KUALA LUMPUR, Nov 3 — As a free zone (FZ) alone is unable to guarantee foreign investment, it is crucial to improve the country’s business environment particularly in the seaborne business, said Port Klang Authority general manager Captain Subramaniam Karuppiah
He said regulations and procedures must be able to promote, not hinder, trade while excessive non-tariff barriers must be removed.
“Free zones must truly be free of unnecessary shackles, including the need for permits and licences. Strict controls must be put in place if cargo moves from an FZ into other parts of the country to prevent revenue leakages,” he told Bernama.
He was responding to Budget 2019 tabled yesterday, which outlined the allocation of 153.781 hectares of land in Pulau Indah for the development of an FZ.
Subramaniam also said that the FZ would spur further growth for the port in terms of cargo generation, even though Port Klang has attained tremendous growth with excellent port facilities.
“Despite the fact that Port Klang is continuously posting significant growth, local cargo import and export activities are trailing far behind trans-shipment,” he added.
He further explained that the FZ would serve as a catalyst in promoting import and export activities, as it is expected to provide land for manufacturing, value adding and distribution hubs to be set up within the vicinity of the port area, complementing tax incentives.
“This would place Malaysia in a competitive position as we are not just offering tax incentives but also through the FZ, it offers considerable cost savings in logistics costs for investors,” he added.
Meanwhile, Malaysian National Shippers’ Council Secretary-General Datuk Nathan K. Suppiah said the allocation of Pulau Indah land is much needed to counter the effect of Singapore’s port expansion.
“It is sensible for Malaysia to ride on our advantage of vast land to attract the increasing trend of redistribution and value-adding hub through FZs in the country,” he said.
He said the announcement is timely for the industry as mergers and acquisitions have resulted in a reduced number of shipping lines, while the Port of Singapore has moved way ahead in port infrastructure as well as technology.
“It will be difficult for Malaysia’s hub ports to compete as major hubs in South-east Asia (SEA), but Singapore’s lack of land space and manufacturers’ need for distribution hubs would shift some manufacturing activities into SEA,” Nathan said.
He stressed that it is practical for the Malaysian government to promote FZs as a strategic move to strengthen our hub position within SEA. — Bernama