A gateway for Southeast Asia
Malaysia has a vision – and logistics is at its foundation. The country’s transport minister, Dato’ Sri Liow Tiong Lai, took the opportunity presented by the Fiata World Conference in Kuala Lumpur to talk to ITJ editor-in-chief Christian Doepgen about Malaysia’s ambitious strategy. It envisages cooperating with China and the ten members of Asean to make the country a first-class Asian logistics gateway.
What is the impact of world trade on the development of Malaysia’s transport and logistics sector, minister?
World trade has really billowed our sails. The World Trade Organization (WTO) expects trade to recover and rebound by around 2.4% in 2017, bringing the total figure for global merchandise exports to approximately USD 15.8 trillion – with Asia at the forefront. The logistics and transport sector grew by approximately 5.7% in Malaysia in 2016, and we expect it to improve by another 5.8% in 2017. This means the industry is growing even faster than national GDP, which augmented by 4.2% in 2016 and may reach a growth rate of 5% this year.
Do you expect this trend to continue?
We expect stable growth, as we’ve predicted that the country’s gross domestic product will increase by 4.2% annually through to the year 2020. We simultaneously project that cargo volumes will grow by 8% annually, to reach around 880 million t by the same year. These estimates are even conservative, in the light of developments in the Asean states and in China.
Malaysia is aspiring to become the preferred logistics gateway in Southeast Asia. What steps is the country undertaking to reach this goal?
Everything has been ‘going according to plan’ since 2015, that is to say we’ve been implementing a logistics and trade facilitation master plan since we developed it in that year. In the first phase through to the end of 2016 we concentrated on removing bottlenecks. The newly-formed national logistics task force has now additionally re-assessed the structure of the Malaysian shipping register, reorganised the training of truck drivers and revamped our warehouse monitoring regulations.
Has the first phase of the master plan thus been concluded?
We’re continuing with three projects in the course of this year. We want to improve import and export processes and make them more efficient, remove bottlenecks in the Padang Besar container terminal by next year, and improve transport options on the last mile to Port Klang. Of course this doesn’t preclude simultaneous implementation of the next phase of the master plan.
What projects does this include?
The second phase of the undertaking extends from 2017 to the end of 2019, and it aims to fortify Malaysia’s domestic economy. The KLIA Aeropolis at Kuala Lumpur airport is one of our main projects. It is an integrated air cargo network hub offering a mix of air, sea and land facilities; the Alibaba Group has also set up its Southeast Asian e-commerce hub there.
What role do e-commerce and digitalisation play in your strategy?
A major role. We created a digital free-trade zone (DFTZ) in March this year, to underline their significance. This e-hub, jointly established by the Alibaba Group and the Malaysia Digital Economy Corp (MDEC), combines physical and virtual zones, with a 17.5 ha e-fulfilment hub, a digital satellite services hub in Bandar Malaysia’s Kuala Lumpur Internet City, and a virtual e-services platform zone.
The Chinese hinterland and the ‘One Belt, One Road’ initiative are very important for Malaysia, aren’t they?
Absolutely. Our two nations have entered into a port alliance, amongst other things, which envisages the cooperative development of seven Malaysian and eleven Chinese ports. This collaboration effort harbours a great potential, for our expansion plans for Port Klang are based on half of the gateway’s capacity being set aside for transhipment volumes.
What maritime projects is Malaysia currently focusing on?
Where to start, in the light of the plethora of projects that were engaged in? The development of a third terminal for Port Klang on Carey Island, the new Malacca Gateway Port in Malacca, the re-development of Sepanggar Port in Kota Kinabalu, and the development of a new mega port in Kuantan, are but a few of the most important undertakings I could mention in this context.
To what extent does the recently-launched 668 km East Coast Rail Link (ECLR), connecting Port Klang, Kuantan and Thailand, also have China in its sights?
Together with our Chinese partners we started with the construction of this USD 13 billion project in August. By the year 2030 we expect this new corridor, which will stretch all the way to China, to carry approximately 53 million t of goods a year, including goods flows to and from China.
The corridor is thought to represent something of a paradigm shift, particularly concerning traffic through the Malacca Straits and the South China Sea. How is Singapore, the region’s traditional hub, expected to react?
We’re good neighbours and can envisage the project becoming a rather advantageous development for the entire region. The hub in Singapore will retain its importance, whilst we’ll create additional capacities – which the international markets need – in Malaysia. As you know, we’re also planning to build a high-speed railway line from Kuala Lumpur to Singapore. So close collaboration is important to us.
Malaysia was placed 32nd in the World Bank’s Logistics Performance Index in 2016. What rank do you want to attain in 2018?
By next year is too short a time frame to make a concrete prediction. Naturally we believe that we’ll improve vis-à-vis this year, at any rate. For the year 2020, however, our target is for Malaysia to break through into the top twenty nations of the LPI.
