Malaysia says cost of new budget airport to double
Malaysia's airport operator said the cost of a new airport for budget carriers has nearly doubled to 3.9 billion ringgit ($1.2 billion), and will open nearly a year later than planned, reported Associated Pres Newswires.
Malaysia Airports Holdings said plans for the airport have now been "significantly upgraded with superior facilities" including aerobridges and an automated baggage system. The airport will be able to accommodate 45 million passengers annually, up from 30 million previously, it said.
The greater expense was criticised by AirAsia – the main user of the terminal. Its chief executive Tony Fernandes said that amenities such as aerobridges were a waste of money and would not be used by his airline. He also expressed doubt that annual passengers could hit 45 million.
Malaysia Airports defended its decision to install aerobridges to assist the sick, elderly and young children, saying the additional cost was negligible at US 8 cents) per passenger. Due to the changes, the "KLIA 2" airport is expected to open only in April 2013, instead of mid-2012, it said.
Fernandes slammed Malaysia Airports for overspending amid the current global economic uncertainty. Singapore's budget terminal has no aerobridges, he said.
"We won't use them," he responded on Twitter. "American Airlines just gone into bankruptcy. And Malaysia Airports spends $1.23 billion. I am sure that's not the final figure."
AirAsia, the region's largest no-frills airline by fleet size, has said a bigger terminal is crucial to its survival with passengers expected to reach 30 million and its fleet to grow to 184 planes by 2013. The existing budget airport can only accommodate 15 million people and has insufficient airplane parking bays.
In 2009, AirAsia proposed to build and operate a $504 million budget airport in a southern state but the government rejected the plan amid concerns it may undermine the country's international airport. It subsequently unveiled plans for KLIA 2, located just two kilometers west of the main airport.
Malaysia hopes the new budget airport will bolster the country's international airport as a significant air hub in the region rivaling Singapore's Changi Airport and Thailand's Suvarnabhumi Airport.
Malaysia's international airport, with annual passengers of around 17 million and capacity of 25 million is relatively small compared with regional rivals. Changi's three main terminals and one budget terminal have a combined capacity of nearly 69 million passengers. Actual passenger numbers are around 42 million a year, similar to Suvarnabhumi, which opened in late 2006.
Wednesday, November 30, 2011
THE CHARTERED INSTITUTE OF LOGISTICS & TRANSPORT IN MALAYSIA
ABOUT CILTM
(Part 2)
The Chartered Institute of Logistics and Transport (CILT) is the international professional body for all sectors of the transport industry. Founded in the United Kingdom in 1919 and granted a Royal Charter in 1926, it was established to promote knowledge of the science and art of logistics and transport and to provide a source of authoritative views for communication to government, industry and the community.
The International Institute’s Patron is Her Majesty the Queen of England.
The Institute is a progressive and purposeful organization which provides a forum for professionals and academicians engaged in transport & logistics industry, whether it is in planning, operation and management, logistics and physical distribution, industrial transport, transport technology or for those whose contribution to transport lies in the areas of education, research and associated activities.
The Institute’s Qualifying Examinations are internationally recognised professional transport and logistics qualification of a high educational standard. A Member with a pass in the CILT Qualifying Examination is accepted as equivalent to a general degree. Together with appropriate work experiences, they lead to full Membership and the designatory letters of “CMILT” which is recognised by the Public Services Department in Malaysia as equivalent to an honours degree of a local university. Avenues for post-graduate studies in the logistics and transport field may be pursued at any local or overseas universities offering such courses.
The Chartered Institute of Logistics and Transport in Malaysia (CILTM) had its beginnings in 1965 with the formation of Malaysia Section. This was to fulfil the need for the qualified locals in the field of logistics and transport after independence and the increasing demand in the transport industries. In October 1990, the Malaysia Section was upgraded to that of a National Council. Today, the situation in the logistics and transport industry even more dynamic and the demand for trained logistics and transport managers and operators is greater than ever.
Internationally, the institute has about 33,000 members with about half the number residing outside the UK, mostly in the Commonwealth countries. Malaysia has about 2,000 members of all grades. Membership of the CILT not only offers today’s transportants a breadth and depth of training through its excellent examination system, it also offers the opportunity to exchange valuable ideas and experiences with other logistics and transport professionals.
The Institute also constantly strives to keep up with the ever changing development in the Industry.
Sunday, November 27, 2011
THE CHARTERED INSTITUTE OF LOGISTICS & TRANSPORT in MALAYSIA
Welcome to CILT Malaysia!
(Part 1)
About Us
The Chartered Institute of Logistics and Transport (CILT) is the international professional body for all sectors of the transport industry. Founded in the United Kingdom in 1919 and granted a Royal Charter in 1926, it was established to promote knowledge of the science and art of logistics and transport and to provide a source of authoritative views for communication to government, industry and the community.
The International Institute’s Patron is Her Majesty the Queen of England.
The Institute is a progressive and purposeful organization which provides a forum for professionals and academicians engaged in transport & logistics industry, whether it is in planning, operation and management, logistics and physical distribution, industrial transport, transport technology or for those whose contribution to transport lies in the areas of education, research and associated activities.
The Institute’s Qualifying Examinations are internationally recognised professional transport and logistics qualification of a high educational standard. A Member with a pass in the CILT Qualifying Examination is accepted as equivalent to a general degree. Together with appropriate work experiences, they lead to full Membership and the designatory letters of "CMILT" which is recognised by the Public Services Department in Malaysia as equivalent to an honours degree of a local university.
(Part 1)
The Chartered Institute of Logistics and Transport (CILT) is the international professional body for all sectors of the transport industry. Founded in the United Kingdom in 1919 and granted a Royal Charter in 1926, it was established to promote knowledge of the science and art of logistics and transport and to provide a source of authoritative views for communication to government, industry and the community.
The International Institute’s Patron is Her Majesty the Queen of England.
The Institute is a progressive and purposeful organization which provides a forum for professionals and academicians engaged in transport & logistics industry, whether it is in planning, operation and management, logistics and physical distribution, industrial transport, transport technology or for those whose contribution to transport lies in the areas of education, research and associated activities.
The Institute’s Qualifying Examinations are internationally recognised professional transport and logistics qualification of a high educational standard. A Member with a pass in the CILT Qualifying Examination is accepted as equivalent to a general degree. Together with appropriate work experiences, they lead to full Membership and the designatory letters of "CMILT" which is recognised by the Public Services Department in Malaysia as equivalent to an honours degree of a local university.
