The Organisation of Ports in Sabah

Port operations are a vital component of maritime trade, with compliance in environmental and safety practices being paramount for sustainable operations. Port operations constitute an essential pillar of Sabah's regional economy, prominently featuring Sabah Ports Sdn. Bhd. and POIC Ports as key players. In Sabah, the regional economy is heavily reliant on port operations. Their licensing agreements set the foundation for their operations, roles, and responsibilities.

Ports in Sabah are organized and managed to cater to various types of maritime activities, ranging from container handling to oil and gas services as well as palm oil products. The landscape of port management and operations includes both publicly managed and private ports, reflecting a blend of government oversight and private sector efficiency aimed at enhancing the state's maritime infrastructure and trade capabilities. Private ports in Sabah, often specialized and developed to cater to specific industries or economic zones, play a crucial role in the region's economic development.

Aside from a defined ports structure as being either a public or a private port, there are also proliferations of what are termed as 'Private jetties' in Sabah to serve a variety of purposes, ranging from supporting the operations of specific industries to providing access for private resorts and tourism activities. These jetties are essential components of Sabah's maritime infrastructure, facilitating efficient transportation and logistics, particularly for sectors such as palm oil, timber, aquaculture, and tourism.

Sabah Port Authority Enactments

The Sabah Ports Authority within the context of its Enactment (17 of 1981), act as the landlord of all wharves, servicing ships on a common-user basis, and oversees warehouses that serve as transit storage for goods. The Privatisation Enactment (2 of 1998) marks a significant shift in the management of Sabah’s ports, redefining the Sabah Ports Authority (SPA) from a direct operator to a regulatory and oversight body.

Privatisation Agreements

The Sabah Ports privatisation agreement refers to the transfer of operational rights and responsibilities of ports in Sabah, Malaysia, to a private entity. This process typically involves the government of Sabah entering into an agreement with a private company, allowing the company to manage, operate, and possibly develop the ports in exchange for a concession period. The objectives of such privatisations are often aimed at improving efficiency, attracting private investment, enhancing port infrastructure, and providing better services to port users.

The privatization agreement has significantly transformed the operational landscape of Sabah's ports, redefining the roles and responsibilities of the Sabah Ports Authority (SPA). As the regulatory body, SPA's functions have been adjusted to focus more on oversight, strategic planning, and policy development, ensuring that port operations align with broader economic and environmental goals.

Regulatory Oversight

SPA's paramount role involves establishing comprehensive regulations and standards to govern port operations, focusing on efficiency, safety, security, and environmental protection, ensuring all port operators comply with these standards.

Strategic Planning and Policy Development

SPA engages in strategic planning and policy development to guide the growth and development of port infrastructure and services, aligning with broader economic and developmental goals.

Licensing and Concession Management

The authority is responsible for issuing licenses to port operators and managing concessions, ensuring that these entities meet the operational, safety, and environmental standards set forth by SPA.

Infrastructure Development Oversight

SPA oversees and approves major infrastructure development within ports, ensuring projects align with strategic objectives and operational requirements, and meet the future demands of trade and logistics.

Environmental Protection and Sustainability

SPA enforces environmental standards, promoting sustainable practices among port operators to minimize ports' environmental impact and ensure compliance with national and international environmental guidelines.

Safety and Security Enforcement

Ensuring the safety and security of ports and maritime operations falls under SPA's remit, including the implementation of security protocols in line with international maritime security standards.

Stakeholder Engagement

SPA plays a crucial role in mediating and facilitating dialogue and collaboration among various stakeholders, including port operators, government bodies, and local communities, to ensure port operations are aligned with public and economic interests.

Monitoring and Performance Evaluation

SPA monitors the performance of port operations, conducting evaluations to ensure port operators meet efficiency and service quality benchmarks, and taking corrective actions when standards are not met.

Privatised entities

In Sabah, two distinct entities have come under a concession agreement with Sabah Ports Authority, i.e., Sabah Ports Sdn. Bhd. and POIC Ports playing significant roles. Their licensing agreements set the foundation for their operations, roles, and responsibilities.

Legal and Regulatory Framework

Sabah Ports Sdn. Bhd. operates under a comprehensive licensing agreement that outlines its duties and rights in managing several ports across Sabah. This agreement is regulated by the Sabah Ports Authority.

POIC Ports, particularly in Lahad Datu, are governed by a different set of agreements and regulations, tailored to the specific industrial and developmental goals of the Palm Oil Industrial Cluster (POIC).

Scope of Operations

Sabah Ports Sdn. Bhd. is licensed to manage a wide range of port operations, including container handling, bulk, and liquid cargo, and providing logistic solutions.

