Hong Kong's aggressive Hutchison group appears poised for further expansion with the purchase of a 30 percent stake in a terminal at Malaysia's Port Kelang, the ocean gateway for the capital, Kuala Lumpur.
It would come only days after Maersk Sealand acquired a similar stake in the new Port of Tanjung Pelepas in southern Johore state near Singapore.Malaysia says it's happy to sell stakes in its ports to maritime-related companies as a way to improve efficiency.
Hutchison International Port Holdings Ltd., which operates 18 ports worldwide, is understood to be in talks with shareholders of Kelang Multi Terminal Sdn. Bhd. to acquire 30 percent of its Westport terminal, the newest at the Kelang complex.
Westport has capacity of over 1 million TEUs a year and has recently extended its quayside and added gantry cranes. The Hutchison deal would provide needed capital for further development, as well as proven management expertise.
The port operator is believed to have outstanding loans amounting to about 600 million ringgit ($158 million), largely due to high start-up costs, Malaysia's New Straits Times reported. It quoted unidentified sources as saying Hutchison's investment would be ''in the millions.'' Some estimates say it could be worth $80 million.
Westport executive chairman G. Gnanalingam shrugged off talk that KMT intends to sell 30 percent to Hutchison. The Hong Kong company declines to comment on press speculation or discuss deals in progress.
Approval from Malaysia's Foreign Investment Committee to dilute the country's shareholding in the port management company was secured just over a week ago, sources said. That is needed because the equity sale is to a foreign party, and ports are regarded as national assets.
Transport Minister Ling Liong Sik said this week the government is open to port investment by outside parties. It ''welcomes anything that benefits the ports and nation and will definitely consider the overtures. We have to study it on a case-by-case basis and not apply it as a general rule.''
Though known previously as sluggish and inefficient, the main Malaysian ports - Pelepas, Westport and Port Kelang - appear ready to soar in the next few years due to lower costs, growing capacity, improving efficiency and infusion of foreign expertise.
Hutchison Ports owns Hongkong International Terminal Ltd., the largest there, and operates 118 berths in China, Myanmar (Burma), Indonesia, Britain, the Netherlands, Panama and the Bahamas. It handles about 10 percent of the world's containers.
Maersk Sealand is buying 30 percent of Tanjung Pelepas and shifting long-haul operations out of Singapore. That should attract an additional 2 million TEUs to Tanjung Pelepas next year.
Singapore is the world's second-busiest container port after Hong Kong. It processed 15.9 million TEUs last year, the great majority of them transshipments, and 8.6 million TEUs in the first six months this year, up nearly 13 percent on last year.
Tanjung Pelepas went straight for its rival across a narrow strait, offering lower costs and promising high efficiency. The Malaysian port saw volume of 48,668 TEUs in the first six months and is forecasting 450,000 by year-end.