Picking up speed: The government is working to shore up the country’s reputation as a transport hub

Over the past few decades, Malaysia has built one of the highest-quality and farthest-reaching transport networks in South-east Asia. The national transport network, which includes extensive road, rail, air and sea links, has underpinned the country’s economic development over the past decade, playing a vital supporting role in numerous industries.

Now, the government is in the process of expanding and improving the network further, with the long-term goal of boosting Malaysia’s reputation as a major regional transport and logistics hub. The ongoing expansion in imports and exports, trans-shipment activity and visitor arrivals bodes well for continued growth of the transport sector in the coming years.

CHALLENGING DYNAMICS: Malaysia’s transport industry faces a number of unique challenges. Demand for transport services of all sorts is expected to grow exponentially in the coming years, due to rapidly expanding tourist arrivals and steadily rising foreign trade figures. Keeping up with this demand, even with strong government support, is expected to be a major challenge for many years to come. In particular, the government is working to develop new transport links in Kuala Lumpur (KL) and the Klang Valley (KV), in an effort to clear up congestion around the capital area, which has seen swiftly rising population and visitor numbers in recent years. Other areas of focus include Sabah and Sarawak, both of which are relatively under-developed in terms of land transport links compared to Eastern Malaysia. While the country has gained a reputation as a regional transport hub in recent years, strong competition from Singapore and Thailand is also an ongoing challenge, as both are investing heavily in port and airport cargo facilities, for instance.

Despite these issues, Malaysia’s transport infrastructure is expected to continue to improve and expand over the coming decade, largely as a result of several government-led investment initiatives. “Transportation, especially public transport, is a key component of economic growth and high-quality standards of living,” said Najib Abdul Razik, the prime minister, in a recent statement. Indeed, the sector is a major focus of the government’s numerous ongoing economic development plans, including the Economic Transformation Programme (ETP) and the Government Transformation Programme (GTP), both of which run through 2020, and the 10th Malaysia Plan (10MP), set to wrap up in 2015.

Broadly, the state’s long-term plans for the sector are aimed at developing multimodal transport hubs throughout the country, with a focus on underserved rural locations and busy urban areas, in particular. While the government has taken the lead in development planning and strategy, the private sector is expected to play a central role in terms of implementation and financing. With these ambitious plans in mind, Malaysia’s domestic transport network is expected to continue to improve and expand for the foreseeable future, which will likely burnish the country’s growing reputation as major transport player in South-east Asia.

OVERSIGHT & REGULATIONS: The sector includes government organisations, public-private firms and private sector players. The Ministry of Transport (MoT), which was founded in 1953, oversees air, sea, national rail and private road transport. The ministry has a mandate to plan and implement policies related to these areas, with the overarching goals of developing a supply- and technology-driven integrated national transport network; a competitive economic environment for private sector firms involved in transport; and an effective and transparent enforcement regime, taking into account all transport-related laws and regulations.

The MoT is responsible for overseeing a number of departments and official entities. Primary departments within the ministry include the Road Transport Department, the Road Safety Department, the Department of Civil Aviation and the Marine Department.

Additionally, the MoT oversees the Malaysian Institute of Road Safety Research (MIROS), which was founded in 2007 to implement the country’s ambitious plans for improving road safety (see analysis). Meanwhile, the Railway Assets Corporation (RAC), also under the ministry, works alongside other federal rail agencies to manage and develop the nation’s railway network. Finally, the MoT oversees a number of maritime agencies and authorities, including the Bintulu Port Authority, Johor Port Authority, Port Klang Authority, Kuantan Port Authority, Penang Port Commission and the Maritime Institute of Malaysia. While private corporations operate the country’s cargo ports, the individual port authorities own and regulate the respective major harbours.

The Land Public Transport Commission ( Suruhanjaya Pengangkutan Awam Darat, SPAD), meanwhile, oversees all aspects of public rail and road passenger transport (including light-rail, bus and taxi services) and road and rail cargo transport. The commission, which was launched in January 2011, is the result of the Land Public Transport Act of 2010, which was developed in conjunction with the GTP. SPAD effectively took over the functions of a variety of now defunct government entities, including the Department of Railways (at the MoT), the Commercial Vehicles Licensing Board and the tourism vehicle-licensing arm of the Ministry of Tourism, among others. SPAD’s chairman, Tan Sri Syed Hamid Syed, told local press in November 2012 that their jurisdiction would extend from Peninsular Malaysia Sabah and Sarawak in 2013.

