Sapangar Port to be a game changer
KOTA KINABALU: The approval by the Federal Government for the expansion of Sapangar Bay Container Port in the first Rolling Plan under the 11th Malaysia Plan (11MP), marks a significant recognition of the need for the State to develop its port infrastructure in its role to bring about balanced economic development in Sabah especially through enhanced port connectivity and network.
Through the expansion project, the state government will be able to assure the shipping industry both local and foreign, that there is sufficient infrastructure in Sabah to meet their needs, said Deputy Chief Minister Tan Sri Pairin Kitingan.
Pairin. who is also Infrastructure Development Minister. pointed out that with the infrastructure in place, Sabah Ports’ capacity, ability, strength and efficiency will increase.
“This means our capacity to handle more cargo and ships will also increase. We also expect that the growth of other requirements will be in tandem so whilst we are networking and opening ourselves to global expansion, we also need to ensure that our local industry will expand and improve.
“We need to increase our local production and the government needs to put a lot of effort into this area because as we know what is happening at the moment is that when foreign ships come into Sabah, the goods that they expect to bring back let’s say to Hong Kong is not yet there,” Pairin told reporters after a briefing at Sabah Ports headquarters in Sepanggar yesterday. He later inspected the port facilities.
According to Pairin, the expansion project will also be met with the expansion of the manufacturing sector in Sabah so that they can contribute towards the export of goods which will help the ports attract more ships.
“We want to see Panama size vessels coming to Sabah. The expansion project will also boost the tourism industry and we will be able to see more cruise ships stopping by in the state,” he added.
After the expansion is completed, Sapangar Bay Container Port will play a bigger role in strengthening and increasing the state as well as the country’s economy for the benefit of the people.
“Whilst we do not say we want to compete with other ports in the country, I think it is only right for us and this is now recognised by the federal government that Sabah’s geographical location must be taken advantage of to ensure that the global economy will benefit Sabah through the expansion of better facilities and capacity in the expansion of the port.
“Definitely when that is completed we will be able to play a bigger role and that is only by the natural logistical process. So if we can achieve that target, it will be good for the state. It will also provide more employment opportunities,” he said, adding that all this will take time and need promotion.
Meanwhile Sabah Ports Sdn Bhd General Manager Siti Noraishah Azizan, said that the cost ceiling for the project is RM800 million.
“With the expansion, we want to reach the capacity of 1.25 million TEUs. We anticipate the completion of the project’s physical infrastructure in three years which is 2019. To achieve the target of 1.2 million TEUs, will be determined after all our strategies are implemented,” she said adding that this is achievable in five to 10 years' time.
Earlier, Pairin told the press conference that Sapangar Bay Container Port has also been identified under the 11th Malaysia Plan as a game changer under the National Blue Ocean Strategy to stimulate and drive economic growth within Greater Kota Kinabalu.
An initiative under the National Blue Ocean Strategy, the Ministry of Urban Wellbeing, Housing and Local Government as the lead agency will oversee the implementation of this project.
Cities such as Greater Kota Kinabalu, he said, have always played an important role in a nation’s growth by providing investment and trade opportunities, as well as improving connectivity with rural or suburban areas and the global market.
Seamless connectivity between the hinterland and global market will invariably accelerate the State’s industrial and economic development. Sapangar Bay Container Port hopefully will serve eventually as the main gateway not just for Sabah, but also the region to the Asean Economic Community, economies of signatory countries to the Trans-Pacific Agreement and the global economy at large, he added.
Under the 11MP, the Sapangar Bay Container Port will be developed into a transhipment hub. A Masterplan to upgrade and expand Sapangar Bay Container Port infrastructure to allow Main Line Operators will also be prepared this year.
The transhipment hub strategy will boost the State’s connectivity to international markets generating higher volume of cargo to attract more shipping lines to call at Sapangar Bay Container Port.
This will be the long term catalyst to the industrial activities in the State. The hub and spoke system will see Sapangar Bay Container Port as a load centre supported by other ports such as Sandakan, Lahad Datu and Tawau Ports.
The Federal Government had approved the expansion of Sapangar Bay Container Port as a project under the Sabah Development Corridor initiative. Sabah Ports Sdn Bhd, a 100 per cent owned subsidiary of Suria Capital Holdings Berhad, being the operator, has been appointed as the implementing agency.
An amount of RM800 million has been allocated under the 11MP, whereby funding will be staggered over a two year period (2016-2017). Under the arrangement, RM7 million is to be utilised within the first year of implementation and RM365 million for 2017.
The long term expansion plan will be carried out in phases commencing with the First Rolling Plan (2016-2017) under the 11th Malaysia Plan driven primarily by public investment through development expenditure.
The long term plan, expected to be carried out up to 2030 will generate investment opportunities for the private sector in the provision of port services and activities as well as throughout the logistic supply chain.
The Port with better facilities and deeper draft shall have the capacity of handling higher throughput of more than one million TEUs a year. With such capacity, it is expected to be able to boost efficiency to cater for bigger vessels such as the Panamax-size vessels. The expansion plan will also see the establishment of a Free Zone Area to complement the Port’s role as a Transhipment Hub.
For the initial phase, the project will involve the expansion of its berth length from the current 500 meters to 1.2 km and the stacking area from 15 hectares to 60 hectares. With the additional operation area, the handling capacity is expected to increase to as much as 1.25 million TEUs (twenty equivalent unit size of containers) from the current 500,000 TEUs.
Currently, Sapangar Bay Container Port handles an average of about 300,000 TEUs a year, about 70 per cent of the total container throughput of Sabah.
The growth has been on the uptrend at about 5 to 6 per cent annually since the privatisation exercise.
Construction work for the first stage of the development will commence in early 2017 with expected completion by 2019. The Port Master Plan being prepared shall serve as a Blue Print to further develop the seaport and logistics industry in the State for the next 30 years. This will ensure sustainability of the port to continually support the economic development of the State.
The positioning of Sapangar Bay Container Port as the transhipment hub augurs well with the Port’s strategic location along the main shipping route of the East Asian sea trade and being at the centre of the BIMP-Eaga region. Leveraging on this advantage, the supplydriven approach is anticipated to attract international Main Line Operators (MLOs) to hub at Sapangar Bay Container Port.
The transhipment strategy along with other improvement initiatives by the Port would significantly address the issue of trade imbalance that may result in reducing the cost of ocean freight. This will eventually lead to not only lowering the cost of doing business and the cost of living in Sabah, but also enhance the State’s economic competitiveness in the longrun.
Chief Minister Datuk Seri Panglima Musa Haji Aman announced in December 2015 that the Federal Government had approved RM2.404 billion allocation under the 11MP for Sabah Development Corridor (SDC) projects.
The said projects approved include the Sapangar Bay Container Port expansion, master plan for Aviation Hub and Air Freight Logistics and the construction of a jetty in POIC Sandakan.
Also present yesterday were Assistant Infrastructure Development Minister Datuk Ghulamhaidar Khan, Sabah Ports Chairman Datuk Karim Bujang, Suria Capital Group Executive Director Ng Kiat Min, Infrastructure Development Ministry’s Permanent Secretary Datuk Michael Emban and officers from Suria Capital as well as Sabah Ports.