AVIATION - Airport Facilities Upgrade
KLIA2 baggage system upgrade to cost MAHB RM100mil more
By B.K. SIDHU
bksidhu@thestar.com.my
PETALING JAYA: Malaysia Airports Holdings Bhd (MAHB) would be upgrading the baggage system at the new low-cost carrier terminal, KLIA2, to be fully automated based on requests made by airlines and this would cost the airport operator an additional RM100mil and push the completion date beyond October 2012, sources said.
It involves redesigning the original baggage system planned for the airport and hacking parts of the airport, which is already 40% complete. The decision on the upgrade of the baggage system only came recently following discussions with airlines, the source said. The original plan was to have a semi-automated system and now the contracts which were awarded early this year would have to be revised.
MAHB would be holding a press conference tomorrow to provide updates on KLIA2.
KLIA2, once completed, would be the most modern low-cost air terminal in Asia to cater for more than 30 million passengers and it would also have the longest skybridge in Asia.
The airport is no longer based on its original design where its terminal building was to be sited on a 150,000 sq m area.
To meet regulatory requirements for segregation of international and domestic passengers, the terminal will now be almost double its original size at 255,000 sq m.
“With a bigger terminal building that has a longer runaway and so many other requests made by airlines, including the new baggage system upgrade, the cost to build KLIA2 will go up to about RM4bil.
“Whatever the reasons, the changes have been made to accommodate the airlines because they would be using the terminal eventually .
“It should be the most modern to meet future requirements,'' said another source.
A fully automated baggage system would provide for faster and more efficient sorting of bags and with such an upgrade, KLIA2 baggage system would be at par with the KLIA main terminal building.
A lot of the additional requests came at the point when the designs were already done and the construction had begun,” said the source.
RAM Ratings, meanwhile, reaffirmed the respective long and short-term ratings of AAA and P1 for Malaysia Airports Capital Bhd's (MACB) RM3.10bil Islamic medium-term notes programme (2010/2025) and RM1bil Islamic commercial paper programme (2010/2017).
Both facilities have a combined limit of RM3.1bil in nominal value and are collectively referred to as “the sukuk”. The long-term rating has a stable outlook.
It said MACB was a special-purpose vehicle set up by MAHB to undertake the issuance of the sukuk for the latter.
MAHB is the exclusive 25-year concession holder that operates, manages and maintains the KLIA and 39 other airports in the country.
By B.K. SIDHU
bksidhu@thestar.com.my
PETALING JAYA: Malaysia Airports Holdings Bhd (MAHB) would be upgrading the baggage system at the new low-cost carrier terminal, KLIA2, to be fully automated based on requests made by airlines and this would cost the airport operator an additional RM100mil and push the completion date beyond October 2012, sources said.
It involves redesigning the original baggage system planned for the airport and hacking parts of the airport, which is already 40% complete. The decision on the upgrade of the baggage system only came recently following discussions with airlines, the source said. The original plan was to have a semi-automated system and now the contracts which were awarded early this year would have to be revised.
MAHB would be holding a press conference tomorrow to provide updates on KLIA2.
KLIA2, once completed, would be the most modern low-cost air terminal in Asia to cater for more than 30 million passengers and it would also have the longest skybridge in Asia.
The airport is no longer based on its original design where its terminal building was to be sited on a 150,000 sq m area.
To meet regulatory requirements for segregation of international and domestic passengers, the terminal will now be almost double its original size at 255,000 sq m.
“With a bigger terminal building that has a longer runaway and so many other requests made by airlines, including the new baggage system upgrade, the cost to build KLIA2 will go up to about RM4bil.
“Whatever the reasons, the changes have been made to accommodate the airlines because they would be using the terminal eventually .
“It should be the most modern to meet future requirements,'' said another source.
A fully automated baggage system would provide for faster and more efficient sorting of bags and with such an upgrade, KLIA2 baggage system would be at par with the KLIA main terminal building.
A lot of the additional requests came at the point when the designs were already done and the construction had begun,” said the source.
RAM Ratings, meanwhile, reaffirmed the respective long and short-term ratings of AAA and P1 for Malaysia Airports Capital Bhd's (MACB) RM3.10bil Islamic medium-term notes programme (2010/2025) and RM1bil Islamic commercial paper programme (2010/2017).
Both facilities have a combined limit of RM3.1bil in nominal value and are collectively referred to as “the sukuk”. The long-term rating has a stable outlook.
It said MACB was a special-purpose vehicle set up by MAHB to undertake the issuance of the sukuk for the latter.
MAHB is the exclusive 25-year concession holder that operates, manages and maintains the KLIA and 39 other airports in the country.
MARITIME - International Maritime Organisation
Malaysia re-elected to IMO council
KUALA LUMPUR: Malaysia has been re-elected for the fourth consecutive time on Nov 25 to the International Maritime Organisation (IMO) council, said Transport Minister Datuk Seri Kong Cho Ha.
He said Malaysia garnered 120 votes from the 155 eligible voting states to sit on the 20-member council’s category C for countries with maritime and navigational interests for the 2012-2013 term.
“This is a great achievement for Malaysia as we managed to get re-elected for the fourth consecutive time. This shows that the members are satisfied with our performance at the council all this while,” he said in a text message to Bernama here from London.
Kong expressed his appreciation to the entire campaign taskforce for its hard work. The Malaysian delegation to the assembly, headed by Kong, also comprised Malaysia’s high commissioner to Britain and Northern Ireland, Datuk Seri Zakaria Sulong, and several officials from the Transport Ministry.
The council’s category C members are Singapore, Bahamas, Indonesia, Thailand, Australia, Kenya, Cyprus, Belgium, Turkey, Morocco, the Philippines, Liberia, Chile, Jamaica, Malaysia, Malta, South Africa, Egypt, Mexico and Denmark.
The council elections are one of the highlights of the IMO general assembly, which convenes every two years. Among others, it makes policy decisions on the IMO’s direction and endorses its activities.
The IMO is the United Nation’s specialised agency responsible for the safety and security of shipping and the prevention of marine pollution by ships. — Bernama
KUALA LUMPUR: Malaysia has been re-elected for the fourth consecutive time on Nov 25 to the International Maritime Organisation (IMO) council, said Transport Minister Datuk Seri Kong Cho Ha.