SPAD is in charge of developing and implementing the government’s National Land Public Transport Master Plan, which includes initiatives initially laid out in the GTP, the ETP and other national development plans. The draft plan has been prepared and open for public display and feedback before being finalised. The commission is currently in the midst of a handful of large-scale developments. The Greater KL/KV Mass Rapid Transit (MRT) project, which involves constructing a new public rail transport backbone in the capital region, is set to be completed by 2020, for example. SPAD is also in the early stages of a project to construct a high-speed rail link between KL and Singapore, which has the potential to increase trade and economic integration between the two neighbours.

SPECIALISED MANAGEMENT: In addition to the MoT and SPAD, a number of other government entities are involved in the transport sector. The Public-Private Partnership Unit (Unit Kerjasama Awam Swasta, UKAS), under the Prime Minister’s Office, is involved in a wide variety of transport-related projects. The unit owns 28 toll-roads in Malaysia, for example, which are in turn operated by private firms. UKAS also oversees the Private Finance Initiatives Programme, through which the government finances major projects under a build-lease-maintain-transfer model. The unit also operates a public-private partnership facilitation fund, which provides grants of up to RM200m ($64.5m) for initiatives carried out in the public interest, including port expansion and land reclamation projects, among others. UKAS is a major source of investment – the entity is expected to account for RM30bn ($9.7bn) of investment into Malaysia through 2020.

Finally, a handful of government-owned companies play a major role in the transport sector. Most of the public transport networks in KL/KV are owned and operated by state-owned enterprises, for example. Both the monorail and the light-rail transit (LRT) network are owned by Syarikat Prasarana Negara (Prasarana), a government-owned firm, and operated by RapidKL, one of its subsidiaries. Similarly, Keretapi Tanah Melayu (KTMB), another state-owned entity, is Malaysia’s primary rail operator, overseeing some 1700 km of rail, which includes the KV-based KTM Komuter network. Finally, the country’s flag air carrier, Malaysia Airlines (MAS), is also majority owned by the government. The sheer number of state players involved in transport in Malaysia has occasionally resulted in confusion in terms of jurisdiction. “The transport sector in Malaysia includes a large number of stakeholders,” said Solah Mat Hassan, the director-general of the Road Transport Department at the MoT. “This sometimes generates delays in the decision-making process for transport-related projects.”

LONG-TERM PLANNING: Transport factors heavily in the government’s ongoing development plans. Both the GTP and ETP, which were designed to complement each other and are being carried out simultaneously, include transport-related initiatives. Under the GTP, which aims to both boost access to public services and improve their quality throughout Malaysia, the government is working to address seven National Key Results Areas (NKRAs), which have been deemed priority development areas. Two of these focus on areas related to transport.

The fifth NKRA, which is being carried out by the Ministry of Rural and Regional Development in conjunction with transport authorities, aims to improve rural basic infrastructure, particularly in Sabah and Sarawak. According to the GTP planning document, which was launched in early 2010, around 35% of Malaysians live in “rural areas with minimal access to proper roads, water and electricity supply”. Under the NKRA, the government initially planned to build 7000 km of new roads in rural areas by 2012. As of the end of 2011 the state had completed work on 1796.1 km of new roads (in addition to connecting a number of homes to the water and electricity grids). The sixth NKRA, meanwhile, aims to improve urban public transport in the KL/KV area, with a focus on creating higher demand for public transport. In 2009, according to SPAD, only around 12% of travellers in the capital region used public transport. The government is working to boost this number to 50% by 2025. Hitting this ambitious target will require a multi-faceted approach. The state is working to improve the reliability of public transport, shorten journey times, increase the comfort of train and bus travel and improve accessibility of public transport options for a substantial percentage of the population.

