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MODERATOR
Prof. Datuk Dr. Kasim Hj. Md. Mansur
(Professor, Faculty Of Business, Economy & Accountancy
University Malaysia, Sabah)
THE ECONOMIC IMPACT FROM GLOBAL CONNECTIVITY
SPEAKERS
Datuk Dr. Mohd. Yaakub Bin Hj. Johari, J.P.
(President & Chief Executive,SEDIA, Malaysia)
Mr. Jayendu Krishna
(Director, Drewry Maritime Advisor,Singapore)
Capt. K. Subramaniam
(General Manager, Port Klang Authority)
SPEAKER
Datuk Dr. Mohd. Yaakub Bin Hj. Johari, J.P.
(President & Chief Executive,SEDIA, Malaysia)
SDC: SABAH’S EMERGING GEO-ECONOMIC POTENTIALS
SABAH ECONOMIC DEVELOPMENT AND INVESTMENT AUTHORITY (SEDIA)
SDC: SABAH’S EMERGING GEO-ECONOMIC POTENTIALS
2ND SABAH PORT FORUM1ST OCTOBER 2019KOTA KINABALU
Fragmented economic spaceForeign labourersPoor public infrastructureUneven Economic Growth: Low value adding Dependent on primary commodity –Narrow Export base
Low productivity
Poor connectivity
Imbalance in inbound-
outbound cargo
Higher logistics costs
High cost of doing business
THE VISION FOR SDC
The vision for Sabah is to be a vibrant, economically successful and liveable state
by accelerating economic growth, reducing socio-economic and regional
imbalance, and ensuring sustainable environmental development
Malaysia is rated by BAV Consulting and Wharton School, Univ of
Pennsylvania as the best countries to invest (2017), and sixth in this
2015’s ranking of destinations of attractiveness for foreign investors in
the Baseline Profitability Index (BPI). The BPI index published by the
Foreign Policy Magazine, covered 110 countries across six continents.
STRATEGIC GEOGRAPHICAL LOCATION: LINKING
BIMP-EAGA/ASEAN AND NORTH EAST ASIA
FDI into ASEAN-5 climbed to USD128.4 billion,up 7% from USD120 billion In 2012.
FDI into China fell to USD117.6 billion in 2013,down 2.9% from USD121.1 billion In 2012”FDI TO ASEAN-5 surpassing FDI to China in 2013
(Bank of America Merrill Lynch
TOURISTS ARRIVAL: 109 million (2015)Intra ASEAN: 46 million
POPULATION: 634 million (2016)GDP: USD 2.55 trillion (2016)
TOTAL GOODS EXPORTS: USD 1.1 trillionIntra ASEAN: 24.7 %
Sabah is blessed with excellent location, resources, culture and bio- diversity
Cultural Heritage
Natural Resources
• Accessed easily by air from 13 global destinations
• Rich in natural resources such as oil & gas, fertile agriculture land, palm oil and forestry
• Rich marine life, plant diversity and wildlife habitat• World Heritage Sites (Mount Kinabalu, Maliau Basin, Danum
Valley, Imbak Canyon) and world best dive sites (Sipadan)
CompetitiveADVANTAGE
Biodiversity
• 3rd largest population in Malaysia with 32 ethnic groups spawning diverse cultural backgrounds
Geographical Location
6
• Logistics convergence of Maritime Silk Road and Lombok-Makassar Shipping Lane
Sabah to be a Vibrant, Economically Successful and Liveable State by 2025
Tourism
Oil, Gas
& Energy
Palm Oil
Agriculture
Education
KEY SECTORAL CHARACTERISTICS
Modernization of KK City as a lifestyle hub
Boosting tourism attractions in Greater KK
Improve mobility and travel experience
Boosting Private & Public Healthcare
Improving Early Childcare Education
Key Focus Areas for
SDC
Key Focus Areas
for SDC
Key Result Areas for
Greater Kota Kinabalu
✓ Highest CPO Production;✓ Highest Oil Extraction
Rate (OER)
✓ Highest crude oil reserves (45%);
✓ New deep water discoveries
✓ Biggest Aquaculture producers✓ Largest seaweed producers✓ Rich Biodiversity
✓ Highest tourist spending;
✓ 6% growth rates
Manufacturing
& Logistics
TOTAL CARGO AND CONTAINER THROUGHPUT
292,688
277,905
326,825
356,195
374,624
373,042
398,800
363,185
357,386
0
50,000
100,000
150,000
200,000
250,000
300,000
350,000
400,000
450,000
-
5,000,000
10,000,000
15,000,000
20,000,000
25,000,000
30,000,000
35,000,000
40,000,000
2008 2009 2010 2011 2012 2013 2014 2015 2016
Total Tonnage at Wharf Total Tonnage at Anchor Total Cargo Total TEUs
Total Tonnage Total TEUs
According to UNCTAD, Global Investment had been declining from USD2,033.8 billion in 2015 to USD1,297.2 billion in 2018; the second lowest in a decade except in 2009, immediately after the Sub-Prime Crisis (USD 1,172.2);
Malaysia’s share of FDI into ASEAN had declined from a high of 14.2% in 2011 to a mere 5.4% in 2018;
in 2011, Malaysia’s share of FDI into ASEAN was the 3rd highest after Singapore and Indonesia. By 2018 however Malaysia’s ranking had declined to the 5th, after Singapore (1st), Indonesia (2nd), Vietnam (3rd) and Thailand (4th), slightly ahead of the Philippines!