He said Malaysia garnered 120 votes from the 155 eligible voting states to sit on the 20-member council’s category C for countries with maritime and navigational interests for the 2012-2013 term.
“This is a great achievement for Malaysia as we managed to get re-elected for the fourth consecutive time. This shows that the members are satisfied with our performance at the council all this while,” he said in a text message to Bernama here from London.
Kong expressed his appreciation to the entire campaign taskforce for its hard work. The Malaysian delegation to the assembly, headed by Kong, also comprised Malaysia’s high commissioner to Britain and Northern Ireland, Datuk Seri Zakaria Sulong, and several officials from the Transport Ministry.
The council’s category C members are Singapore, Bahamas, Indonesia, Thailand, Australia, Kenya, Cyprus, Belgium, Turkey, Morocco, the Philippines, Liberia, Chile, Jamaica, Malaysia, Malta, South Africa, Egypt, Mexico and Denmark.
The council elections are one of the highlights of the IMO general assembly, which convenes every two years. Among others, it makes policy decisions on the IMO’s direction and endorses its activities.
The IMO is the United Nation’s specialised agency responsible for the safety and security of shipping and the prevention of marine pollution by ships. — Bernama
LOGISTICS - Fashionwear Distribution
| ‘Red carpet logistics' brings Glamour to Asian fashion sector | |
| November 26, 2011 (Asia) | |
 | |
 The global logistics service provider Logwin AG is now offering a special product for the fashion sector in Asia – its “red carpet logistics”. The first step in its introduction throughout Asia was taken in Shah Alam, Malaysia, where Logwin opened a warehouse specially dedicated to the requirements of exclusive fashion articles in November 2011. Additional dedicated warehouses are scheduled to follow at locations in Singapore, Hong Kong, Shanghai, Sydney and Jakarta.“Red carpet logistics” combines the transport of high-quality fashion products from and to Asia as well as within Asia with specially equipped warehouses and advanced services for the fashion and lifestyle industry. The first warehouse in Shah Alam is located approximately 30 kilometres from the Malaysian capital Kuala Lumpur. This is where the logistics specialist provides its customers from the fashion sector with exclusive services. In the next phase Logwin will be upgrading its existing fashion warehouses in Hong Kong, Singapore, Shanghai and Sydney to meet the exacting “red carpet logistics” standards. Finally the network will be expanded to include Indonesia, India and additional locations in China. Warehouses are also planned for Thailand and Vietnam. The storage area of these facilities ranges from 9,000 m² to 18,000 m². “The concept is aiming to server the growing demand for premium European brands in Asia”, explains Marc Wijnen, Director Logistics at the Logwin business segment Air + Ocean." "At the same time Logwin will also be focusing its “red carpet logistics” on premium Asian brands intended for export to Europe, Australia and the USA. “Our intention with 'red carpet logistics' is to reposition ourselves on the Asian market. We are rolling out the proverbial red carpet for our customers and their brands,” says Helmut Kaspers, COO of the business segment Air + Ocean at Logwin. Particularly high-value premium products from the fashion and lifestyle field need special service that takes account of their exclusive quality. Logistics for this sector is a niche market with sophisticated requirements. “We have involved experts from the fashion and lifestyle industry in designing the 'red carpet logistics' concept in order to ensure that we are speaking the same language as our customers,” says Helmut Kaspers. The articles that Logwin transports all over the world are very often time-sensitive and logistics must satisfy the highest demands." Logwin can look back on many years of logistical experience in the fashion and lifestyle sector and offers its customers in Europe, for example, the largest logistics network for hanging garments. With its AirTextainer the company developed a special box for the space-saving and carful transport of fashion products around the world. The Asian fashion market is already the largest in the world. It is expected to become 35 per cent larger than that in Western Europe by 2015. Trade in clothing grew by 7.6 per cent in Asia in 2010 alone according to a study by Euromonitor in 2011. PricewaterhouseCoopers has predicted that demand for fashion and clothing will grow by 4.7 per cent in Asia this year, with China leading the way with an increase of 10.8 per cent. The Malaysian International Fashion Alliance (mifa) wants to establish Malaysia as an Asian fashion hub. The company, founded in 1995, specializes in planning, holding and marketing fashion events. mifa has been organizing the Malaysia International Fashion Week (MIF-W) since 2003. Besides organizing events, mifa also develops business models and brands for Malaysian fashion designers. | |
SHIPPING - plans to cut shipping capacity
Maersk plans idling of ships
Maersk Line will announce plans to cut its shipping capacity on Asia-Europe routes next week due to the impact of the euro-zone debt crisis on international trade, reported Dow Jones Newswires.
Tim Smith, the company's chief executive for the North Asia Region, said overcapacity remains a key concern for the global shipping industry. Maersk Line is a unit of A P Moller-Maersk.
"I think it's very clear now that we've seen, collectively, we're ordering more capacity than we really need for the short term," he said on the sidelines of a shipping conference in Hong Kong.
He added the company would consider idling more capacity after the Lunar New Year, which falls on January 23 next year.
While lingering concerns about the European debt crisis are weighing on demand for trade on European routes, Smith said the prospects for transpacific routes are better amid signs of a gradual recovery in the US economy.
Freight rates have plunged to unprofitable levels this year as a result of overcapacity in the market. Maersk Line said earlier it expected its container shipping business to post a loss for 2011 mainly due to weak rates on Asia-Europe routes.
Maersk Line will announce plans to cut its shipping capacity on Asia-Europe routes next week due to the impact of the euro-zone debt crisis on international trade, reported Dow Jones Newswires.
Tim Smith, the company's chief executive for the North Asia Region, said overcapacity remains a key concern for the global shipping industry. Maersk Line is a unit of A P Moller-Maersk.
"I think it's very clear now that we've seen, collectively, we're ordering more capacity than we really need for the short term," he said on the sidelines of a shipping conference in Hong Kong.
He added the company would consider idling more capacity after the Lunar New Year, which falls on January 23 next year.
While lingering concerns about the European debt crisis are weighing on demand for trade on European routes, Smith said the prospects for transpacific routes are better amid signs of a gradual recovery in the US economy.
Freight rates have plunged to unprofitable levels this year as a result of overcapacity in the market. Maersk Line said earlier it expected its container shipping business to post a loss for 2011 mainly due to weak rates on Asia-Europe routes.