SPAD, which was created to carry out the transport development strategies of the GTP, has made substantial progress in many areas in recent years. Pudu Sentral (previously known as Puduraya Terminal), KL’s main bus station, underwent an RM52.7m ($17m) overhaul, which was completed in mid-2011. Similarly, as of the end of 2011 some 468 bus stops in the greater KL/KV region were refurbished, 470 new public buses were put into service and the government introduced three new Bus Expressway Transit (BET) routes. The government also added 35 additional four-car sets on the Kelana Jaya LRT line, one of the busiest public rail lines in the capital region. Since the urban public transport NKRA was introduced as part of the GTP in 2010, the percentage of the population that lives within 400 metres of a public transport route has increased from 63% to 75%; eight BET routes have been introduced, reducing journeys by 30 minutes per route on average; and around 80,000 new commuters have started taking public transport, an increase of 35%.

INTERNATIONAL EFFORTS: While the GTP aims to increase access to public services, the ETP is meant boost economic growth throughout the country, with the long-term goal of turning Malaysia into a high-income nation by 2020. The ETP is organised into National Key Economic Areas (NKEAs), which, like NKRAs, are priority development areas. Two of the largest transport projects currently in the works in Malaysia fall under the Greater KL/KV NKEA – namely the Greater KL/KV MRT project, now under way, and the KL-Singapore high-speed rail link project, which is in the planning stages. Also, under the tourism NKEA, the government is adding air links between KL International Airport (KLIA), Malaysia’s primary international gateway, and 10 priority medium-haul cities in six countries, including China, India, Australia, Japan, Taiwan and South Korea. These countries are seen as growth markets in terms of tourist arrivals in Malaysia in coming years. The state is also working to attract additional foreign carriers to operate in Malaysia and to develop an air rights allocation framework for local carriers, which is expected to boost tourism arrivals (see Tourism chapter). The 10th Malaysia Plan (10MP), which covers the period 2011-15, was developed in support of the GTP and ETP. The plan includes a number of initiatives aimed at upgrading Malaysia’s physical infrastructure in an effort to enhance access, both for locals and visitors, and boost connectivity internally and externally.

Under the 10MP the government is working to enhance the country’s multimodal transport networks by building new roads and rail links to major airports and ports; modernising and expanding the national rail network and rolling stock; developing a national port policy, which will serve as a blueprint for port development for the foreseeable future; and carrying out a series of major airport expansions and upgrades, including the construction of a low-cost carrier terminal at KLIA.

METRO AREA DEVELOPMENT: The ongoing redevelopment of the urban transit network in the KL/KV area is perhaps the most ambitious transport-related project currently under way in Malaysia. Under the Greater KL/KV NKEA, the government is working to shore up the capital region’s reputation as a leading international destination for talent, investment, innovation and economic activity. The NKEA is made up of 10 entry-point projects (EPPs), or individual development targets, including attracting 100 companies from within priority sectors; revitalising the Klang River into a commercial and heritage district; “greening” the region; building new iconic structures and destinations; and improving the area’s waste management infrastructure. Perhaps most importantly, three EPPs aim to revitalise the region’s transport network. EPPs 3 and 4, respectively, aim to connect KL/KV to Singapore via a high-speed rail link and construct an integrated urban MRT system in the capital district, while EPP 8 aims to improve the area’s pedestrian network.

The Greater KL/KV area is home to several public transit options. The capital is served by two LRT lines, the monorail (which consists of a single line), and two KTM Komuter lines, in addition to a number of bus routes. While these existing transport options have become increasingly integrated in recent years, primarily as a result of government-led initiatives, the system has not been updated in any major way for a decade. The population, meanwhile, has grown steadily over the same period, rising from around 24.5m people in 2002 to nearly 29m in 2011, according to World Bank statistics, with a substantial percentage of this expansion taking place in the urban KL/KV region. Consequently, the capital area is severely underserved in terms of public transit. In mid-2012 the Klang Valley was home to less than 20 km of rail for every 1m inhabitants, compared to an average of 40 km per 1m inhabitants in major cities such as Singapore, London and Hong Kong, according to SPAD. With the population of the Greater KL/KV area expected to grow from around 6m in 2011 to nearly 10m by 2020, the already crowded urban transport system needs immediate attention.

MRT: The Greater KL/KV MRT initiative, which is being developed by SPAD to meet the targets laid out in EPP 4, is expected to have a major positive impact on this situation. The project is on track to be the single largest infrastructure project in Malaysia’s history, and one of the largest ever undertaken in South-east Asia. With an estimated cost of between RM36bn ($11.6bn) and RM50bn ($16.1bn) in total, the MRT will eventually comprise three new urban rail lines through the capital region, including two radial lines and a circle line, with a total radius from central KL of around 20 km. Upon completion, the network will have nearly 150 km of track. By 2020 the MRT will have the capacity to handle 50% of daily trips in the Greater KL/KV area.