Malaysia’s GFCF more than doubled from about RM160 billion in 2009 to RM350 billion in 2018;
According to ADB Study, the BIMP-EAGA Sub-Regional Initiatives however have had limited effectiveness in attracting cross-border trade and investments into Sabah from the participating countries since its inception.
INVESTMENT TREND AT THE GLOBAL AND ASEAN LEVEL
• General Incentives: Projects in the key promoted sectors of SDC relating to manufacturing and manufacturing related services fall within the purview of MIDA. (see www.mida.gov.my);
• Special Incentives Package and Customised incentives within designated Strategic
Development Areas/Clusters are also available to companies undertaking projects in the
Sabah Development Corridor (case-by-case basis). Applications should be submitted to
SEDIA;• Participation in Public-Partnership Programme;
• Supporting the creation of Bumiputera Entrepreneurship;
• Supporting Bio-Economy Agenda, with MOSTI and BiotechCorp - Bio-Nexus Status for
Biotech-related Industries;
• Supporting SMEs and Start-ups through Incubator and Accelerator Programme
DRIViNG INVESTMENTS IN SDC
0
20
40
60
80
100
120
140
160
180
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
11.8719.55
41.36
118.77123.23
127.98138.11
153.45159.22
165.00
0.92 1.415.… 7.…
18.1325.86
50.… 55.3160.32 66.09
Cumulative Committed and Realised Investment in SDC from 2008 -2017
Cumulative Committed Investment Cumulative Realised Investment
• Cumulative Investment in SDC from 2008-2017 is RM165 billion• Cumulative Realised Investment in SDC from 2008-2017 is RM66.09 billion• By the Second Quarter of 2018, the SDC recorded RM166.33 billion of
cumulative committed investments• Driven by domestic sector
❖ Human Capital Development: Supporting TVET
Programme, Talent Development and Entrepreneurship
❖ Infrastructure and Utilities: Completed key infrastructure
to support dedicated economic clusters, including 2
incubator projects: Sabah Agro-Industrial Precinct and
Sabah Animation and Creative Contents Centre
❖ Policies and Regulations: As and when applicable
especially as enforced under the various National and
State Budget thrusts
❖ Fiscal and Tax Incentives: Income tax exemption for 10
years under SDC; and supported by MIDA incentives as
well as incentives for Less Developed Areas
COMPLETED PROJECTS AND KEY ENABLERS
ENHANCING SABAH’S ATTRACTIVENESS AS AN INVESTMENT DESTINATION
• Enhancing Sabah’s global competitiveness by improving the state’s globalconnectivity, upgrading human capital and entrepreneurship.
• Improve KKIA handling capacity to cater for increased air traffic passengerand air freights. KKIA is now handling more than 6.5 million per year, and expectedto reach its capacity of 9 million passenger by 2020. With the current rapid increasein tourist arrivals through both scheduled and chartered flights, KKIA may reach itscapacity earlier. SEDIA had completed a Masterplan Study for Aviation Hub andAir Freights Logistics.
• The Federal Government had also approved development allocations to upgradeSapangar Bay Container Terminal into a major Transhipment Hub.
• Proposed the development of a Free Trade Zone at KKIP. A feasibility study isbeing carried out by SEDIA.
PAN-BORNEO HIGHWAY TO STIMULATE ECONOMIC ACTIVITIES IN SDC
PAN-BORNEO HIGHWAY TO STIMULATE ECONOMIC ACTIVITIES IN SDC
GLOBAL PORT NETWORK UNDER THE MARITIME SILK ROAD
LEVERAGING SABAH AND THE NEW INDONESIANCAPITAL IN THE BORNEO ISLAND: NEW FRONTIERS RE-SHAPING THE GEO-ECONOMICS POTENTIAL OF BORNEO ISLAND
Active air and ferry services between Tawau-Tarakan
A with ICQS facilities, and opening up new businesbordertownship at Serudung (Kalabakan, Tawau), Sabah should be established: serving as Sabah-Kalimantan logistics Hub, trading and services centres, s and investment opportunities.
