We either grow or be left behind

ISSUES were aplenty in the months leading up to the launch of our plan to transform the productivity and competitiveness of Malaysia’s logistics industry – the Logistics and Trade Facilitation Masterplan – in early 2015.

Though with all the right intentions, we were faced with difficulties on two fronts: a lack of the required human resource capacity to implement the plan; and a then-highly fragmented and competitive industry, which led some to think that the goals set out in the masterplan were, at best, ambitious, and at worst, unattainable.

Fast forward two years: the masterplan has not only been implemented and is progressing well but above all, it has exceeded our initial targets.

In fact, just two weeks ago, working with global e-commerce company Alibaba, we have successfully achieved an exciting new phase and milestone in the masterplan through the launch of the Digital Free Trade Zone (DFTZ) – a unique logistics hub that will function as a centralised customs clearance, warehousing and fulfilment facility for Malaysia and the region.

As we continue progressing towards our goal of becoming the “preferred logistics gateway to Asia” as set out in the masterplan, I’d like to share some key milestones from our journey so far and, more importantly, how the plan will benefit Malaysians.

One of the most crucial and initial moves that has contributed to our current success is the setting up of the National Logistics Task Force (NLTF).

The outfit, which exists to lead the delivery and monitor the implementation of the masterplan, comprises seasoned industry players, academics and experienced officers from the Government.

The NLTF is also supported by various strategic partners, including ministries and the World Bank Global Knowledge and Research Hub Kuala Lumpur Office.

Employing a private sector-driven approach, the task force actively listened and engaged with various stakeholders and understood that for the masterplan to work, it has to be both transformational (with immediate effect) and sustainable (the logistics industry must be able to cater to the market’s future needs).

Divided into three phases, the first phase of the masterplan involves “debottlenecking” the logistics sector.

This is aimed at removing the root causes that were holding back the industry from reaching its full potential.

In this respect, we have managed to complete an impressive 85% of the 11 action items planned, with the remaining action items ongoing and some action items from the subsequent phases even brought forward, highlighting the urgency of our activities.

Some of the key results include the setting up of a national logistics database to support the planning and simplification of cumbersome processes and procedures related to licensing. This process is still very much ongoing. Recently, following Cabinet discussions, we have increased the weight limit for small lorries in Peninsular Malaysia.

The move, which was done in consultation with the Works Ministry, Road Safety Council and Land Public Transport Commission, will see the maximum permissible laden weight of decontrolled vehicles in Peninsular Malaysia raised from five to 7.5 tonnes.

One immediate impact is the reduction of the cost of transporting goods by 7%.

In the long run, this means that lorry operators as well as small and medium enterprises (SMEs) can operate better and more effectively, as travel times, operation and maintenance costs are minimised.

Once our path was clear, we worked on boosting investment confidence by strengthening our fundamentals.

This is where the second phase of the masterplan – the enhancement of domestic growth – comes into the picture, with the objective of improving the connectivity and integration of our logistics services.

One such example is Port Klang.

Considered by many as the Load Centre for Malaysia, the port is currently transforming to become more competitive in today’s fast-paced economy.

Our ultimate aim is to propel the world’s 11th busiest port to the top 10 category.

To do so, we have planned the Carey Island port project in Selangor to extend Port Klang’s reach and capacity.

Dubbed by some as a “dark horse”, the port project, which will increase Port Klang’s overall cargo from Sumatra, Indonesia, and Thailand and cement its position as one of the key hubs in Asia, gathered momentum with the signing of a memorandum of understanding (MoU) between MMC Port Holdings Sdn Bhd (MMC Ports) and India’s Adani Ports and Special Economic Zone Ltd (APSEZ) to conduct a feasibility study of the project, which is estimated to spur RM200bil in investments.

In a further game-changing development, MMC Ports, Sime Darby Property Bhd and APSEZ also signed a separate MoU to study the feasibility of the development of an integrated maritime city, worth an estimated US$22.78bil (RM100.87bil), to support the Carey Island port project.

The MoUs were exchanged during our Prime Minister’s recent visit to India, and mark our global vision in transforming and upscaling our logistics industry.

The projects also gear us towards the future, enabling Port Klang to grow and meet capacity demands beyond 2030 while acting as a manufacturing base to support our export sector. When completed, the fully functional port is estimated to have a total gross development value exceeding RM1 trillion, according to the Port Klang Authority.

As we charge towards the goals set out in the masterplan, we are also extremely cautious in ensuring we are ready for the future – the digital economy. This is where our third and final phase, which plays a pivotal role in ensuring the sustainability of the logistics industry – the creation of a regional footprint – enters into the equation.

This is perhaps the most challenging part of all phases. Essentially, this is about making the tough decision to venture into a nascent field in the region – e-commerce.

Compared to other mature markets such as China and the United States, Malaysia’s e-commerce contribution to its Gross Domestic Product is only at 5.8% (21% in China and 35% in the US).

The DFTZ, as mentioned previously, is needed to secure our future and is poised to change the landscape of our logistics industry.

Comprising both physical and virtual zones, the DFTZ aims to lay the foundation for Malaysia to become a regional e-fulfilment and e-services hub, providing a more inclusive, free and innovative global trading platform for all SMEs in the country.

The benefits of this special trade zone are two-pronged.

Firstly, the DFTZ will help strengthen our economy when fully developed. It is expected to create close to 60,000 jobs and handle up to RM287bil worth of goods around the Asean region.

Secondly, the DFTZ will act as the anchor in supporting the biggest contributors to the country’s economy – SMEs.

Our goal is to support their growth by providing them equal footing with the bigger, more established players in the industry when it comes to competing in the international market.

To this end, we are confident that our effort to transform the logistics industry will pay off immensely in the near future.

The great military strategist Sun Tzu once said that the line between disorder and order lies in logistics.

For me, logistics has and will always be the backbone and silent worker of Malaysia’s economy.

Our job in the ministry is to support and make sure the industry will remain relevant for decades to come.

  • Datuk Seri Liow Tiong Lai is Transport Minister and MCA President. The views expressed here are entirely the writer’s own.