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PTI Insight: Is Malaysia a major maritime nation?

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In the past 20 years Malaysia has developed to become one of the most important hubs for trade, finance and technology, largely fueled by a rapidly expanding maritime industrybut is it truly a major maritime nation?

At Port Technology International, we have looked at Malaysia’s progress and asked if it now stands among the strongest nations in the maritime world.

Background

Malaysia is situated in one of the most important regions in world shipping, close to some of the world’s most powerful and technologically advanced economies.

It has a number of advantages, such as being the third largest economy in southeast Asia with high skilled labour market. According to a World Economic Forum Global Competitiveness Report, updated in March 2019, Malaysia is the 25th most economically competitive country in the world in 2018-19.

The country has seen considerable growth since the 1990s, having followed the example of the four Asian ‘Tiger economies’ – South Korea, Singapore, Hong Kong and Taiwan.

Its growth is such that an HSBC report in 2012 suggested that by 2050 it could be the 21st richest country on Earth.

In 2019, The World Bank said it will become what is called a ‘high-income economy’ by 2024 as income per household grows.

However, The World Bank also warned that while the government has supported the economy through infrastructure investment, it will need to do so even more in the coming years as it ceases to be dependent on exports.

In order to understand the secret behind Malaysia’s boom and whether or not it is a major maritime nation, we have to closely examine its ports sector.

How is Malaysia’s maritime sector today?

Port Klang

Malaysia is one of three countries to control the Malacca Strait, one of the most important shipping lanes in the world, along with Singapore and Indonesia.

That has allowed the country to place itself firmly as a major transshipment hub and, as we shall see, a regular port of call for the world’s largest vessels.

As of March 2020, it has seven major federal government-owned ports: Port Klang, Johor Port, Port of Tanjung (PTP) Pelepas, Kuantan Port, Penang Port, Bintulu Port and Kemaman Port.

These are in addition to the ports at Sabah and Sarawak, which are owned and run by their respective state governments.

Port Klang, its biggest port, and PTP are the 12th and 18th busiest ports in the world, a testament to the country’s maritime prominence.

The country’s annual container throughput has increased threefold between 2000 and 2010, and the country’s ports have expanded in size to meet this demand.

The growth of the port industry has a few main drivers: the above mentioned increase in containerisation and expansions of its economy and an improved domestic supply chain, all of which contribute to making Malaysia a major maritime nation.

However, above all that has been a realisation from the Malaysian government as to how important the maritime sector is to the country’s economic growth. Seaports have played an ever increasing role in the government’s numerous economic plans over the decades.

Notable advancements – The Port of Tanjung Pelepas

The Port of Tanjung Pelepas, one of the major drivers behind making Malaysia a major maritime nation

The biggest example of Malaysia’s ascent is the Port of Tanjung Pelepas (PTP). As mentioned at the beginning of this article it is behind Port Klang in TEU capacity, but it is the most technologically advanced in Malaysia and one of the fastest growing ports in the world.

Having first begun operations in 2000, it is now the 18th busiest port in the world and third in southeast Asia, behind Singapore and Port Klang.

It has an annual throughput of 12 million TEU after a $1.2 billion upgrade in 2015, but also already outgrown that figure. In October 2019 it announced plans to more than double its capacity to 30 million TEU by 2030.

Its growth is evident in it breaking the vessel utilisation record three times in a row, once in 2018 and twice in 2019.

The most recent occasion was in July 2019 when the MSC Gulsun, the largest container ship built to date, called during its maiden voyage and left with 19,574 on board.

As for technological innovation, PTP announced in early 2019 that it had agreed a partnership with Ramco Systems to upgrade its Enterprise Resource Planning System, as part of its efforts to boost its digital logistics infrastructure and operational efficiency.

PTP may be some way behind Singapore in the region but it is undoubtedly a hub the rest of the world should be aware of in the next decade. That alone makes Malaysia a major maritime nation.

Read more: PTP’s Digital Revolution

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