POIC Ports have a more focused operational scope, primarily supporting the palm oil industry and related sectors, including the facilitation of raw materials and processed goods.

Roles and Responsibilities

Sabah Ports Sdn. Bhd. is responsible for ensuring the efficiency, safety, and security of port operations across its managed ports.

POIC Ports have a unique role in integrating port operations with the industrial needs of the POIC, emphasizing on facilitating the export of palm oil products and related commodities.

Compliance and Standards

Both entities are required to comply with national and international maritime standards, but POIC Ports may have additional compliance requirements related to environmental and industrial standards due to their specific focus on the palm oil sector.

Impact on Regional Development

Sabah Ports Sdn. Bhd. plays a crucial role in general economic development, enhancing trade and connectivity for a broad range of industries in Sabah.

POIC Ports are strategically important for the development of the palm oil industry and related sectors, contributing to job creation and economic diversification in targeted regions.

Challenges and Opportunities

Sabah Ports Sdn. Bhd. faces challenges in managing diverse operations and meeting the growing demands of international trade. Opportunities lie in expanding port capacities and enhancing technological integration.

POIC Ports encounter specific challenges related to industrial growth and environmental sustainability. There are significant opportunities in leveraging the growth of the palm oil industry to expand port and logistic services.

As an overview, the licensing of Sabah Ports Sdn. Bhd. and POIC Ports reflects their distinct roles in Sabah's maritime and industrial landscape. While Sabah Ports Sdn. Bhd. is focused on a broad range of port operations essential for the state's overall economic development, POIC Ports are specialized, aiming to support and stimulate the growth of the palm oil industry and related sectors. Understanding these differences is crucial for stakeholders to navigate the opportunities and challenges within Sabah's maritime and industrial sectors effectively.

Summary

Under the Privatisation Enactment, SPA's functions and responsibilities have evolved to ensure that the privatization of port operations aligns with Sabah's strategic interests. Through regulatory oversight, strategic planning, and stakeholder engagement, SPA ensures that privatized ports operate efficiently, safely, and sustainably, contributing to the region's economic development and competitiveness in the regional maritime industry.

As for private jetties operations in Sabah they continue to be under license given by SPA. Some of them will graduate into a full bloom private ports depending on the nature and volume of trades managed. A couple may be fully operated commercially as a public port looking at the future of the economy of Sabah taking advantage of development within the BIMP-EAGA Regions especially on the move of the Indonesian capital to Nusantara in East Kalimantan. END.

 

A Transport Masterplan for Sabah

I have elaborated in my previous article on the setting up of a Sabah Logistics Council (SLC). This is a critical precursor towards a transport masterplan for the state. I am now attempting to fast forward a situation where on the successful setting up of the SLC, what would it take to bring us to a transport masterplan. 

A transport masterplan is a comprehensive and long-term strategy that outlines the vision, goals, and objectives for the development and management of a transportation system within a specific region or city. The underlying factors considered in formulating a transport masterplan can vary depending on the local context and specific needs, but here are some common factors:

 

1.     Population Growth: Understanding the projected population growth in the area is crucial as it directly impacts transportation demand. The masterplan should account for the anticipated increase in residents and their commuting patterns.

2.     Existing Infrastructure: Evaluating the current transportation infrastructure, including roads, highways, railways, airports, and public transit systems, helps identify strengths, weaknesses, and areas in need of improvement or expansion.

3.     Mobility Patterns: Analysing existing travel patterns, including commuting flows, peak travel times, and traffic congestion hotspots, provides insights into the current transportation needs and challenges. This information can guide the development of strategies to enhance mobility and reduce congestion.

4.     Land Use and Urban Planning: Coordinating transportation planning with land use and urban planning is crucial. Integrating transportation considerations into land use decisions helps create walkable neighbourhoods, encourages transit-oriented development, and reduces the need for long-distance travel.

5.     Environmental Sustainability: Promoting sustainable transportation solutions is essential for reducing greenhouse gas emissions, improving air quality, and minimizing the environmental impact of the transport system. The masterplan should incorporate strategies to encourage the use of public transit, walking, cycling, and electric vehicles.

6.     Economic Development: Recognizing the role of transportation in supporting economic growth is important. The masterplan should consider the transportation needs of businesses, industrial areas, commercial centres, and logistics hubs to ensure efficient freight movement and facilitate trade.

7.     Technological Advancements: Keeping abreast of emerging technologies and transportation innovations is crucial for a forward-looking masterplan. This includes considering intelligent transportation systems, electric and autonomous vehicles, mobility-as-a-service (MaaS) platforms, and data-driven approaches to optimize transportation operations.