SHIPPING - Another liner seeing red
MISC to quit container shipping business
MISC, the world's largest operator of liquefied natural gas tankers by fleet size, plans to exit the container shipping operations, which have been weighing down its results over the last three financial years.
The Malaysian carrier will pull out of the container shipping business by June 30, 2012, reported Dow Jones Newswires.
MISC will incur a one-time cost of US$400 million due to the move, resulting in a loss for the financial year ending December 2011, but will be positive for earnings over the longer term, the company said in stock exchange filings.
The company reported separately a 62 percent drop in net profit for the July-September period at $44.22 million compared with $115.85 million during the same three months a year earlier. Revenue slipped 15.2 percent to $821.7 million from $969.11million.
It blamed depressed aframax freight rates, lower liftings and high bunker costs for the weak results in the quarter. MISC has recently changed its financial year from end-March end to end-December.
"The exit process will involve the withdrawal from various trade alliances and termination of related service and operational contracts," MISC said, adding that the process includes disposal of its related assets.
MISC said the industry is plagued by over-capacity and operators struggle for profitability in the depressed freight-rate environment. This threatens MISC's restructuring to focus on Asia.
This was hastened after the liner business suffered $789 million of losses over the past three financial years, it added.
MISC, the world's largest operator of liquefied natural gas tankers by fleet size, plans to exit the container shipping operations, which have been weighing down its results over the last three financial years.
The Malaysian carrier will pull out of the container shipping business by June 30, 2012, reported Dow Jones Newswires.
MISC will incur a one-time cost of US$400 million due to the move, resulting in a loss for the financial year ending December 2011, but will be positive for earnings over the longer term, the company said in stock exchange filings.
The company reported separately a 62 percent drop in net profit for the July-September period at $44.22 million compared with $115.85 million during the same three months a year earlier. Revenue slipped 15.2 percent to $821.7 million from $969.11million.
It blamed depressed aframax freight rates, lower liftings and high bunker costs for the weak results in the quarter. MISC has recently changed its financial year from end-March end to end-December.
"The exit process will involve the withdrawal from various trade alliances and termination of related service and operational contracts," MISC said, adding that the process includes disposal of its related assets.
MISC said the industry is plagued by over-capacity and operators struggle for profitability in the depressed freight-rate environment. This threatens MISC's restructuring to focus on Asia.
This was hastened after the liner business suffered $789 million of losses over the past three financial years, it added.
Saturday, November 26, 2011
AVIATION - Another airline in the red
Malaysian Airline posts $149m loss in 3Q
Malaysian Airline System swung to a third-quarter net loss of US$149.98 million from a profit of $73.29 million a year ago, due to higher fuel costs and an unrealised foreign-exchange loss, reported Reuters.
Revenue was 4.9 percent higher at $1.13 billion from a year earlier.
The airline said its fourth-quarter operational results would be worse than the third quarter as high fuel prices and a weak economic outlook in Europe hurt its business.
"Management is embarking on a significant network rationalisation exercise to withdraw structurally weak, loss-making routes, and to possibly embark on new higher yielding routes focusing on Asia," it said in a statement.
"We expect the full impact of these initiatives to begin bearing fruit in 2012."
Malaysian Airline System swung to a third-quarter net loss of US$149.98 million from a profit of $73.29 million a year ago, due to higher fuel costs and an unrealised foreign-exchange loss, reported Reuters.
Revenue was 4.9 percent higher at $1.13 billion from a year earlier.
The airline said its fourth-quarter operational results would be worse than the third quarter as high fuel prices and a weak economic outlook in Europe hurt its business.
"Management is embarking on a significant network rationalisation exercise to withdraw structurally weak, loss-making routes, and to possibly embark on new higher yielding routes focusing on Asia," it said in a statement.
"We expect the full impact of these initiatives to begin bearing fruit in 2012."
Sunday, November 6, 2011
Logistics - Mass transit challenges
Saturday November 5, 2011
Taking the MRT challenges in stride
By RISEN JAYASEELAN
risen@thestar.com.my
One-and-half months into his job as CEO of the newly-set up MRT Coand Datuk Azhar Abdul Hamid does display some signs of fatigue. That's hardly surprising. Over the last few weeks, Azhar has been tirelessly working towards solving one of the thorniest issues of the ambitious project: dealing with the landowners affected by the mass rail transit's (MRT) alignment.
“I've been doing so much talking over the past few weeks my throat hurts,” he tells StarBizWeek at the end of a two-hour interview at MRT Co's temporary office in Damansara. Azhar is calm and articulate in handling the barrage of questions. The Klang Valley MRT which is renamed My Rapid Transit, has not failed to evoke emotions, controversy and even excitement among some stock market punters, from the word go.
After all, it is going to be the most ambitious and expensive infrastructure project in the country, cutting through the core of the city, providing the much needed connectivity, raising Kuala Lumpur's living standard and possibly productivity of its residents.
Azhar's appointment to spearhead such a project did surprise many quarters. Having established himself as a high ranking corporate official, spending a number of years as head of Sime Darby Bhd's plantation division (which is of some significance considering that the conglomerate is the world's largest listed oil palm company), one wonders why Azhar took up the offer.
Some say it was a call to national service which he couldn't turn down. But Azhar says he wouldn't have taken on the job if he didn't believe it is going to work.
Social obligation: Prime Minister Datuk Seri Najib Tun Razak looking at the 3D video clip during the launch of the My Rapid Transit in Kuala Lumpur. With him are (from left) SPAD CEO Mohd Nur Ismail Mohd Kamal, SPAD chairman Tan Sri Syed Hamid Syed Jaafar Albar, Prasrana Negara Bhd chairman Tan Sri Izzuddin Dali and Prasarana Negara Bhd Group MD Shahril Mokhtar.
His agitated throat is likely caused by this: From the early stage of assuming his job, Azhar has been actively engaging the affected landowners in the city centre, particularly those from Jalan Sultan, Bukit Bintang and Jalan Inai although not always with success.
“It was becoming a frenzy. Land ownership was at stake, always a sensitive issue. I said, there must be a better way of doing this,” he says. He has set out to get the advice of the Attorney-General and the Director-General of Lands and Mines. Time wasn't on his side, as the process of land acquisition by the Government had already began, even before the setting up of MRT Co.
