The Star,February 10th 2003 - After years of developing transhipment, Port Klang has now gone a step further to becoming a cargo consolidation centre with the development of a RM1bil distribution megahub.

The project, undertaken by Port Klang Authority (PKA), and modelled after the Jebel Ali Free Zone in Dubai, is aimed at making the port a heart for collecting, repacking, storing and re-distributing goods.

Covering an area of 400ha adjacent to Westport, the plan will be undertaken in two phases, the first of which involves the reclamation of 200ha.

Clearing of what was formerly a plantation has been done and PKA is targeting to start infrastructure work by next month. It is also applying to the Finance Ministry to have the area gazetted as a free zone.

According to PKA general manager Datin Paduka O.C. Phang the setting up of a regional distribution hub was in line with the government's objective of making Port Klang a distribution base and a trade and logistics midpoint.

“This will eventually enhance the port's transhipment trade. The development is conceptualised as mixed and will not only have manufacturing activities but also serve as regional distribution centres or international procurement hubs for multinational companies.

“These activities will be supported by commercial and logistics services so that the whole area will be self-contained,” she said.

Phang added that companies would be allowed to establish their premises at the zone and the entire project would make the port attractive as a leading cargo consolidation centre.

The commercial facilities available include break-bulking, sorting, grading, packing, re-packing, labelling, re-labelling, storage, transit and minor assembly.

The advantages as stated in the project working paper are manifold.They include;

·Boosting Pulau Indah as a megahub and investment centre,

·Bringing business to the port,

·Optimising the potential of Westport as a transhipment megahub,

·Attracting direct investment and foreign exchange,

·Offering a choice of facilities for distribution, storage and assembly of product, and;

·Providing employment.

In the Budget 2003, the government announced incentives for regional distribution centres that include full tax emption on statutory income for 10 years, dividends paid from the exempt income to be exempted from tax in the hands of shareholders, import duty and sales tax exemption on goods for the purpose of distribution and expatriate posts to be approved according to their requirements.

All these are expected to act as further inducement to investors and huge manufacturers.

Jebel Ali for instance is said to have 1,400 companies located there including big names such as Unilever, Nokia, Shell, Matsushita and Nissan, among others.

According to a port official, Port Klang is ready to take on this 'next phase' of activity, moving beyond the traditional role of being a ship-shore link for cargo.

“Becoming an international consolidation centre and distribution centre is essential for the port to progress and the whole country to benefit from increased trade."

“Our ports cannot continue to just focus on handling pure full container load transhipment traffic. Once mainlines find cheaper alternatives there is no guarantee that they will stay on."

“This sort of activity will augur well for development of trade and spur cargo and employment,” said the official.

However an industry player said that while the intention and objective of setting up such a centre was commendable, it would be a “tough job” getting many companies that were already based elsewhere to relocate their business to Port Klang.

“For Port Klang to emulate the success of Jebel Ali is almost impossible and it is doubtful whether it will be able to make any returns from the project,” he said.

Currently Northport and Westport each has its own distripark.

Phang said the new megahub would offer a wide variety of services and facilities including a proper infrastructure for manufacturing and distribution supported by quality, value-added services.

The components of the project consist;

·A multi-storey intelligent building with high-tech offices to serve as the main business centre. The facilities in the building are conceptualised for use as operations and trade offices as well as for conventions and trade exhibitions,

·Transhipment facilities that will be offered for lease,

·Light industry services comprising terrace, semi-detached and detached factories for sale,

·Vacant lots for development of detached and semi-detached medium industry amenities whereby lots will be sold to buyers to develop their own facilities, and;

·Vacant lots to be leased for construction of warehouses.

Last year Port Klang handled 82.2mil tonnes of cargo compared to 70.1 mil the previous year. The port moved 4.53mil TEUs, out of which 2.4mil were transhipment boxes.