The Pan-Borneo Highway should be linked to Kalimantan Road Artery through a land-bridge linking Serudung to Simanggaris(Kota Tanjung Selor-Malinau-Nunukan) and Balikpapan
Malinau
Serudung
SDC 11MP DIRECTION & STRATEGY
• Increase high yield, long stay tourists
• High end development (resorts, residences, etc)
• Focus on aquaculture sector (shrimp, seaweed, sea cucumber, cage fishing)
• Value add from food processing, packaging & Biotech
• Complete the OGE value chain with downstream activities (petrochemical, transmission, etc)
• Increasing mixed development (commercial and residential) to promote people to live and spend in KK
• Enhance entrepreneurship and skills to support the emerging industries (hospitality & tourism, OGE, manufacturing, Agriculture, etc
• To improve accessibility on public transportation services and infrastructure for locals and tourists
Tourism
Agriculture
OGE
Livability
Logistic • Enhance Intercity & Global Connectivity
Education
Palm Oil • Promote high value add downstream activities
Manufacturing • Further grow manufacturing sector
Focusing on the Expansion of SDC 10MP Programmes by Driving the Keys Focus Areas while Focusing on the Enhancement of Global Connectivity & the Efficiency of Logistic Services
Key Focus Areas
Expansion in Positioning Sabah as a Leading
Economic Region in Asia as an Attractive
Destination for Foreign Direct Investment
with Strong Supporting Infrastructure and a
Ready Pool of Knowledge Workers.
❖ Continue to Drive Key Focus Areas
❖ To Improve Global Competiveness via
➢ Enhancing International Connectivity
➢ Integration of Land, Sea & Air Logistic
Services
➢ Improvement of broadband Internet
Services
➢ Enhancing the Quality of Human capital
➢ Enhancing Knowledge Intensive & High
Technology Industries
➢ Effective Government Delivery Service
Key Strategy
17
Services SectorAgriculture SectorManufacturing Sector
GOING FORWARD
• The BIMP-EAGA initiative had limited effectiveness in promoting cross-bordertrade and investment as there was a divergence between sub-regional developmentprocesses and geo-economics interests.
• The shifting of the new Indonesian Capital to the Borneo Island will re-shape theregional development significance of the Borneo Island, thereby aligning the sub-regional processes to ASEAN geo-economics interests.
• This means that for Malaysia to emerge as a logistics hub in the Asia-Pacific region,the full logistics potential of Sabah need to be fully harnessed, as Sabah can serveas a key conduit to the Maritime Silk Road, by providing the gate of entry to theglobal economy, in the medium-term through the Sapangar Bay Container Portas a transshipment hub, and potentially in the long term through the Kudat Portwhich can tap into the Lombok-Makassar Shipping Lane.
• This development however can be a double-edge sword. It may enhance Sabah’sattraction as an investment destination, if we in Sabah are prepared to do the rightthing. We in Sabah therefore must ensure that we are prepared to face thisemerging geo-economics reality.
CRITICAL SUCCESS FACTORS
• Clear and stable policy framework: sectoral focus, fiscal & development thrusts;
• Good governance;
• Business friendly government: One-Stop Centre;
• Vibrant entrepreneurship culture: Startups, SMEs, Co-ops
• Supportive financial architecture: banking, private equity and government incentives;
• Dedicated economic clusters with infrastructure, water & energy: eg POIC, SAIP & KILC;
• Seamless connectivity: internet and logistics- broadband, road, airports and seaports;
• Skilled, talented and adaptable workforce: creative and innovative
SPEAKER
Mr. Jayendu Krishna
(Director, Drewry Maritime Advisor, Singapore)
ECONOMIC IMPACT OF GLOBAL CONNECTIVITY
Economic Impact of Global
Connectivity
1 October 2019
Author: Jayendu Krishna
Director Drewry Maritime Advisors
Prepared for
22 www.drewry.co.ukDrewry Maritime Advisors – STRICTLY CONFIDENTIAL –
Agenda
Introduction to Drewry
Assessment of global connectivity and impact on the economy
Kay takeaway for Malaysia from connectivity indices
Policy imperatives
A
B
C
D
23 www.drewry.co.ukDrewry Maritime Advisors – STRICTLY CONFIDENTIAL –
Connectivity defined
• Doing away with regulatory barriers
Trade logistics facilitation
• Port
• Rail
• Road
Improving logistics
performance
• Capital
• Information
• People
Other parameters
Connectivity assessment
• Drewry Liner
Connectivity Index
• UNCTAD Liner Shipping
Connectivity Index
• Logistics Performance
Index
• DHL Global
Connectedness Index
Elements of Connectivity
24 www.drewry.co.ukDrewry Maritime Advisors – STRICTLY CONFIDENTIAL –
Key conclusions of DHL Connectedness Index
Europe is the world’s most globally connected region, with 8 of the 10 most connected countries. Europe leads on trade and people flows.
