WESTPORT Distripark (M) Sdn Bhd will proceed next year with the second and final phase of its distribution park (distripark) development covering 9ha in Port Klang after a six-year delay.

The company was supposed to launch phase two of the development in the later part of 1998, but this was put on hold due to the regional economic crisis of 1997.

Westport Distripark vice-president II Mohamad Nasir Ismail said it will develop additional facilities on a 9ha site within the distripark, which is currently vacant, to meet the growing demand as 95 per cent of the existing warehouse space has been leased out.

He, however, declined to reveal details of the development, just that it would include building another 100,000 sq ft of office-warehouse.

Westport Distripark opened in 1997 and covers 14ha. The first phase of the development consists of 470,000 sq ft of two-storey warehouse space. It also includes an open yard area of 80,753 sq ft.

"By last year, we should already have come up with phase two of the development, but we were not able to achieve our objective due to the Asian economic downturn," Mohamad Nasir told Business Times.

Westport Distripark is an 80:20 joint venture between Konsortium Logistik Bhd, a logistics solutions provider, and Westport port operator Kelang Multi Terminal Sdn Bhd (KMT).

"We (KMT) as a port operator wanted to concentrate on the port operations per se and this being an added service to the port industry. We felt that companies such as Konsortium Logistik, being a logistics and warehouse operator, will provide the synergy required to run the distripark while we concentrate on our core business," said KMT commercial manager Shan Jeyarajah.

Today, some 60 per cent of the warehouse is occupied by Philip Morris International Inc which uses Westport Distripark as its regional distribution hub.

"They import all their goods, some for local consumption and others for re-export to their affiliates in the region. They also have a local factory in Seremban. They use Westport Distripark for their regional distribution to countries such as Thailand and the Philippines," said Mohamad Nasir.

Apart from Philip Morris, he added that other customers at Westport Distripark include contracting companies of various electrical vendors.

"They do the assembling and reassembling work here. Hypermarket operators such as Tesco also use our facilities here for their packing and repacking work."

This year, Westport Distripark has 10 main customers and handles 136,000 cu m of cargo per year.

"These customers comprise common users both on an ad-hoc basis and tenanted, occupying an average 1,000 sq ft of warehouse space," said Mohamad Nasir.

Meanwhile, Shan explained that the advantage of operating in a distripark is the exemption of duty. Westport is within the Free Commercial Zone Area.

"Customers are allowed to do all vendor activities without any Customs interference. In comparison, if you do it at a factory outside the distripark, then the first thing you have to pay is the import duties. And if the items were to be re-exported, then that's another duty that you have to pay. You also have to cover the transportation cost and administrative expenses," he said.

"Although the distripark is located in Malaysia, it is deemed for purposes of customers in another country. Thus, that lends opportunities for people from overseas who want to distribute within the region to come here and do their services and this of course develops the synergy for the port," said Shan.

"So basically, the attraction is for people who want to see Malaysia as a cheap cost centre, but don't want to actually bring goods into Malaysia proper. They do it here with the cheap labour, cheap port tariffs and at a competitive and productive level." Shan also said the concept of distripark is similar to that of other ports and is nothing new.

"The only difference are in terms of procedural and facilities available. The services and facilities that we provide here are of high standard, Shan said Westport Distripark's rental rates for warehouse space are "quite favourable" compared with that of other ports in Malaysia and Singapore.

The company hopes to log a 15 per cent to 20 per cent revenue growth this year and this increase will come from the growth of the port. Warehouse operations account for some 70 per cent of its revenue and the balance from its handling business.

Still, Westport Distripark's contribution to KMT's revenue is small.

"However, it is a must have. If you don't have a distripark, this means you are sorely lacking something in the port industry," said Shan.

To a question, Shan pointed out that the distripark is not dependent on any one sector for survival.

Going forward, the company sees good potential for Malaysia to become an important loading centre for goods coming here, repackaging to go to places such as Europe or the US.

When asked whether Westport Distripark sees China as a threat, Shan said: "Labour cost in China is indeed cheap. But at the end of the day, it is what service you can provide and at what levels. The Malaysian Government is flexible. We do not have too much of red tape and we have the infrastructure".

Meanwhile, Westport Distripark is not resting on its laurels. It has recently purchased 405ha of adjacent land and plans to develop it under a free-zone facility, which will allow for both industrial and commercial activities. The facility will be modelled after the Jebel Ali Free Zone - which is the major distribution hub in West Asia and the most successful free zone in the world.

"Our marketing efforts and initiatives are a continuously active process. We are speaking to several logistics and multinational companies. However, we are not able to disclose anything right now as things have yet to firm up," said Shan.