Suria Capital, DP World tie-up to solidify port’s role

KUCHING:SuriaCapitalHoldings

Bhd’s (Suria Capital) partnership with DP World via Sabah Ports Sdn Bhd (Sabah Ports) has been viewed positively by analysts as it could boost the port’s role as a key regional trade centre within the East Asean growth area.

Of note, on Wednesday, DP World announced that it has officially established a partnership with Sabah Ports to manage Sapangar Bay Container Port (SBCP) to cement SBCP’s position as the premier regional trade hub for the Brunei Darussalam-Indonesia-MalaysiaPhilippines East Asean Growth Area (BIMP-EAGA).

With this partnership, DP World will support efforts currently underway to increase SBCP’s container handling capacity from 500,000 TEUs to 1.25 million TEUs by 20252.

DP World had also stated that investments will also be made to optimise terminal workflows, accelerate digitalisation for greater operational efficiency and to increase the port’s connectivity.

MIDF Amanah Investment Bank Bhd’s research team (MIDF Research) paved a positive view on this collaboration considering DP World’s position as the fifth largest global port operator, commanding an 8.9 per cent market share, with about 30 per cent of its revenue generated from containerised cargoes.

“This collaboration presents an opportunity to tackle Sabah’s high logistics costs by building a robust shipping network and expanding the cargo base.

“Sabah Ports currently grapple with trade imbalances, with outbound containers comprising only 30 per cent laden boxes versus 70 per cent empty ones, primarily due to insufficient cargo-generating activities in the state. Furthermore, the state was also considering the establishment of a free economic zone at Kota Kinabalu Industrial Park (KKIP), an area that aligns with DP World’s expertise and specialisation,” it said.

In the long run, DP World said, the vision of the collaboration is to improve landside and seaside connectivity throughout Sabah, reduce transit costs and time, and raise performance standards across the state’s entire supply chain.

However, MIDF Research stressed that it is important to note that the specifics of the partnership agreement, including the equity structure, have not been disclosed yet, as Suria Capital has not officially announced it.

“Clarity is needed regarding the concrete plans to attract significant foreign direct investments (FDIs) for its expanded capacity, particularly considering the current scenario where main line operators bypass Sabah Ports due to limited cargo volume.

In the long run, the vision of the collaboration is to improve landside and seaside connectivity throughout Sabah, reduce transit costs and time, and raise performance standards across the state’s entire supply chain.