While work on lines two and three is still in the planning stages, SPAD broke ground on line one in late 2011. Line one will stretch 51 km (9.5 km of which will be underground) from Sungai Buloh in north-western KL to Kajang in the south-east. According to initial reports there will be 31 stations on the line, with room to build additional stations if need be. The line is expected to be up and running by January 2017. It will serve a catchment area of 1.2m people, including some of KL’s busiest neighbourhoods – KL Sentral and Bukit Bintang, among others. According to SPAD, 58 trains will provide service on line one, serving 442,000 passengers per day. At most stations trains will arrive every 3.5 minutes at peak hours. Four stations will intersect with LRT and KTM Komuter lines.

Line two of the MRT, otherwise known as the circle line, is currently in the final planning and evaluation stages, and is set to be completed by 2020. The circle line is expected to cover a number of key areas in the capital, including KL City Centre, Bukit Bintang, Sentul and KL Ecocity, among others. Line three of the MRT is still in the planning phase of development, but it is expected to stretch from Sungai Buloh to Pandan and, like the circle line, be completed by 2020. As of October 2012 the government had awarded 47 contracts valued at RM20bn ($6.5bn) for line one of the MRT project. In July 2012 the government issued an initial RM8bn ($2.5bn) sukuk (Islamic bond) to finance the construction of line one. Sukuk issuances are expected to raise RM30bn ($9.7bn) for the project in the coming years. While SPAD is overseeing the construction process, the MRT network will be operated by Prasarana’s RapidKL, which also operates the LRT and the monorail.

OTHER METRO AREA DEVELOPMENTS: As of mid-2012 SPAD was in the midst of a second feasibility study on the KL-Singapore high-speed rail project. The project has been under discussion since the mid-2000s, but gained steam under the ETP. Travellers between Malaysia and Singapore have many options: a three- to four-hour trip by plane (with airport commuting, check-in, and transit through immigration, security and Customs); a five-hour bus ride; or a seven- to eight-hour standard rail trip. A high-speed rail link would make the trip in about 90 minutes, at speeds over 250 km per hour. While plans are far from finalised, based on initial proposals the line would run 400 km from KL with potential stops at KLIA, Seremban, Melaka, Muar, Batu Pahat and Johor Bahru before reaching Singapore at the southern tip of Peninsular Malaysia. The government has also announced that the line will stretch north from KL as well, up to Pulau Pinang and potentially linking up with rail lines in Thailand. Finally, under EPP 8 the government has worked to improve KL’s pedestrian network. In 2011 the state completed work on 10 km of walkways and sidewalks in central KL. In 2012 another 12 km will be targeted for upgrades.

ROADS: The road segment is overseen by federal and state entities. The Road Transport Department at the MoT coordinates and regulates licensing (of both cars and drivers) at the national level, in addition to coordinating the sector’s long-term development strategy. Malaysia’s road network is managed on a three-tier system. State governments operate state roads, which make up the majority of roads in the country. Federal roads, which cross state lines, are overseen by the Ministry of Works (MoW). Finally, the country’s expressway network is regulated by the Malaysian Highway Authority (MHA), which is under the MoW.

Private companies manage the expressways day-today, primarily on a build-operate-transfer basis. Consequently, most expressways in Malaysia are toll roads. “Vehicle ownership growth is expected to grow at nearly 5% per annum, which will help boost toll revenues, and make highway concessions more viable,” Zainudin Abdul Kadir, the group chief executive of Prolintas Group of Companies, told OBG.

Federal regulations related to roads are laid out in the Road Transport Act of 1987, which has been amended several times since its creation. In recent years the Road Transport Department has worked to improve the regulatory framework. In March 2010, for example, Malaysia adopted a UN draft resolution to improve road safety standards. Signatories to the resolution, will work to reduce traffic accidents and fatalities (see analysis). Malaysia’s road network is relatively well developed in Peninsular Malaysia, though congestion is an issue, especially in the Greater KL/KV region, where the majority of the population resides. Even though the massive MRT project is expected to have a positive effect on this situation in the coming years, the government is still considering additional measures that could help reduce the number of vehicles on the road in the capital right now. “The government is seriously looking at implementing a congestion charge in KL,” said Solah. “The charge would aim to reduce congestion and raise investment funds. This system has proven to be successful in other international cities, such as London.”

