OBG talks to Pengiran Zain, Acting Director of Ports

Interview: Pengiran Zain

How is Brunei Darussalam’s port being positioned in the region so that it can capture an increasing volume of ASEAN and sub-regional trade?

PENGIRAN ZAIN: As widely understood by many, the level of throughput and proportion of cargo coming in and out of a port is directly linked to the overall shipping cost and driven by economies of scale, quality of service and port connectivity. Brunei Darussalam is experiencing empty outbound containers. One way to tackle this is to establish and nurture export and reexport industries, an initiative now being aggressively led by another agency. A number of export and reexport-based industries have been identified, which will help to indirectly facilitate trans-shipment and address the issue of empty outbound containers. Five years ago, trans-shipment cargo accounted for about 30% of Brunei Darussalam’s port traffic. However, it has now dropped considerably. Apart from efforts to improve our operational efficiency (and, hence, quality of service), we are now focused on port connectivity and are trying to attract more shipping lines. However, the volume of cargo depends on the economic development of the Sultanate and the success of export-based industries, which will in turn create the required economies of scale for trans-shipment activities to flourish.

What is currently being done to increase the port’s price competitiveness to promote Brunei Darussalam as a trans-shipment hub?

PENGIRAN ZAIN: In terms of shipping costs and port charges, it has been acknowledged Muara Port has among the highest port charges in the region. Undoubtedly, a review of existing charges needs to be made in order to be more competitive with other similar-sized ports. Additionally, operational efficiency needs to be further improved if we were to attract more shipping lines. Freight charges are set by the relevant shipping lines and are beyond our control. However, port charges, to some extent, are within our remit and we should be adequately responsive to market changes. In doing so, it is obviously important to think about long-term sustainability. Lowering charges would trigger our competitors to react and could result in undesirable price war. I would say this is not a sustainable business practice for commercial ports. The Ports Department is one of the few yet to be corporatised. Once it has become a commercial entity, profitability will be a main focus.

We can bring prices down, but we need to make a profit too. So, this must be done by lowering operational costs and improving efficiency and productivity.

On the other hand, rates need to be reviewed to attract shipping lines. Reliance on incoming cargo only has been replaced by a need to be more sustainable.

As in other successful ports, Muara Port has its own IT system. By implementing new technology and infrastructure we can focus on improving our services. This will allow us to be competitive with other regional ports.

With regards to infrastructure, we have started a project to expand our container terminal by another 150 metres. We are also in the process of embarking on a study to develop a Muara Port masterplan. This will involve ascertaining the structural integrity of the conventional terminal, accommodating future requirement for cruise ships, re-positioning and re-evaluating the functions of warehouses, the development of other value-added services and the development of logistics centre to facilitate trans-shipment activities.

What is Brunei Darussalam doing to capitalise on new trends in the cruise ship segment?

PENGIRAN ZAIN: This is an area the country must truly develop. A big cruise ship can carry as many as 5000 passengers. If a bus can carry 40 people, we will need over 100 buses to transport arriving visitors. Right now this is a huge challenge, as we do not have adequate support services to accommodate these numbers.

On our part, through the masterplan, we hope to be able to identify the technical and financial requirements that must be fulfilled in order to accommodate such future berthing requirements for cruise ships.