Emerging economies have much lower average levels of connectedness than advanced economies.
Countries that integrate more deeply into international flows tend to enjoy faster economic growth, and even the top-ranked countries have untapped opportunities to strengthen their global connectedness.
25 www.drewry.co.ukDrewry Maritime Advisors – STRICTLY CONFIDENTIAL –
Connectivity and its impact
Encourage FDI
Increased industrialisation
Trade expansion
Regional integration
Lower logistics cost
Higher economic growth
26 www.drewry.co.ukDrewry Maritime Advisors – STRICTLY CONFIDENTIAL –
Key observations: DHL Connectedness Index 2018
Pillar Component
1. Trade
1.1. Merchandise Trade (vs. GDP)
1.2. Services Trade (vs. GDP)
2. Capital
2.1. Foreign Direct Investment (FDI) Stocks (vs. GDP)
2.2. Foreign Direct Investment (FDI) Flows (moving
average in last 3 years, vs Gross Fixed Capital
Formation)
2.3. Portfolio Equity Stocks (vs Stock market cap)
2.4. Portfolio Equity Flows (moving average in last 3
years, vs Stock market cap)
3. Information
3.1. International Internet Bandwidth (vs internet users)
3.2. Telephone Call Minutes (vs Population)
3.3. Trade in Printed Publications (vs Population)
4. People
4.1. Migrants (foreign born population) (vs Population)
4.2. Tourists (departures and arrivals) (vs Population)
4.3. Students (vs Tertiary education enrolment)
Global Connectedness refers to the depth and breadth of a
country’s integration with the rest of the world, as manifested
by its participation in international flows of products and
services, capital, information, and people.
DEPTH refers to the size of a country’s international flows as
compared to a relevant measure of the size of its domestic
economy. It reflects in simple terms how important or
pervasive interactions with the rest of the world are in the
context of business or life in a particular country.
BREADTH measures how closely a country’s distribution of
international flows across its partner countries matches the
global distribution of the same flows in the opposite
direction. The breadth of a country’s merchandise exports,
for example, is measured based on the difference between
the distribution of its exports across destination countries
versus the rest of the world’s distribution of merchandise
imports.
Source: DHL Global Connectedness Index 2018
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Key observations: DHL Connectedness Index 2018
Netherlands ranks 1, Singapore Ranks 2. UAE ranks 5.
Rest are European countries in Top 15
Malaysia ranks 12.
Ranking of Malaysia by pillars
Trade Pillar: 4
Capital Pillar: 28
Information Pillar: 19
People Pillar: 47
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Connectivity indices: 2018
Netherlands
12 Malaysia
2 Singapore
25 Thailand
41 Malaysia
7 Singapore
32 Thailand
DHL Index LPI Index
Germany
46 Indonesia
39 Vietnam
China
4 Malaysia
2 Singapore
25 Thailand
UNCTAD Index
18 Vietnam
China (Shanghai, Ningbo)
10 Malaysia (Port Klang)
3 Singapore
55 Thailand (L. Chabang)
Drewry Index
66 Vietnam (Vung Tau)
21 Malaysia (Tanjung Pel)
171 Indonesia (T. Priok)
111 Indonesia
35 Indonesia
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Where does Malaysia stand vis-à-vis Netherlands and Singapore?
Note: FPI: Foreign Portfolio investment
All the figures are in terms of % of GDP except FPI, which is % of market cap, The detailed figures presented in the Appendix
Source: DHL Global Connectedness Index 2018
Malaysia
• Outward: 69%
• Inward: 62%
• Outward: 41%
• Inward: 44%
• Outward: 13%
• Inward: 16%
Netherlands
• 79%
• 70%
• 194%
• 118%
• 91%
• 99%
Singapore
• 115%
• 101%
• 260%
• 397%
• 81%
• 24%
Trade Pillar:
Merchandise Trade
Capital Pillar:
FDI
Capital Pillar:
FPI
30 www.drewry.co.ukDrewry Maritime Advisors – STRICTLY CONFIDENTIAL –
Key conclusions
Areas of improvement
Trade Pillar
• Relatively low merchandise trade
• Low Services trade
Capital Pillar
• Significantly low FDI stock as well
as flow.