Azhar managed to get that process “frozen” until he implements a “realistic” approach by reducing land acquisition where possible or working around it.
In a nutshell, this is the new approach:
Land owners in the prime property of city get to keep their property, as far as possible.
Building the MRT underneath those properties (the first line of the MRT will be underground for 51 km, from Sungai Buloh to Kajang, out of which 9.5 km will be underground.)
Compensating the land owners for their loss of business and related costs when having to vacate their premises when the work begins and which is expected to last for about six months.
MRT Co will pay for all legal fees needed to draw up the agreement on this.
“My approach has always been to only revert to the law as the last resort. There are many other ways in solving the issues and one needs to look at them from all angles, especially from the perspective of the affected land owners. Since they didn't want to give up their properties, we worked on that premise,” Azhar says.
Time will tell if this approach will work although Azhar is confident that a majority of landowners are inclined to accept this offer.
Limited property play
The plan is for the construction of the MRT's first 51km line from Sungai Buloh to Kajang to start by the middle of next year and be completed by mid-2017. The initial completion date has been pushed back from 2016 to a year later due to delays stemming from the land issues.
Contrary to speculation that the MRT may take on the Hong Kong-model of having property development as the means to make it a viable or even profitable venture, that isn't the case for the MRT here.
The MRT is going to be entirely government-funded. A Finance Ministry unit called Dana Infra will be issuing government-backed bonds to raise the money for the MRT.
Hong Kong's MRT Corp Ltd is a hugely profitable listed company and a full-fledged property developer and owner, maximising all possible outlets to make money such as leasing, advertising and consultancy.
This approach though can't be replicated in its full form here. And that's because of legacy issues. Firstly, Hong Kong had the fortune of planning and building its MRT in the 1970s. The tracks were also built on largely government-owned land.
“I would love to follow the Hong Kong model. Unfortunately, I can't. Hong Kong and Singapore have specific laws that facilitated the development of the MRT we don't. I am still relying on a 1960 Act for land acquisition and I do not have a masterplan that existed 20 years ago that said KL would have an MRT.”
That isn't to say there will be no opportunities for property development. There will be areas such as Sungai Buloh and KTM Bhd where some level of development will take place. (See page 20)
But can the Government afford to fund the MRT its most expensive infrastructure project to date?
Futuristic station: An artist’s impression of the MRT station.
It still isn't clear how much the entire project is going to cost. Initial reports had tagged the total cost at some RM50bil, but that was for all the three lines and even so it is believed to be an outdated cost as prices of materials have risen.
The Government has decided to only start with the first line, from Sungai Buloh to Kajang. There are some suggestions that this will cost RM30bil. Azhar reckons he will have better idea of costing once all tenders are called for all the major parts of the project.
Back of the envelope accounting, the Government could be increasing its debt levels by about RM5bil every year for the next six years, assuming the RM30bil figure is spread out the six-year period. Can the Government afford to do that?
Economist Dr Yeah Kim Leng reckons so. “Assuming the RM30bil cost is funded through borrowings, it will raise the government debt-to-GDP ratio by 3.9 percentage points to 57% based on the 2010 GDP figure. When compared with the debt situation of many advanced economies where the debt levels are either close to or above 100% of GDP, the Malaysian government does have the borrowing capacity,” said Yeah, who is RAM Holdings' chief economist.
He adds that assuming the entire amount is funded through the bond market, the bond issuance of RM30bil would raise the fiscal deficit by an estimated 0.2% of GDP. “This will necessitate either a cut-back in spending on other areas or raising revenue through means such as asset sales or tax increases, in order to achieve the fiscal deficit target of less than 3% of GDP by 2015.”
On a positive note, Yeah adds that the MRT project will “boost the economy by adding jobs and crowding-in investment which will have the desired effect of enlarging the GDP, thereby contributing to either stabilising or lowering the debt-to-GDP ratio”.
The good news is that there will be some savings from the reduction in land acquisition, following Azhar's approach.
Another promise by Azhar is that procurement will be done in a transparent and effective manner. “We have implemented a unique tender procurement process,” Azhar says. He explains that there will be tender committees chaired by different people depending on the amount involved. For contracts of up to RM50mil, the committee will be chaired by the secretary-general of the MOF while for contracts to the tune of between RM50mil and RM300mil, the Second Finance Minister and for amount above that, the Prime Minister will chair the decision-making committee.
The rationale and hence “pay back” of the MRT project is espoused by discussions in the labs of the Performance Management and Delivery Unit: Kuala Lumpur is going to get congested by 2020 and hence, something needs to be done about urban transportation and like all big cities in the world, the MRT is an ideal solution.
“The MRT is the Government playing a social obligation role, to make KL a more liveable place. Integrating with existing systems, the MRT will help make KL a complete city and thereby more competitive,” Azhar says.
But the expected pains during the construction period is getting KLites worried. Still, all major cities that have an MRT system have had to endure the construction process. Azhar uses the Penang Bridge to illustrate his point. “When it first started, the public lashed out saying the Government was wasting money and taking away people's land. But now, if I have a magic wand and make the bridge dissappear, I think there will be a riot,” he chuckles.
The expected ridership of the first line of the MRT is 300,000 people on an average weekday. The second and third lines may start while the first line is being built to avoid lengthening the time of public inconvenience.
Gamuda-MMC as PDP
Another issue that had concerned some quarters is the choice ofGamuda Bhd-MMC Corp Bhd, the joint venture that first mooted the MRT, as the project deliver partner (PDP). Gamuda-MMC is also bidding for the tunneling part of the first line of the MRT, a significant portion of the project at about 40% its total cost.
To date, five group of companies, including the Gamuda-MMC JV, have been shortlisted for the tunnelling job.
If Gamuda-MMC wins the tunnelling job, it would step out of the PDP role relating to that part of the project.
On why it was given the PDP role in the first place, Azhar says: “If not for them this project would not have started. They did the ground work and technical feasibility studies, took it to the Government and struck a deal to jointly manage the project and that's how they have come to be appointed as PDP. They also have experience in tunneling.”
MMC-Gamuda are also in an advantageous position in the bid for the tunnelling job. Under the Swiss Challenge system, MMC-Gamuda will have the first right of refusal to do the job at the lowest bid plus a small 2.5% to 7.5% margin.
Curiously, this has not stopped other parties from making a bid.
