Today's CEO Outlook series features the country's four major port operators. They are Tan Sri G. Gnanalingam of Westport Malaysia, Basheer Hassan Abdul Kader of Northport (M) Bhd, Datuk Mohd Sidik Shaik Osman of Pelabuhan Tanjong Pelepas, and Datuk Ahmad Ibnihajar of Penang Port Sdn Bhd.

Ports play an important role in the economic life of a country; more so for Malaysia which is such a big global trader. Malaysia's total trade is bigger than that of the Indian sub-continent countries combined.

Malaysia's ports have grown rapidly over the past two decades and the outlook, according to our four port CEOs, is bright. According to Gnanalingam, growth in the logistics industry is normally 2.5 times that of GDP; so if the economy grows by 6% next year, ports can expect growth of between 12% and 15.

TAN SRI G. GNANALINGAM Chairman, Federation of Malaysian Port Operating Companies Executive chairman, Westport Malaysia

Challenges and prospects for Malaysia's economy in 2004?

The factors that attracted foreign direct investment (FDI) before the mid-1997 crisis, such as a competent and relatively cheap, English-speaking workforce and political stability, are no longer able to attract investors. This is due to several factors. For instance, the use of English language is growing at a frenetic pace in China, where the labour costs can't be matched. Other investment centres are also mushrooming. Once politically troubled nations such as Cambodia, Myanmar and Vietnam are now new players in the battle for investment dollars. What we need to do is to reinvent ourselves and be an integral part of the global manufacturing chain, producing something for the international economy. There is no fighting globalisation.

What are the prospects and challenges for your sector/industry next year?

The prospects for the logistics industry continue to be good as it normally grows at 2½ times the gross domestic product (GDP). As such, if the GDP improves to 6%, we can see 12%-15% growth. However, there are several challenges that we will have to face: ·Ports must continue to be supply-driven, improve productivity and achieve a cost-efficient and fast turnaround for vessels; ·Port infrastructure, in terms of civil works and equipment, needs two years to construct. As such, long-term planning is critical; ·The pace of vertical and horizontal integration will have to be speeded up where the number of players in the logistics chain will have to be reduced; ·Freight forwarders, forwarding agents and warehouse operators will need to pool their resources to become total logistics operators. This is very important in view of the Asean Free Trade Area and World Trade Organisation where international logistics operators will merge. We have already seen this in the presence of retail operators such as Tesco, Makro and Carrefour, which seem to be springing up in residential areas as one-stop centres; ·To be the best employer, we need to attract the best employees and we need to make every effort to motivate them to achieve continuous improvement and a higher productivity level; and ·Malaysia has done very well to achieve 10 million boxes this year, which is twice the amount in India and more than the whole of Africa's. There is every opportunity to double this volume in the next five years if we continue to invest in the development of our ports.

What will be the focus of your company/group in 2004?

Our focus will be to expand our facilities with a planned construction of another 2,400m berth with sufficient cranes to double our volume in the next five years. The key issues for us will be to improve the standard of living of our employees and their families and to achieve the Best Employer status with the best employees. The port industry is still beset with a lot of archaic practices and manual documentation. Hopefully, with the co-operation of the public sector we can eliminate such practices.

Do you expect your company/group to do better or worse in 2004, compared with 2003? Why?

Westport has grown from 20,000 boxes in 1996 to 2.4 million this year and handled 8.5 million tonnes of general cargo. We have targeted a 20% growth to reach three million 20ft equivalent units (TEUs) in container and 10 million tonnes of conventional cargo. The growth is expected to come equally from the hinterland and regional cargo.

China's economy continues to power ahead. Is China an important factor in the management of your operation?

Malaysia has overtaken Singapore as China's largest trading partner in Asean. Between 1996 and 2002, Malaysia's trade with China increased three-fold, from US$3.8bil to US$11.4bil, and according to reports, the trend is accelerating. In 2002, bilateral trade between the two countries rose by a significant 49%, from US$7.68bil in 2001 to US$11.4bil, making Malaysia China's seventh largest trading partner. With China becoming an economic powerhouse, Port Klang is set to play a big role in enhancing bilateral trade between the republic and Malaysia. In fact, China Shipping Container Lines, one of the leading main line operators with a fleet of 100 vessels and a total capacity of about 170,000 TEUs, has indicated that it is confident of exceeding its projected 280,000 TEUs this year at Westport. It plans to reach 350,000 TEUs next year, in line with the rising trade demands. As such, China will definitely be an important factor to be considered in Westport's operations.

Datuk Seri Abdullah Ahmad Badawi has taken over as Malaysia's fifth Prime Minister. In your view, what should his priorities be for the country?

The Prime Minister highlighted 10 key issues in a speech on Nov 3, which outlined his priorities for the country. They were also an indication of what needed to be done in the maritime industry. I believe Malaysia has already achieved Vision 2020 in terms of infrastructure, which in many ways is superior to those in some developed countries. What is required now is a National Vision Policy to ensure that the citizens of the country also share the fruits of a developed nation. Speaking for the maritime industry, I agree that the public sector needs to radically move beyond being mere regulators because we are in an era of globalisation, a borderless world and free trade agreements. I also agree that there is an urgent need to be transparent. This can only be achieved by removing archaic practices and licences. Most of all, tariffs in the maritime industry should be simplified and standardised, similar to the practice in the airline industry where the price of one ticket pays for all services at both ends of the airports. Currently, in the maritime trade, the shipper pays numerous charges imposed by different players, which in some cases are regulated but in many cases are not transparent.