KUALA LUMPUR, Jan 24 — The plan to develop Selangor’s Carey Island into a giant port city on the Malacca Strait has been touted by as a maritime game changer for Malaysia that has long been overshadowed by Singapore as a global shipping hub.

Port Klang Authority (PKA) chairman Tan Sri Kong Cho Ha has reportedly said the total gross development value (GDV) for the Carey Island port may exceed RM1 trillion once all three phases of the 20-year project are completed.

Port Klang Authority (PKA) chairman Tan Sri Kong Cho Ha (pictured left) said the proposal to build a port on Carey Island is still being studied. — Picture by Saw Siow Feng

The new port-city project, Kong said, will comprise the development of an integrated port and related infrastructure, industrial parks and free trade zones, commercial and residential buildings in an area over 100sq km or double the size of Putrajaya.

He also said it will be able to handle 30 million TEUs (twenty-foot equivalent units) more container cargo than Northport and Westports combined.

The first phase of development is expected to take about six to seven years if the project is launched now.

Kong said while the project is open to interested parties from port operators, shipping lines and infrastructure developers from all over the world, he indicated that a Chinese firm has specifically expressed its interest in the project.

However, other captains of industry have expressed reservations over the scale of the project and its timeline in the desire to supplant Singapore as the next global sea trade hub.

Former PKA chairman Datuk Lee Hwa Beng said the PKA and Transport Ministry need to consider four aspects carefully before deciding on a third seaport within the Port Klang area that already has the Northport and Westport in operation.

Infrastructure: Who will pay?

"First it is to understand whether there is really a demand for such a facility. After that, it is to test if it is feasible to set up a port there because if it is not, it could translate to huge government subsidies,” Westports chief executive Ruben Gnanalingam told Malay Mail Online.

In the case of Carey Island, Ruben also said a port in the area would need a lot of infrastructure.

He pointed that apart from constructing an expensive breakwater structure, the authorities would also be required to conduct massive dredging works to build terminals.

"This may challenge its feasibility to do transshipment containers at a cost effective rate without some kind of government support like subsidies or grants,” he said.

On giving an operator license to run a port, Lee claimed that PKA would provide initial funds for an operator to build the basic infrastructure, while subsequent developments would be undertaken by the latter.

"Port operators will then have to pay PKA some amount every month like a tenant paying to his landlord in a 30 years lease which the lease is renewable after that,” he said.

Thailand’s Kra Canal

The construction of the canal has been an ongoing talk by the Thais since the 1600s when its king sought to shorten shipping time around Asia. It was put off for various reasons ever since.

According to initial reports, the artificial canal would cut through southern Thailand, connecting the Gulf of Thailand with the Andaman Sea. This will allow vessels heading to China from Europe or vice versa to bypass the Malacca Straits.

The construction of the canal does not involve works on Malaysian land.

News reports said the project, once started, will take a decade or so for completion and would incur a cost of more than RM1.2 trillion.

It was reported that China and Thailand have signed a memorandum of understanding on May 15, 2015. However, after the signing of the agreement, both countries have yet to begin construction works of the canal.

Lee pointed that if the proposed Kra Canal or the Thai Canal goes through, it would significantly reduce traffic in the Malacca Straits and thus leaving the Penang, Port Klang and Johor ports, including the Singapore port, a less likely destination to disembark transshipment cargos.

"If the Thai Canal comes up, let’s not even talk about the Carey Island port, the available ports in the west coast will ‘die’,” he said.

China-UK overland freight rail route

Lee also pointed that the recently launched rail service between China and European cities as another factor that could likely affect operations of the Carey Island port "to a certain extent” should it be given the green-light for construction.

"Currently, many European vessels go through the Strait of Malacca to get to China and with this new train service, I am sure that in time, it will result in lesser traffic at the Malacca channel because the rail service is touted to be cheaper than air and faster than sea,” he said.

While the proliferation of routes connecting China and European cities started in 2013, the freight rail service was officially launched earlier in January.

The service passes through Kazakhstan, Russia, Belarus, Poland, Germany, Belgium and France before arriving at Barking Rail Freight Terminal in East London, covering 12,000km in 18 days.

Currently, almost 80 per cent of vessels around the globe ply the Straits of Malacca and it is the main route between the Indian Ocean and the Pacific Ocean.

Malaysia’s East-West rail connection

Malaysia could experience a surge in trade calls from China once the 620km East Coast Rail Link (ECRL) rail route, which connects the east and west coast of the peninsula across the Titiwangsa mountain range, is completed.

The project, also a product in progress by the Chinese, will allow goods to be transported from the Kuantan Port to Port Klang without having to go through Singapore.

The RM55 billion ECRL project that will connect Port Klang to Gombak; Gombak to Dungun; and Dungun to Tumpat, is expected to start construction early next year.

The first phase of the ECRL is expected to be completed by 2020 while the second phase, connecting Dungun to Tumpat, is slated for completion in 2030.

If this project takes off, the multi-billion-ringgit ECRL could help boost Malaysia’s shipping trade.

"Yes, then maybe it will serve its purpose by connecting the east and west coast,” Lee conceded, before adding, "But it is hard to say what is going to happen in 10 or 20 years time.”

He warned that if the Kra Canal completes ahead of Malaysia’s ECRL, the transshipment cargoes that the country has been dealing with would no longer need to ply through the Malacca Strait when it can go to China or Europe through the Thai shortcut.

"When this happens, it is pretty obvious that the ECRL won’t be that much of a game changer but merely acting more as a passengers’ train.

"The ultimate question after considering these aspects would be: ‘Is there a need for another seaport?’ let alone in Pulau Carey where a lot of work in terms of building infrastructure and other facilities would be required,” Lee said.

Nothing is cast in stone, studies still ongoing

When contacted, Kong said the proposal to build a port on Carey Island is still being studied

He also refuted a World Bank study that was commissioned by the Singapore government, saying that an international consultant had conducted the study with the Transport Ministry and PKA to suggest for the implementation of the project.

"I don’t know what is the agenda of Singapore but our consultants have advised us to build another port to cater to the port demands,” he said.

The World Bank study reportedly said that there was no need for another seaport in the Straits of Malacca.

"Westports can probably expand for another 10 years, and then what happens? Anyway nothing is cast in stone for the construction of this new port as there is still a lot of studying needed to be done,” Kong said.

The proposed Carey Island port city would also provide maritime services that include bunkering, ship repairing and maintenance. It will cater for container ships, bulk and liquid carriers, as well as vessels carrying conventional cargos such as grains, minerals and vehicles.

Carey Island is located below sea-level and according to locals, the whole island is bundled up to prevent seawater from rising.

Mostly owned by Sime Darby Plantations, the island is located more than 30km away from Port Klang, which would require more or less an hour drive by road but only minutes away from the town by water.

Port Klang — the world’s 12th busiest container port — handled container cargo totalling 13.2 million TEUs last year, a rise of 10.8 per cent over 2015. Its maximum capacity is 16 million.

Last year, Port Klang handled 9.07 million TEUs in transshipment throughput, recording a growth of 14.3 per cent from the previous year.

Of the figure, Northport handled 1.66 million TEUs and Westports Malaysia handled 7.41 million TEUs.

In comparison, Singapore Port handled an estimated 30.9 million TEUs in 2016, about 0.5 per cent drop in the percentage of throughput it handled in 2015.