“Take note that the other bidders for the tunneling job are made up of two Chinese, one South Korean and one Japanese company. Aren't they also able to have advantages of economies of scale and possibly government funding on their part?”
Azhar is now backed by a small but growing team of 25 people. One key person from that team is Briton Marcus Levon Karakashian, who had been hired by Prasarana for the MRT project before MRT Co came into being. Levon has been involved in the implementation of major rail projects over the past 30 years including Singapore MRT downtown, northeast and eastwest lines as well as London's Jubilee line extension.
Besides leading the MRT project Azhar faces many challenges ahead including the outcome of the meeting with the land owners to be held next week. There's always a chance that things could go awry and no meeting of minds is achieved and protesters take to the streets again. “I'm prepared for anything,” quips Azhar.
Another concern is whether Prasarana will do a good job of running the MRT system. The MRT is structured this way: MRT Co oversees the project. Another MOF company becomes the asset owner (but reports to MRT Co) while Prasarana will manage the asset, via a concession agreement that will be signed with the Government.
Judging from its past track record, Prasarana has room for improvement. Hopefully the recent management changes at Prasarana will help it achieve that.
Azhar, who is on a three-year contract, remains unfazed by the challenges and confident the project will be a success.
“It's different from overseeing an palm oil business, but it's fun, in its own way,” he quips.
Saturday, November 5, 2011
LOGISTICS - Performance during flood
Thai Floods hobble Japanese logistics firms
The severe flooding in Thailand has hampered the operations of Japanese shipping companies, inundating some of their warehouses and weakening demand for transporting goods, according to Nikkei Report.
Each of the logistics firms conducts daily updates of maps showing the areas that are flooded so they can deliver products and parts using trucks in areas accessible to vehicles. But making on-time deliveries is difficult due to congestion, they say.
Nippon Express experienced flooding at five warehouses at the Hi-Tech Industrial Estate and Rojana Industrial Park. Although it has managed to avoid damage to clients' cargo by putting it on racks and by moving it to other facilities, "we can't go near flooded warehouses, so we have been unable to check inside," said president Kenji Watanabe.
Even so, more than 80 percent of the floor space of the firm's Thai warehouses is dry, and there has been a sharp increase in calls from customers about moving production equipment.
Nippon Express decided to dispatch about 30 personnel from Japan and Singapore to help out in Thailand. With flood damage spreading in Bangkok, the company may also move the headquarters of its Thai unit from the capital to Laem Chabang.
Yusen Logistics suspended operations at its warehouse at the Nava Nakorn industrial zone, and it moved clients' goods such as electronic devices and autoparts to other locations. However, the movement of freight has been slow because factories that are supposed to receive the shipments have closed down.
Kintetsu World Express has shut its warehouse in the Rojana park after the facility was inundated. Although business has slowed, it is continuing to operate using unaffected facilities.
Kawasaki Kisen Kaisha's (“K’’ Line) containerships departing from Japan make two port calls in Thailand a week, but the firm is considering temporarily scaling back service to once a week.
Nippon Yusen KK (NYK) has discontinued stops at the port of Bangkok because loading and unloading works have been affected, and is using the port at Laem Chabang instead.
With automobile production down in Thailand, NYK’s automobile carriers made half the usual number of port calls in the country last month.
Mitsui OSK Lines (MOL), which transports 10,000 to 20,000 vehicles out of Thailand every month, has cancelled some stops in the country.
“K’’ Line said that it has not yet made plans for its automobile carriers to make port calls in Thailand this month on the view that transport demand will fall by some 17,000 vehicles a month.
The severe flooding in Thailand has hampered the operations of Japanese shipping companies, inundating some of their warehouses and weakening demand for transporting goods, according to Nikkei Report.
Each of the logistics firms conducts daily updates of maps showing the areas that are flooded so they can deliver products and parts using trucks in areas accessible to vehicles. But making on-time deliveries is difficult due to congestion, they say.
Nippon Express experienced flooding at five warehouses at the Hi-Tech Industrial Estate and Rojana Industrial Park. Although it has managed to avoid damage to clients' cargo by putting it on racks and by moving it to other facilities, "we can't go near flooded warehouses, so we have been unable to check inside," said president Kenji Watanabe.
Even so, more than 80 percent of the floor space of the firm's Thai warehouses is dry, and there has been a sharp increase in calls from customers about moving production equipment.
Nippon Express decided to dispatch about 30 personnel from Japan and Singapore to help out in Thailand. With flood damage spreading in Bangkok, the company may also move the headquarters of its Thai unit from the capital to Laem Chabang.
Yusen Logistics suspended operations at its warehouse at the Nava Nakorn industrial zone, and it moved clients' goods such as electronic devices and autoparts to other locations. However, the movement of freight has been slow because factories that are supposed to receive the shipments have closed down.
Kintetsu World Express has shut its warehouse in the Rojana park after the facility was inundated. Although business has slowed, it is continuing to operate using unaffected facilities.
Kawasaki Kisen Kaisha's (“K’’ Line) containerships departing from Japan make two port calls in Thailand a week, but the firm is considering temporarily scaling back service to once a week.
Nippon Yusen KK (NYK) has discontinued stops at the port of Bangkok because loading and unloading works have been affected, and is using the port at Laem Chabang instead.
With automobile production down in Thailand, NYK’s automobile carriers made half the usual number of port calls in the country last month.
Mitsui OSK Lines (MOL), which transports 10,000 to 20,000 vehicles out of Thailand every month, has cancelled some stops in the country.
“K’’ Line said that it has not yet made plans for its automobile carriers to make port calls in Thailand this month on the view that transport demand will fall by some 17,000 vehicles a month.
Friday, November 4, 2011
Malaysia's Economic Transformation
Malaysia’s economic transformation: One year on
Invest Malaysia came to Hong Kong yesterday to give a one-year report on its plan to join the rich world by 2020.
According to the plan, Malaysia will need to add 3.3 million people to its workforce, grow its economy by 6% a year and attract $444 billion of investment (hence the trip to Hong Kong) during the coming decade to reach its targeted gross national income (GNI) of $523 billion by 2020 — or $15,000 per capita, up from $6,700 today.
“The plan is to make us all rich for a very long time,” said Jala, during a lunchtime speech.