• Portfolio equity stock
Information piIlar
• Relatively low
People Pillar
• Singapore: high reliance on
migrant population
• Low inward movement of students
Relatively Low on enabling trade
index
Relatively Low on capital account
openness
Relatively Low on operating
environment
Relatively Low on infrastructure
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International Best Practices
www.drewry.co.uk
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Global maritime hubs have developed core competence
• Strong finance and
maritime insurance
offering
• Relatively competitive
services in law and
arbitration
• Moderate level in
shipping business and
port infrastructure and
handling services
Others
• Developed countries
with relatively high in
government
transparency, ease of
doing business,
economic freedom and
logistics performance.
• Relatively lower rank on
tax compared with other
developed countries.
Shipping business services
Ship Finance and Marine Insurance
Maritime Legal and Dispute Resolution
Shipping Technical services
Port Infrastructure and services
• Largest international
shipping center for
finance, insurance, legal
and dispute services
with longest history
• Has competitiveness in
shipping business
services
Others
• Historical developed city
with high rank for all
indicators.
• Competitive presence in
ship finance and
maritime insurance
• Average level in
business services,
technical services and
port infrastructure and
handling services
Others
• Developed countries
with relatively high
scores in all general
environment indicators
except tax.
• Competitive presence in
ship finance and
maritime insurance
• Focus on offshore
Nordic shipping
operations
• Competitive presence in
ship finance and
maritime insurance
• Cluster of ship owning
companies
• Average level in
services of law and
arbitration
New York London Hamburg Oslo Athens
Key elements of maritime hub
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Global maritime hubs have developed core competence
• Growing hub for port
infrastructure and
handling services
• Relatively competitive
services in law and
arbitration
• Has strength in port
infrastructure and
handling services
• Large ship owning
base
• Maritime legal and
distribution solution
center in Asia
historically, but has
lost position to
Singapore
Others
• Financial center of
North East Asia with
relatively high scores
for all indicators.
• Relatively competitive
services in technical
services, port
infrastructure and
handling services
Others
• Second largest city in
Korea, average
scores in almost all
indicators except
government
transparency.
• Headquarters of large
a number of Chinese
shipping companies
and agencies
• Huge strength in port
infrastructure and
handling services
• Offering competitive
technical services
• Very large maritime
hub with strength in
shipping business
services, technical
services, port
infrastructure and
handling services
• Large, but smaller in
finance and insurance
services, law and
arbitration services
than London
• Strong support from
government to
become a leading
shipping center in all
sector
Others
• Emerging developed
city with high scores
for all indicators, high
government
transparency, easy to
do business, very low
tax rate.
Dubai Busan Hong Kong Shanghai Singapore
34 www.drewry.co.ukDrewry Maritime Advisors – STRICTLY CONFIDENTIAL –
Leading maritime capital of the world: 2019
Source: Menon Economics and DNV GL
Note: Based on objective criteria and expert assessment
35 www.drewry.co.ukDrewry Maritime Advisors – STRICTLY CONFIDENTIAL –
Maritime Cluster Management
The planning and management of Singapore Maritime Cluster take place in the Maritime and Port Authority of
Singapore. Reporting directly to the Assistant CEO, the International Maritime Centre (IMC) Division undertake the
critical tasks of promotion, service development, incentive management and manpower development. These efforts
are in sync with that of the Planning Division to ensure alignment in the country’s maritime strategy.
Source: MPA Singapore
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Maritime Cluster Management
To ensure quality strategic planning for the maritime cluster amid a fast changing landscape, an IMC 2030 Advisory
Committee was setup in 2016 to focus on new industry developments and identify cross-sector growth opportunities
to strengthen Singapore’s position as a leading IMC. Represented by industry leaders across all relevant sectors, this
committee works closely with the MPA and the Ministry of Transport.
Source: MPA Singapore
Prominent organizations represented in
the IMC 2030 Advisory Committee
Members
• BE Group Limited
• BHP Billiton
• Nippon Kaiji Kyokai
• DHL Global Forwarding
• DNV GL Group
• DVB Bank
• Howe Robinson Group
• IBM Singapore
• John Swire & Sons
• Kuehne + Nagel International AG
• LCH Lockton Pte Ltd
• Lloyd’s
• PIL
• PSA International
• Singapore Shipping Association
• MPA
First Meeting of IMC 2030 Advisory Committee
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Key Enabler: Talent Availability
The success of Singapore maritime cluster rests on a set of enablers that attract global and regional businesses.