The government has also completed a number of major construction projects in recent years, both in the capital region and further afield. In 2007 the state completed work on the Stormwater Management and Road Tunnel (SMART) project, which is jointly owned by the MHA and the Department of Irrigation and Drainage. The RM1.89bn ($610m) project, which at 9.7 km is the longest tunnel in Malaysia, functions as a toll motorway during normal operations, but was designed to serve as a stormwater tunnel during flood situations. Since its launch, the SMART system has successfully prevented a number of flash floods in the centre of KL. Other recently completed road projects include widening sections of the North-South Expressway, Malaysia’s longest highway, which stretches 966 km from the border with Thailand to Singapore; and the 160-km phase one of the East Coast Expressway, which runs from the Karak-KL Expressway to Kuala Terengganu on the northeastern coast of Peninsular Malaysia.

NEW PROJECTS: A number of new road projects are either currently under way or in the early planning stages. The 190-km second phase of construction of the East Coast Expressway, which will stretch from Kuala Terengganu to Jabur, is expected to be completed by the end of 2013. Since August 2011 a series of short sections of the project have been completed. While construction of the East Coast Expressway is being carried out by the Malaysian Public Works Department under the MoW, the road will be managed by a private firm.

As of October 2012, a concession agreement for the new West Coast Expressway was expected to be in force by the end of 2012, according to local press. The 316-km road link has been under discussion since at least 2008, but it was delayed by the international economic downturn. According to Kumpulan Europlus, the local firm charged with designing, constructing and managing the project, construction is set to begin in late 2012 or early 2013 and is expected wrap up in 2017.

The RM7.07bn ($2.3bn) expressway will stretch from Banting, just south of KL, to Taiping, in the north-west.

The West Coast Expressway project will be funded primarily by government and commercial loans.

Finally, the government has also continued work on the Penang Second Bridge, a 24-km span that will connect Batu Kawan on Peninsular Malaysia with Batu Maung and Seberang Perai on Penang Island. When it is completed in late 2013 it will be the longest bridge in South-east Asia. The RM3bn ($968m) project is being funded primarily with a loan from China.

EASTERN MALAYSIA: While road developments in Peninsular Malaysia are ongoing, in the past few years the government has shifted its focus to East Malaysia (Sabah and Sarawak), largely as a result of initiatives laid out in the GTP and the ETP. While only 1796 km of the 7000 km of new roads due to be built in rural areas by 2012 had been completed as of the end of 2011, 1013 km of this had been built in 2011, which is in line with a push from the government. Around 425,377 people in Sabah benefitted from new road construction in 2011, but the road networks in Sabah and Sarawak remain largely underdeveloped. Increased economic activity and rising car ownership have put pressure on existing infrastructure. The island’s transport backbone is the Pan-Borneo Highway (PBH) which runs north-south along the west coast of Borneo, connecting Sabah and Sarawak with Brunei Darussalam.

In early 2012 the MoW launched a study of the PBH, in what was viewed as the first step to upgrading the highway. In Sabah road development is being coordinated through the state government’s Sabah Development Corridor (SDC) initiative, which was launched in 2008. As of mid-2012 some RM112.8bn ($36.4bn) worth of investments had been secured since the SDC was created, including a number of infrastructure projects. In mid-2011, for example, the federal government announced that it had allocated RM4.3bn ($1.4bn) in financing for Sabah in 2011-12 as part of the 10MP.

A number of major road projects have either recently been completed, are currently under way or are in the initial planning stages in Sabah, including the 45-km Tongod-Pinangah road, repair work on the Kota Belud-Langkon road, the Sibuga Bypass project, and roads connecting to the Sabah Oil and Gas Terminal. Sarawak – larger and less developed than Sabah – has also benefitted from government investments in roads.

