief Chow Kon Yeow, said the Johor-born former Labis MP was conspiring with Tan Sri Syed Mokhtar al-Bukhary to benefit his home state at Penang’s expense and relegate Penang Port to a feeder for the logistics tycoon’s Tanjung Pelepas Port (PTP). 

But the former health minister justified the government’s decision to shelve plans to dredge the port’s channel as it is set to be privatised by the Finance Ministry (MoF). 

He also told The Malaysian Insider it did not make sense for any bidder not to improve the port’s performance as “it is not doing as well as it should be and has accumulated a debt of around RM1.3 billion.” 

“How will the new owner settle the outstanding debt without deepening the harbour? It does not make sense to assume the liabilities and not dredge. It only makes sense to DAP but it makes no sense to any businessman,” the MCA president said. 

But several shipping industry players expressed doubt over whether Syed Mokhtar, who has emerged as a frontrunner to take Penang Port private, will deepen its channel at his own cost. 

Industry players, who declined to be named, told The Malaysian Insider it would not make economic sense for a private player to dredge the port’s channel at a reported cost of RM350 million, especially as Syed Mokhtar also controls the rival Tanjung Pelepas Port (PTP). 

“Definitely it makes more sense to turn Penang Port into a feeder port instead of splitting up resources and competing with yourself as well as Port Klang,” said a former top port official. 

The Penang DAP lawmakers have said that the dredging was needed to allow bigger ships measuring 8,000 TEUs (twenty-foot equivalent units) to call on the island state along the Straits of Malacca, the world’s busiest waterway. 

One of them, Liew Chin Tong, also rejected Dr Chua’s explanation, saying the former health minister was trying to project a “false image of Penang Port as a loss-making outfit when the debt is mostly due to the RM1.1 billion investment.” 

The Bukit Bendera MP warned that Syed Mokhtar may “engage in asset stripping by bringing the seven units of Super Port Panamax cranes from Penang to PTP” and replace them with six smaller quay cranes from Johor Port, run by the tycoon’s Seaport Terminal. 

The DAP strategist said that with the smaller cranes unable to handle ships measuring 4,000 TEUs and above, Syed Mokhtar would have no reason to carry out dredging works around the Penang channel. 

The Penang DAP MPs have also called for the privatisation exercise to be aborted after Dr Chua’s rationale that the government should not spend on an asset it is planning to sell. 

They said that following the same logic, the RM1.1 billion — or over three times the cost of dredging — spent over five years up to 2009 to double the port’s capacity to two million TEUs meant that Putrajaya should scrap the sale altogether. 

Although Dr Chua also insisted that PPC has not been informed of any winning bid, the elected representatives challenged him to deny knowledge of a Cabinet decision on November 25 to endorse Syed Mokhtar’s Seaport Terminal. 

The Malaysian Insider reported in December 2010 that the Cabinet had approved the MoF’s sale of PPSB to PTP despite competitive bids from other businessmen and also the Penang government, which owns the port land. 

Penang Chief Minister Lim Guan Eng wrote to Prime Minister Datuk Seri Najib Razak in early December 2010 to put in a bid to run the port, which has declined since the MoF took over in 1994. 

The port lost its free-port status in 1974 but Najib’s Barisan Nasional (BN) is offering to reinstate its free-port status if the federal coalition regains Penang which it lost in Election 2008. 

PPSB is a wholly-owned subsidiary of MoF Inc while the regulator, PPC, also reports to Putrajaya through the Transport Ministry. 

It is learnt that cargo volumes at Penang Port have failed to match that of Port Klang and Tanjung Pelepas, growing only 5.8 per cent a year between 1995 and 2009, against Klang which grew 14.2 per cent annually. 

Tanjung Pelepas Port began in 1999 but now handles more than six million TEUs a year, five times more than Penang Port, which Liew said had grown to handle 1.3 million TEUs last year. 

Penang has complained that federal ownership of the port operator has worsened its financial position, with net debt rising from RM148 million in 2004 to RM832 million in 2009 — a 462 per cent increase in five years.