Among which, the availability of talent in the maritime industry is a strong draw. This enabler is built on the strong,
robust education system that have allowed Singapore to rank among the top in scholastic performances and
university rankings globally.
2016
RankScience Math Reading
1 Singapore Singapore Singapore
2 Japan China: Hong Kong Canada
3 Estonia China: Macao China: Hong Kong
4 Taiwan Taiwan Finland
5 Finland Japan Ireland
6 China: Macao China: Major Cities Estonia
7 Canada South Korea South Korea
8 Vietnam Switzerland Japan
9 China: Hong Kong Estonia Norway
10 China (Main Cities) Canada Macao
Source: OECD, BBC
Rank #10 in QS World
University Ranking
Rank #10 in QS World
University Ranking
Global Ranking for Scholastic Performance among 15-year olds 2020 ranking
38 www.drewry.co.ukDrewry Maritime Advisors – STRICTLY CONFIDENTIAL –
Key Enabler: Quality of Life
The EIU ranked Singapore as the 4th most liveable city in Asia, after Tokyo and Osaka. The city is known for its safe
streets, clean environment, good schools and cosmopolitan feel; offering a quality of life that makes it an attractive
destination for global talent and business owners. This facilitates efforts to attract maritime businesses to cluster in
Singapore.
Source: EIU
Low crime rate
Low risk of social unrest
Little corruption
Good healthcare
Efficient transport
Vibrant public spaces
Good schools
Cosmopolitan
Rank: 40
High Quality of Life in
Singapore
Behind Hong Kong (38)
Ahead of London (48) and New
York (58)
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Key Enabler: Pro Business Environment
Singapore has also acquired a reputation for being a good place to do business. It ranks in the top 20 for most of the
business environment attributes, and is known to have a climate of good corporate governance and low taxes. These
factors allow the city to successfully attract and entrench global maritime firms to shape its vibrant ecosystem today.
Source: World Bank 2018 Report, World Economic Forum
2 3 816 21
32
7 8
45
1
27
0
20
40
60
80
100
120
140
Ran
k
Doing Business
Singapore Malaysia
World Competitiveness Index 2018:
Singapore: 2
Malaysia: 25
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Growth in Maritime Service Providers in Singapore since 2000
Source: IMC 2030
Maritime Singapore contributes about 7% of Singapore’s GDP and generates more than 170,000 jobs.
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Key Takeaways: Saba/Malaysia
1Create a Robust Management Structure for the maritime hub
• The creation of a sustainable maritime hub is a complex task. A main agency has to be tasked to
undertake this responsibility
• Partnerships have to be forged across the government (trade ministries, manpower ministries
and tax agencies) and with key players (ports and shipping companies) in the industries
2
Ensure that the Enablers are in Place
• Ensure a pipeline of talent for both knowledge based and labour based jobs
• Make the city attractive and conducive for foreign talent and investors
• Improve the ease and transparency of doing business
• Improve the proficiency of English used in the industry
• Enhancing trade enablers (general operating environment)
• Capital account convertibility
3Leverage on Strategic Funding
• Set aside different pots of funding for each strategic objectives in shipping and logistics
• Jointly shape the criteria and quantum of funding with the industry to ensure practicality
• Ensure transparency and parity in fund administration
• Measure the long term return on funding based on tangible and intangible value added
4Prioritize among Sectors
• Measure the prospect of each sector within the maritime clusters
• Prioritize sectors where strong fundamentals are present and upside is steep
• Focus resources on these sectors, using them as the starting point of clustering
UK
15-17 Christopher Street
London
EC2A 2BS
United Kingdom
T +44 20 7538 0191
INDIA
4th Floor, Tower C
Pioneer Urban Square
Sector 62, Gurugram
122102 India
T +91 124 497 4979
SINGAPORE
#13-02 Tower Fifteen
15 Hoe Chiang Road
Singapore 089316
T +65 6220 9890
CHINA
Unit D01, Level 10,
Shinmay Union Square
Tower 2, 506 Shangcheng Road
Pudong, Shanghai 200120
T +86 21 5081 0508
enquiries@drewry.co.uk
www.drewry.co.uk
Thank you!
