Local ports’ prospects to remain healthy
KUCHING: RAM Ratings expects the container- and cargo-handling prospects of Malaysian ports to remain healthy in 2017, in tandem with the gradual global economic recovery.
“That said, we expect throughput growth to remain in the low singledigit levels, akin to the modest three per cent recorded in 2016,” highlights Davinder Kaur Gill, RAM Raings cohead of Infrastructure and Utilities Ratings, in a statement.
“Prospects for the key national ports – including Westports Holdings Bhd, Northport (Malaysia) Bhd and Pelabuhan Tanjung Pelepas Sdn Bhd – remain stable, benefiting from the strengthening local and regional economic outlook.
“Nonetheless, in the immediate term they are still vulnerable to the effects of the current trend towards protectionism and changes in shipping alliances,” she added.
While the global economy is gaining momentum – with world trade expected to expand 3.8 per cent in 2017 against 2.2 per cent in 2016 – this raises questions on what recent developments, such as Brexit and US President Donald Trump’s protectionism rhetoric, mean for global trade flows.
In the meantime, RAM Ratings noted that Malaysia continues to benefit from its strategic position along the straits of Malacca, one of the busiest shipping lanes in the world.
Malaysia’s throughput remained resilient in 2016, with container throughput recording a 10-year compounded annual growth rate (CAGR) of six per cent while that of cargo throughput came in at five per cent.
At the same time, Malaysia handled more than 25 per cent of the containers passing through the Asean-5 nations – Malaysia, Singapore, Thailand, Indonesia and the Philippines – and accounted for
That said, we expect throughput growth to remain in the low single-digit levels, akin to the modest three per cent recorded in 2016. Davinder Kaur Gill, RAM Raings co-head of Infrastructure and Utilities Ratings
three per cent of world container traffic.
“While prospects for regional trade expansion are still encouraging, the long-term growth of SouthEast Asian ports must be analysed in the context of economic growth, the region’s upcoming new port capacity and the requirements of the newly formed shipping alliances,” explained Davinder.
On that note, the ratings agency said regional port expansion is under way in the Asean-5, adding at least 100 million TEUs of new container-handling capacity over the next 20 years, with most of this planned along the straits of Malacca.
“Although the new capacity will provide opportunities in terms of scale, there is a possibility of running into a supply glut and an ultra-competitive situation if trade growth does not keep pace,” Davinder pointed out.
“With China pursuing its ambitions through the One Belt, One Road plan, the prominence of the Straits of Malacca vis-à-vis global trade must be closely monitored,” RAM Ratings said.
From a funding perspective, the ratings agency said, the financing needs of the Malaysian and regional port sectors would be massive if all the announced expansion plans come to fruition in the near future.
“However, we expect a gradual roll-out. On this note, domestic funding needs through the next five years are projected to hover around RM5 billion, factoring in the expansion of Kuantan Port, Sapangar Bay Container Port and Port of Tanjung Pelepas, which are deemed more definite than those of the others.