8.     Stakeholder Engagement: Engaging with various stakeholders, including government agencies, transportation operators, community organizations, businesses, and the general public, ensures that the masterplan reflects diverse perspectives, needs, and aspirations. Collaborative decision-making and input from stakeholders can lead to more effective and widely accepted transportation solutions.

9.     Funding and Resources: Developing a realistic financial framework to support the implementation of the masterplan is essential. Assessing available funding sources, potential public-private partnerships, and exploring innovative financing mechanisms can help ensure the feasibility and sustainability of the proposed transportation initiatives.

 

By considering these underlying factors, a transport masterplan can guide the development of a transportation system that is efficient, sustainable, and responsive to the needs of the community it serves and for improvement of the supply chain industry in general. 

There are many examples of transportation master plans in our country. For instance:

•           Penang Transport Master Plan (PTMP) is a comprehensive and well-connected transport strategy that sets the framework for an integrated and modern transport system in Penang, Malaysia. It covers both land and sea, comprising various transportation systems and services such as an elevated light rail transit (LRT) line, bus rapid transit (BRT), tram, taxi, e-hailing, ferry and water taxi.

•           National Transportation Master Plan (NTMP) is a policy document that guides the development of the logistics industry in Malaysia to further improve its productivity and competitiveness with the vision to become “The Preferred Logistics Gateway to Asia”. The NTMP outlines five strategic shifts and 21 action items to be implemented.

•           National Transport Policy (NTP) 2019-2030 is an overarching policy that provides direction for relevant federal ministries and agencies as well as state governments and local authorities in Malaysia to develop and streamline transport initiatives towards a common goal. The NTP aims to enhance mobility for all Malaysians while ensuring environmental sustainability. 

As for now the overall situation in the state as regards the logistics and transport industry is as follows:

1.     Sabah lacks the basic transport and logistics infrastructure to serve its economics needs. There is a need to put things in perspective before we can embark upon a comprehensive masterplan.

2.     There is critical need for data support for any planning to take place. Data from the supply chain industry is crucial towards any planning efforts to take place.

3.     The need to set up a body such as a Sabah Logistics Council (SLC) is crucial to take stock of things and to put things in perspective to enable analysis of the status of ongoing activities.

4.     There is no coordinating body to address issues faced by the industry especially of logistics players in providing efficient services. This is where the SLC role will serve as a one roof institution to collect data and information and to harness them and recommend for ways of resolving them.

5.     The prime objective is to put things in perspective so that we can put up the basic needs of the economy which is to facilitate trade.

6.     With trade facilitation mechanism in place, it would be timely for a Transport Masterplan to be mooted.

7.     It is therefore crucial that all stakeholders need to play their roles to ensure that we have the necessary data collected and collated to move forward efficiently.

These are crucial needs towards an eventual transport masterplan for Sabah. With a masterplan we should then be able to steer and facilitate trade and the economy in a planned and sustainable manner. This way we will be better able to channel the finances towards a cohesive transport infrastructure development. Budgeting towards harnessing transport needs of the community will be well directed towards a cohesive transport infrastructure development and improve mobility and improving the supply chain economy.

We take note of two master plans, namely the Kota Kinabalu Public Transport Master Plan and the Traffic Improvement and Urban Transport Master Plan for Kota Kinabalu Central Business District (CBD), which will complement the bigger picture of a grand masterplan. It is therefore timely that we take such plans to a higher level covering a broader perspective of the logistics and transport industry to work towards an efficient, productive and sustainable economy for the whole state.

END.

Seaport as a Logistics and Industrial Node in Global Supply Chains

 Seaport as a Logistics and Industrial Node in Global Supply Chains 

Quoting a study entitled ‘Institutions and Industrial Development in Sabah’, published in 2022 by Firdausi Suffian, Kasim Mansur, Ika Suzieana Jamluddin, Arnold Puyok , and Azmi Abdul Majid, I found several phrases that are of profound importance when discussing about economic reforms. These are that:

i.                Industrialization is the key to structural change.

ii.              The institutions embedded with political consideration and private interests somehow has constrained the state to implement effective industrial policy.

iii.             There is scant attention on the role of institutions to take centre stage in analysing in economic growth and development.

iv.             Institutions are widely known as “rules of the game” in a society.

v.               Industrial development has wide sectoral interlinkages that have the capacity to pull the rest of the economy in all sectors.