1 October 2019
Author: Jayendu Krishna,
Director Drewry Maritime Advisors
43 www.drewry.co.ukDrewry Maritime Advisors – STRICTLY CONFIDENTIAL –
Malaysia : Key observations from DHL Connectedness Index 2018
Areas of improvement
Trade Pillar
• Relatively low merchandise trade
• Low Services trade
Capital Pillar
• Significantly low FDI stock as well
as flow
• Portfolio equity stock
Information piIlar
• Relatively low
People Pillar
• Singapore: high reliance on
migrant population
• Low inward movement of
students
Source: DHL Global Connectedness Index 2018
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Netherlands: Key observations
Source: DHL Global Connectedness Index 2018
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Singapore: Key observations
Source: DHL Global Connectedness Index 2018
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Comparison : DHL Connectedness Index 2018
Netherlands
Malaysia
Source: DHL Global Connectedness Index 2018
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Key observations for Malaysia: DHL Connectedness Index 2018
Singapore
Malaysia
Source: DHL Global Connectedness Index 2018
48 www.drewry.co.ukDrewry Maritime Advisors – STRICTLY CONFIDENTIAL –
Introduction to Drewry
www.drewry.co.uk
49 www.drewry.co.ukDrewry Maritime Advisors – STRICTLY CONFIDENTIAL –
Who we are
From our origins in 1970 London to a 21st century maritime and shipping
consultancy, Drewry has established itself as one of the most widely used
and respected sources of impartial market insight and industry analysis.
This in-depth understanding and objectivity provides our clients with the
actionable advice and recommendations they need to achieve their
ambitions and stay ahead of the market.
We provide our services through four business units: Drewry Maritime
Advisors supporting the needs of shipping and financial institutions; Drewry
Supply Chain Advisors providing seafreight procurement support to retailers
and manufacturers; Drewry Maritime Research publishing market-leading
research on every key maritime sector; and Drewry Maritime Equity
Research delivering an Investment Research Service on listed companies
operating in the industry.
Drewry is the leading international provider of research and
consulting services to the maritime and shipping industry with
unrivalled experience and expertise across all market sectors from
containers and ports to tankers and dry bulk.
50 www.drewry.co.ukDrewry Maritime Advisors – STRICTLY CONFIDENTIAL –
What we do
RESEARCH ADVISORY
Independent, market-
leading research on every
key maritime sector
An Investment Research
Service on listed companies
operating in the industry
Expert project-based
advisory services to the
shipping industry and
financial institutions
Ocean freight procurement
support and cost benchmarking
services to global retailers and
manufacturers
Rigorous analysis, practical advice
In boardrooms across the globe, decisions are made based on the analysis and insight provided by
our Maritime Research teams. This rich industry knowledge and understanding provide the unique
intelligence that underpins our advisory services.
A SPECIALIST THAT COMBINES RICH MARKET INSIGHT WITH EXPERIENCE AND EXPERTISE
51 www.drewry.co.ukDrewry Maritime Advisors – STRICTLY CONFIDENTIAL –
What sets us apart
We are the primary source of market insight, analysis and advice trusted by a global audience of maritime and shipping industry stakeholders. Our
combination of sector knowledge, rich market insight and commercial awareness enables us to deliver the performance, profitability and competitive
advantage our clients seek.
Our voice is our own and is
not defined by others
This impartiality, alongside our
depth of market understanding
has cemented our reputation
as an indispensable reference,
trusted by a diverse audience
of shipping industry
stakeholders.
Independence Heritage Market Insight Sector Expertise
A trusted brand for more than
50 years
We have been charting and
analysing the world’s maritime
markets for over 50 years,
building unique resources and
models our clients rely on to
make informed decisions.
Rich insight – unrivalled market
intelligence
Our understanding comes not only
from being close to the sectors
we serve but also from working
with our clients and giving them a
balanced, highly practical and
commercial perspective.
Industry knowledge
We combine timely and relevant
market analysis with specialist
sector and technical expertise to
deliver real commercial value
and competitive advantage to
our clients.
52 www.drewry.co.ukDrewry Maritime Advisors – STRICTLY CONFIDENTIAL –
Shipping Advisory Capability
Drewry provides expert advice to Financial Institutions, Shipping Companies, Private Equity firms and Industrial Users covering
the full spectrum of commercial and technical aspects of the shipping market. Our team is made up of industry professionals,
economists and technical experts, providing rigorous analysis and a practical understanding of all shipping markets.
The Shipping team provides strategic, commercial, financial and technical advisory services to
industry players and investors. Our approach is to provide a bespoke package to each client,
working to ensure that each project focuses on achieving its core objectives and that the
analysis we prepare answers the client’s fundamental questions. These questions range from
whether it is the right time to invest in the sector to how to manage seafreight to ensure
corporate competitiveness.
In all our projects, our starting point is an in-depth understanding of the characteristics and
dynamics of the relevant shipping market and a clear view of the outlook for the sector’s
earnings and asset values. The advisory team works closely with Drewry’s individual shipping
Research teams, who provide up to date analysis on key commodities, market rates and asset
values, the newbuild orderbook and other key industry trends.