That is why Malaysian prime minister Najib Razak has made national transformation a priority, appointing Jala in January last year as the chief executive of the newly created performance management and delivery unit (or Pemandu, which means “driver” in Malay).
Jala came to the job after a career in the private sector with Shell and a stint as chief executive of state-owned Malaysia Airlines, which he helped return to profitability after heavy losses. At Pemandu, he has brought in an army of international consultants, auditors and communications specialists.
He was in Hong Kong yesterday as part of Invest Malaysia, accompanied by senior executives from Bursa Malaysia and OSK Securities, to pitch the country as an investment opportunity to fund managers from Hong Kong and China. The main message was a simple one: Malaysia is making a wholesale drive to modernise, under the guidance of a professional management team that speaks your language.
After the first year of the transformation programme, Malaysia remains on target to hit its key economic goals — the full-year figures forecast that the economy will have created 11% of the jobs it needs to add by 2020, attracted 12% of the investment and moved 13% of the way to its GNI target.
It is making progress on structural reforms too. A new competition law will come into force in January 2012 and a further 17 industries will be opened to foreign competitors, including professional services such as law and accounting, as well as some healthcare sectors and telecommunications services.
The government is also divesting its assets with a plan to limit its role in business. Felda Global, the commercial arm of government-owned Federal Land Development Authority (Felda), raised $269 million from the IPO of sugar refiner MSM in June and is planning its own IPO for the first half of 2012. In all, the government has 24 divestments in the pipeline for this year and next.
The message is getting through to some people, it seems. This year’s World Economic Forum Global Competitiveness Report identifies broad improvements in Malaysia’s institutions, macroeconomic environment, education and training, and the development of its financial markets.
A big part of the challenge will be to keep the investment coming in. Jala conceded during his presentation that the country may not reach its goal for 2011. One of the problems the country faces is that investors have tended to find it a boring, defensive market, according to Chris Eng, head of research at OSK Securities. “Defensiveness is cold comfort in a bear market, when the value of most asset classes tends to shrink,” he said.
Building stronger ties within Asean, particularly between the various exchanges, is one avenue that is being explored as a way to stimulate further investment, but that is a slow process and Malaysia is in a hurry.
The path it has chosen is a good one, but it remains to be seen if investors will be convinced.
Thursday, November 3, 2011
LOGISTICS - Lean Six Sigma Logistics
Thinking Out of the Box - the hallmark of success
Thursday November 3, 2011
SOBA winners say thinking out of the box is one of the hallmarks of success
By DALJIT DHESI, EUGENE MAHALINGAM and EDY SARIF
starbiz@thestar.com.my
PETALING JAYA: Perseverance, hard work and thinking out of the box are some of the hallmarks of success, said top winners of the coveted The Star Outstanding Business Awards 2011 (SOBA 2011).
“Our company's motto is to think differently from our competitors and persevere during tough times. Besides being different, we do not give up easily and always strive to do better. We also adopt some of the best practices in the industry and provide attractive benefits to our employees,” said Vista Laser Eye Center Sdn Bhd CEO Lim Boon Siong.
A total of 27 awards in 11 categories were presented at the SOBA 2011 ceremony held at the Royale Chulan Kuala Lumpur on Tuesday. Eight were platinum awards, 10 gold and nine silver. There were a total of 115 entries from 83 companies this year.
Vista Laser, which offers eye correction procedures, clinched the premier Business of the Year Platinum Award. It also won a platinum for Best Employer. Last year, the company won the gold award in the Best Employer category.
PKT Logistics wins three awards: (from left) P’ng Tean Hau, group chief operating officer with Best Employer Silver Award; Datuk Michael B.Y. Tio, group chief executive and MD with the Entrepreneur of the Year Gold Award; Datuk Jalilah Baba, group chairman; Augustine Lee, group chief financial officer with Business of the Year Silver Award.
A first time winner, City-Link Express (M) Sdn Bhd founder and CEO David Tan expressed his happiness and hoped to try much harder next year. The company clinched a platinum for the Outstanding Malaysian Brand category.
“Our strength lies in the people who are working for us and a strong brand name that is backed by more than 32 years of experience in the business,” he said.
Expressing his disbelief, Hextar Chemicals Sdn Bhd chairman Datuk Ong Soon Ho, whose company was the only gold winner in the Global Market category, said his company did not win last year.
“Maybe we were in the wrong category last year but this time around, we are in the right category as our business is very strong in the export market,” Ong noted.
Celebrating the platinum winners: (from left) Nehemiah managing director Dr Nehemiah Lee Chee Hai, Westports director Datuk Rahim Bakar, Thumbprints Utd managing director Tam Wah Fiong, Hextar chairman Datuk Ong Soon Ho, BMW Group Malaysia managing director Geoffrey Briscoe, EXIM Bank managing director/CEO Adissadikin Ali, Transport Minister Datuk Seri Kong Cho Ha, Vista Laser CEO Lim Boon Siong, KK Supermart chairman Datuk Dr Douglas KK Chai, City-Link Express founder and CEO David Tan, and Star Publications group MD and CEO Ho Kay Tat at the SOBA 2011 on Tuesday.
The platinum awards for Environment and Rising Star categories were won by Thumbprints Utd Sdn Bhd and KK Supermart & Superstore Sdn Bhd respectively, while Westports Malaysia Sdn Bhd clinched platinum awards for the Technology/ICT and Community categories.
Thumbprints Utd managing director Tam Wah Fiong said it was making the environment a priority in its business practices, adding that it had plans to expand into other countries, especially India and Indochina.
KK Supermart & Superstore Sdn Bhd chairman Datuk Dr Douglas KK Chai said: “Winning this award carries a lot of weight. In terms of expansion, the sky is the limit in terms of how far we want to go,” adding that the company aimed to expand locally and overseas.
For the Entrepreneur of the Year category, Nehemiah Reinforced Soil Sdn Bhd won the platinum. Its managing director Dr Nehemiah Lee Chee Hai said: “I am humbled and honoured with this win. I will like to thank my management team as this proves that our hard work has paid off. It's because of them that I have won this award.
“Currently, we have set up businesses in India, Bangladesh and Singapore. We have just ventured into Indonesia and hope to take our business to Australia next year,” he added.
SOBA 2011, which is into its second year, is organised by The Star with Exim Bank as presenter and BMW Malaysia as gold sponsor. It is supported by Bursa Malaysia and audited by BDO.