RAIL: The national rail system reaches most states in Peninsular Malaysia, though the network is somewhat out of date. The Greater KL/KV area, which is home to a number of rail services, accounts for the great majority of rail traffic in the country. Several organisations are involved in the rail segment. At the national level, SPAD oversees all rail standards, urban rail development and enforcement issues. KTMB, a government-owned firm, operates the 1830-km national rail network, including the two KTM Komuter lines in the capital. RapidKL, a subsidiary of the state-owned Prasarana, operates the monorail and the LRT system in KL/KV.

In addition to the massive MRT project (described above) and other urban rail developments, the government is working to upgrade and expand the national rail network. The largest potential upcoming project is the KL-Singapore high-speed line. The government is running a handful of additional rail projects as well.

Most of the large-scale rail developments currently under way are taking place as part of the economic corridor initiative. Launched in 2007, the strategy split Peninsular Malaysia into three development corridors, namely the East Coast Economic Region (ECER), the Northern Corridor Economic Region (NCER) and Iskandar Malaysia, in the south. A board made up of government and private sector figures manages each region.

Overseen by the ECER Development Council, the East Coast Rail Route (ECRR) project – for which the government completed a feasibility study in July 2012 – will eventually stretch 600 km from KL to Tumpat, on the north-eastern border with Thailand. The first phase of the project will cover 109 km from Kertih to Kuantan, according to the council, which will work alongside transport authorities on the project. In the NCER, meanwhile, the government is making progress on the PLBKE initiative, a double-tracking project that will boost speed and capacity on 329 km of track between Ipoh and Padang Besar. Finally, plans for the Iskandar Malaysia project include a 100-km intra-city commuter train, for which a construction contract is expected to be awarded before the end of 2012.

AIR: Malaysia has become a major air transport hub for South-east Asia in recent years (see analysis). KLIA, the country’s primary international airport, welcomed 37.7m passengers in 2011, up 10.6% from the previous year. This number is expected to grow further in 2012, according to Malaysia Airports Holding (MAH), the state-owned firm that manages the airport. In the first of half of 2012 19.3m passengers travelled through KLIA, up almost 5% from the same period the previous year. Passenger traffic at all of Malaysia’s 39 public airports (which are also controlled by MAH), including KLIA, hit 32.6m in the first half of 2012, up 4.2% from the first six months of 2011, largely as a result of increased activity by AirAsia, a leading regional low-cost airline, and new activity by foreign carriers. While the passenger segment has posted strong growth in recent years, the cargo segment is somewhat stagnant due to the challenging economic conditions in the EU and the US.

The government has invested heavily in air transport infrastructure in recent years, with the long-term goal of turning KLIA into a global air transport hub. Work is nearly complete on a new terminal at KLIA, which will replace the existing low-cost carrier terminal and boost the airport’s total capacity to 70m from around 43m currently. AirAsia, which has expanded rapidly in recent years, will take up much of the new terminal upon completion. Malaysia Airlines (MAS), the flagship carrier, recently streamlined its business model in an effort to improve revenues. These developments, in addition to steadily rising demand for air travel options and increasing economic integration in South-east Asia, bode well for the country’s air transport segment.

SEA: Malaysia’s ports have seen steady expansion since early 2010, when the segment began to recover from a slump caused by the international economic downturn. The port segment is quite competitive in the region in terms of costs and services offered. In 2011 container traffic at the country’s 11 major ports jumped by 11% from 18.1m twenty-foot equivalent units (TEUs) at the end of 2010 to 20.2m TEUs at the end of 2011, according to statistics from the MoT. Container traffic is expected to grow by around 5% in 2012; in the first half of 2012 Malaysia’s ports handled 10.3m TEUs, compared to 9.85m TEUs in the same period the previous year. Trans-shipment activities through the country’s ports jumped 5% from 6.6m TEUs in the first half of 2011 to 6.9m TEUs during the same period in 2012. Similarly, during the same period import volumes jumped by 7% to reach 1.7m TEUs and exports grew by 3% to reach 1.7m TEUs. This growth is largely the result of continued expansion in both the domestic and regional economies, which have managed to sidestep much of the challenging economic climate in the West. Given the economic significance of its ports, protecting the country’s waters is a vital job. To this end, the Malaysian Maritime Enforcement Agency was launched in 2006 to centralise control of securing the safety of the country’s waters and enforcing maritime laws.