In the foregoing article, these phrases are of profound importance when discussing the role of ports in the economic development of any country. The port as an institution are critical enablers and catalyst of the speed and impact it makes to the state economy. The critical role of the port as an institution towards the management of the economy is what spurs me to introduce the subject matter for a better understanding of its roles and functions and eventual responsibility to the state.

Seaports are points of convergence between the land and the sea of passengers and freight activities. While the marine side can involve huge geographic coverage related to global trade, the land side is related to the region and locality of ports.

 

Ports handle high volume of freight, as against other type of terminal combined.

The emergence of civilisation saw the start of trade networks which later require ports as its outlets. Ports have played a crucial role in facilitating trade and commerce across the world ever since. Although maritime transport technology has much evolved, the role and function of ports basically remain the same. Ports serve as gateways for international trade, connecting countries and regions across the world. They play a vital role in the global economy by generating employment opportunities and contributing to the growth of various industries.

It’s fascinating to see how seaports have evolved over time, and it will continue to play a critical role in shaping the future of our world. 

 

A port is traditionally defined as a transit area, a gateway through which goods and people move from and to the sea. It is a place of contact between the land and the sea that is termed as a node where ocean and inland transport systems interact, and a place of convergence for different transportation modes. Since the sea and inland transportation modes have different capacities, the port assumes the role where cargo is consolidated or deconsolidated, known as a load breakpoint.

 

In general, ports are classified into two categories, seaports, and inland ports.

 

The ports are diverse in sizes and functions. Ports also have a geographical diversity in terms of the sites being used for port activities such as rivers, bays to offshore locations and now a truly port on land called inland port.

 

The ports can be described from a supply chain perspective as being, ‘A seaport is a logistics and industrial node in global supply chains with a strong maritime link with clusters of activities directly or indirectly linked to transportation and logistics processes within global supply chains.’

 

Defining the Seaport

A modern seaport is not solely considered as a load breakpoint in various supply chains but should be considered a value-adding transit point. As nodes within transportation and logistics networks, ports have a location, whose relative importance can fluctuate given economic, technical, and political changes. This location capitalises on the advantages of a port site characterised by fundamental physical features influencing the nautical profile, such as water depth, access channels, and availability of land.

 

Categorisation of Seaports

The diversity of ports can be ascertained by their classification into various types of ports according to their specific role and functions. Ports can be categorized based on many dimensions, such as:

 

Scale. Refers to port size in terms of its area, annual cargo throughput, the size of its hinterland, the number of shipping services it is connected to, or the number of customers. The scale of a port is commonly associated with its economic and commercial importance in the market it serves.

 

Geographical attributes. Refers to the main characteristics of the port site and situation. There are various locational setting of port sites, such as in a bay, along a coastline, on a river, or in an estuary. Many sites have natural advantages, while for others, the site needs to be improved with dredging and landfills. Although a port site is fixed, its situation is relative to the main shipping lanes and hinterland, or its proximity to and interactions with cities or urban areas it served.

 

Governance and institutional settings. Refers to the terms of land ownership and the roles of institutional arrangements between the public and private sectors. Many ports are publicly owned but have terminals operated by private organizations.

 

Port functions. Refers to the range of services offered by the port, such as cargo handling, logistics, and distribution, industry, and maritime services. They are subject to competitive elements since the services offered by one port can be offered by another port.

 

Specialization. Refers to the cargo handled, such as containers, conventional general cargo, liquid bulk, dry bulk, or roll-on-roll-off cargo. Some ports are specialized in handling passenger traffic, namely cruise ships and ferries. Another specialization is based on port-centric industries such as steel plants, energy plants, automotive, or chemical industries. Logistics activities are also an important contributor to port specialization.

 

Ports serve a derived demand that can be segmented into specific markets. These markets include cruise ports and terminals, the break-bulk market, ports as complexes supplying and distributing energy, the provision and management of containers, and the cold chain technology that has allowed ports to play an active role within these supply chains, particularly with refrigerated containers (reefers).

 

One of the main driving forces of change in the port industry emerges from globalization and the shift from supply-driven to demand-driven economies. The supply-driven economy was based on economies of scale in production, standardization, and mass consumption of standard products. This approach changed as a growing individualism began to have an impact on consumption patterns. This brought about a shift to a more demand-driven economic system, combined with global production networks on the supply side of the markets.

 

I hope this information has provided some insights into the characteristics of seaports and is intended for educational purposes in helping to disseminate knowledge and awareness of the important function of a port in any economic development. We shall explore how our local ports in Sabah fare within the context discussed above in a future article. Seaports play a crucial role in the economic development of Sabah and reportedly the port operations in Sabah generated 90.1% of the operating ports total revenue in 2020   END.

 

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