The Royale Chulan Kuala Lumpur is the official hotel partner and Bernama TV the official TV news partner. Shang Hai is the official business magazine while 988FM is the official radio station.
Wednesday, November 2, 2011
Logistics Costs Rising
Wednesday November 2, 2011
Rising services cost a bane for businesses
By EUGENE MAHALINGAM
eugenicz@thestar.com.my
KUALA LUMPUR: Malaysian businesses expect rising services cost and fluctuating exchange rates to be among the top barriers to imports and exports in the next six months, according to findings of the latest HSBC Trade Confidence Index.
In the survey, 52% of Malaysian businesses found the cost of essential services such as shipping, logistics and storage would be the biggest barrier to international trade, followed by fluctuating exchange rates, at 35% and insufficient margins or profitability, at 29%.
Other concerns for Malaysian businesses included government trade regulations, rising interest rates and lack of product demand.
HSBC Bank Malaysia Bhd trade and supply chain director Ng Wei Weisaid that confidence had risen to a positive 106 points in the latest HSBC Trade Confidence Index from negative 97 points in the previous survey. Countries that recorded index points of over 100 are considered “positive,” while those below 100 points are “negative.”
Business concerns: Andrew Grisdale and Ng Wei Wei speaking to the media on the findings of the HSBC Trade Confidence Index.
She said 83% of Malaysian businesses expected trade volume to rise or at least remain unchanged in the next six months.
“In the next six months, 92% of the businesses expect their need for trade finance to rise or remain unchanged and 91% expect their capacity to access to trade to rise and remain unchanged,” she said at a briefing yesterday.
“Despite the rise in confidence in trade, 57% of Malaysian businesses expect the global economy to decline in the next six months,” Ng added.
HSBC managing director for commercial banking Andrew Grisdale said the implementation of key initiatives under the Economic Transformation Programme, combined with the Government’s pro-growth initiatives and regulator’s liberalisation measures would continue to fuel an “optimistic business environment.”
“At HSBC, we see positive growth in trade volumes and we expect growth to be supported by public sector expenditure and domestic private consumption.”
The HSBC Trade Confidence Index covers 21 markets and is the largest trade confidence survey globally.
Of the countries surveyed in Asia, businesses in Indonesia were the most bullish about trade prospects in the next six months with a score of 144 points. This was followed by India and Vietnam with 129 and 115 respectively. Malaysia was the fourth most confident country on the index. The survey comprises the views of 6,390 exporters, importers and businesses from small and mid-market enterprises on trade volume, buyer and supplier risks, the need for trade finance, access to trade finance and the impact of foreign exchange on their businesses.
On another note, Ng said HSBC expected Asian trade to grow 4.8% year-on-year until 2025 versus 3.8% globally.
“Asia trade volumes will grow 96% to nearly US$14 trillion (RM43 trillion) by 2025 and will be the key driver of world trade growth, which is expected to increase by 73% in the same period.
“India, Vietnam, Indonesia and China are among the top five international power houses which will drive world trade growth until 2025,” she said.
OIL & GAS - Oil to generate other economics activities
| Consultant: Let oil gains benefit other sectors | |||
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By Goh De No
BRUNEI'S oil and gas sector needs
Sasha Lennon, director of SGS Economics & Planning, said that Brunei lacks linkages between the oil and gas and the other industries, leading to a small multiplier effect.
SGS Economics, appointed by the Centre for Strategic and Policy Studies (CSPS) for the Land Optimisation Strategy for Industrial and Commercial Growth, said that Brunei fares poorly when compared to neighbouring countries.
In Malaysia, on the other hand, one per cent is contained within the oil and gas industry, while the other 99 per cent goes out to other sectors of the economy, while in Australia, around 88 per cent goes out to other sectors.
"When there isn't many activities to other industries in the country, it leads to Brunei having a small multiplier," Lennon explained.
He said that what SGS is suggesting is to identify seven clusters in line with its strategy on how the optimisation of land can facilitate foreign direct investment, and ultimately, economic diversification.
He added: "We made a point the oil and gas sector needs to be diversified. By promoting other activities in the services industry or mining, that wealth can be captured locally."
Some of these sectors would be advance business services like financial, technical or scientific services, and other possibilities like surveying or mining.
"Another obvious sector is the transport, communication and logistics. We should see how that sector can be focused on so that it can potentially serve the oil and gas industries, and other activities," he said, adding that Brunei needs to embrace its geographical location.
Lennon said that if Brunei builds on its petrochemicals sector first, the development of new business and opportunities will emerge in other areas, like transportation, logistics and so on.
"When you develop those multipliers and the income is retained in domestic economy, it will then develop more creative industries and so on," he said.
The SGS land optimising strategy identified seven future industry clusters, namely: petrochemicals & energy; transport, communications & logistics; creative industries; advanced business services and financial services; tourism; education; and biodiversity, food & pharmaceuticals.
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LOGISTICS - Malaysia's Roadmap
Monday August 22, 2011
Logistics roadmap will benefit the region
“With the roadmap, the transportation networks will be connected within the Asean and PBG countries. This will further develop investment, trade and economic cooperation in the region and form cluster of industries, accelerate economic growth in the PBGEC.” – Bernama
Jelaing attended the 6th PBGEC Forum, which concluded here on Friday.
He said Malaysia would play its role in transportation infrastructure to improve the connectivity between Asean and China.
“We are doing everything that we can to speed up the connection, such as the Singapore-Kunming Rail Link.”
The roadmap for the Development of the Logistics Services Industry is an Asean economic blueprint signed by all Asean leader at the Asean Summit, which was attended by former prime minister Tun Abdullah Ahmad Badawi in 2007.
Meanwhile, Jelaing said the Transport Ministry would evaluate and implement relevant strategic initiatives under the roadmap which whould envision the development of world class freight logistics system, including strengthening the role of ports and shipping to support the country’s economic growth and development.
“We will liaise and consult with various stakeholders in the industry through the focus in moving the agenda on freight logistics forward,” he said.
On maritime cooperation, Jelaing said China-Asean Maritime Consultation Mechanism is in the midst of exploring cooperative opportunities.
Under the mechanism, he said both countries conducted numerous activities, including the meeting on Tide, Current, and Wind Measurement Project of Malacca and Singapore Straits (March and April) and the Workshop on Port Facility Security in July. BERNAMA
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