The two largest ports – Port Klang, located on the Straits of Melaka some 40 km south of KL, and the Port of Tanjung Pelepas (PTP), located in Johor State, just across the Johor Strait from Singapore – account for more than 85% total container traffic. In the first half of 2012 Port Klang handled 5m TEUs of container traffic in total, up 6.7% from 4.7m TEUs during the same period the previous year. PTP, meanwhile, handled 3.84m TEUs in the first six months of 2012, up 4.6% from 3.67m TEUs during the same period in 2011.

PORT KLANG: Port Klang, which was the 13th-busiest container port in the world in 2010, according to the MoT, is actually made up of two separate ports: Westports and Northport. While private operators manage each individual entity, the port as a whole is overseen by the Port Klang Authority, a government agency. Westports, which is operated by Westports Malaysia, a local firm, accounts for the majority of the business at Port Klang. In the first half of 2012 Westports handled 3.44m TEUs, or around 69%, of the total 5m TEUs that came through Port Klang as a whole. According to media reports, as of mid-2012 Westports Malaysia was planning an initial public offering either by early 2013, with the goal of raising $1bn. Northport, which is part of the Malaysian conglomerate NCB Holdings, handled the remaining 1.56m TEUs (31%) of the cargo moving through Port Klang in the first half of 2012.

Port Klang as a whole has 53 berths with a total length of 11,348 metres, including 24 container berths, at 6079 metres in total; 11 breakbulk berths, at 1486 metres; seven dry bulk berths, at 1561 metres; nine liquid berths, at 2086 metres; a passenger berth; and a bunker berth. Additionally, the port offers 219,249 sq metres of storage space, which includes warehouses, covered storage and open yard space. In 2011 Port Klang handled some 18,117 ships in total, including 12,387 container ships, 2216 tankers, 1690 general cargo ships, 1408 passenger ships and 411 dry cargo ships. The 2011 figure was a substantial jump on 2010, when 17,910 ships docked at the port, including 12,332 container ships, 2100 tankers, 1586 general cargo ships, 1504 passenger ships and 380 dry cargo ships.

The capacity at the port is expected to be able to meet demand until 2018, however, port operators are preparing to expand in anticipation of future growth. Westports is in the midst of an RM3.18bn ($1bn) development initiative, targeted for completion by 2013. Northport, meanwhile, is marked for a RM1.3bn ($419m) expansion plan in the coming years.

PTP, Malaysia’s second-largest port, is primarily a container terminal. The port serves the Iskandar development region and traffic from Singapore. PTP has 12 berths with a total length of 4.3 km and an annual handling capacity of 8.4m TEUs. The port is managed by Seaport Terminals, a major local port operator. Indeed, the firm manages several other large ports in Malaysia, including Penang Port and Johor Port. Penang Port, Malaysia’s oldest port facility, was privatised and sold to Seaport in mid-2012. The operator promptly announced a series of ambitious development projects for the port. It plans to spend RM4.71bn ($1.5bn) on the port over the next 30 years, with the long-term goal of turning Penang into a regional shipping hub.

CHALLENGES: The transport industry will face a number of challenges in the coming years. The volatile political situation in the South China Sea could eventually have a negative impact on the shipping industry, for example. However, another possibly major challenge is the upcoming launch of the ASEAN Economic Community (AEC), which is expected to be up and running by 2015, though it remains unclear whether or not this is achievable by the target date. The eurozone-style community is meant to boost economic integration between the 10 ASEAN countries, with the long-term goal of opening up borders between states in an effort to increase trade, and thus has the potential to influence Malaysia’s transport sector (see analysis). While the creation of the AEC will likely have a positive impact on the region in the long term, implementing the plan will likely be politically and economically difficult exercise.

OUTLOOK: Despite these issues, the future of Malaysia’s transport sector looks bright. Notwithstanding rising competition from other transport hubs in the region, the country is well situated in the growing market for passenger and cargo transport services in South-east Asia. Additionally, the industry is expected to benefit from rapidly expanding tourist arrivals and foreign trade at home. Indeed, ensuring that the sector will be able to meet future demand for transport services is currently a primary government concern. Taking into account the ambitious infrastructure projects outlined in the GTP, ETP and 10MP and forecasts of rising trade and visitor arrivals figures in the coming years, the sector looks set to meet this growing demand, which likely means steadily expanding revenues for years to come.