This understanding of the market underpins our work in market analysis, commercial and
technical due diligence, valuation, fairness opinion and investment appraisal. We prepare
earnings and asset value projections under a variety of scenarios and combine this with
financial modelling and analysis to allow clients to see the likely outcomes of planned
investment.
The outlook for the market and specific commodity sectors is used by our advisors in
seafreight strategy and CoA tendering advice. The advisory team has the experience to assist
in seafreight contract negotiations.
Drewry’s in-house technical experts are able to offer a full range of technical services including
desktop technical due diligence, health and safety due diligence, operating cost benchmarking
and physical inspection of vessels.
The combination of commercial, financial and technical expertise means that Drewry’s shipping
team has the complete set of capabilities required to service all stakeholders within any
shipping market.
• Market outlook
• Projections of earnings and asset
values
• Investment due diligence of target
company
• Network design and modelling
• IPO/Private placement support
• Seafreight strategy development for
industrial users
• Freight rate benchmarking
• Freight cost assessment model for
contract negotiation
• Counterparty due diligence and
Credit analysis
• Contract of affreightment tendering
advice
• Strategic planning and investment
• Mergers and Acquisition assistance
• Market entry and exit
Commercial and market assessment
Assessment of vessel seaworthiness
• Desktop technical due diligence
• Health, Safety and Environment due
diligence
• Oversight supervision of vessels
under construction
• Operating cost benchmarking
• Physical inspection of vessels
• Financial modelling
• Earnings benchmarking
• Fairness opinion
• Vessel valuation (Charter free,
Charter attached)
• Residual Value assessment
Technical due diligence of vessels
Financial assessment
53 www.drewry.co.ukDrewry Maritime Advisors – STRICTLY CONFIDENTIAL –
Ports and Terminals Capabilities
Drewry provides expert advice to Financial Institutions, Port Authorities, Terminal Operators, and Governments covering the full
spectrum of commercial and technical aspects of ports and terminals. Our team includes industry professionals, economists
and technical experts who together bring rich experience and practical understanding of the global ports industry.
The global Ports and Terminals team provide strategic, commercial and technical advisory
services. Our rich industry knowledge and expertise is complemented by the practical,
hands-on experience of our advisors.
For every project we take care to craft a bespoke package that focuses on your core
objectives and commercial needs whilst answering the fundamental project-specific
questions you may have.
Whether commissioning our commercial advisory team to provide strategic analysis,
commercial due diligence or market analysis, you can rely on our independence and
rigour to provide sound professional advice. We can provide an in-depth assessment of the
characteristics, dynamics and trends of the port market, conduct customer analysis or
evaluate the port competitive environment to help you overcome challenges or realise
asset opportunities. Given the breadth and depth of experience across the team, we are
well placed to support both strategic goal setting and business planning processes.
Drawing on our extensive in-house databases we can help you assess the impact of liner
network strategy, vessel upsizing and the development of key trade lanes within the ports
and terminal sector.
Our approach to financial modelling and forecasting utilises our rich market intelligence
and analysis, producing models that reflect the unique competitive environment in which
your asset resides. The advisory team can provide volume, revenue, B/S, P&L, cash flow
forecasts and asset valuations. This work can also support investment and divestment
appraisals, where can advise on market entry strategies and financial return projections.
Our in-house technical experts, who are port engineers, are also able to support feasibility
and pre-feasibility studies as well as offer technical due diligence and asset risk services.
This combination of technical and commercial expertise ensures a consistent and co-
ordinated approach, whilst providing an independent view of the asset infrastructure, key
material risk and capacity expansion plans.
• Commercial due diligence
• Market analysis and outlook
• Strategic analysis and planning
• Asset risk analysis
• Investment and divestment appraisals
• Competitive assessments
• Feasibility and pre-feasibility studies
• Concession design
• Bid process support
• Financial modelling
• Tariff assessments and structures
• Maritime policy
• Network analysis
Strategic and commercial
• Capacity assessment, capacity bottlenecks and
expansion assessment
• High level assessment of technical risks of
project
• Maintenance strategy review and repex strategy
review
• Capex review
• Opex review
• Lenders Technical Advisor, Vendor’s Technical
Advisor, Buyer’s Technical Advisor
Operational and technical
SPEAKER
Capt. K. Subramaniam(General Manager, Port Klang Authority)
ECONOMIC IMPACT FROM GLOBAL CONNECTIVITY
ECONOMIC IMPACT FROM
GLOBAL CONNECTIVITY
CAPT. K. SUBRAMANIAMGENERAL MANAGER
PORT KLANG AUTHORITY
MALAYSIA GLOBAL CONNECTIVITYTHAILAND
SINGAPORE
BRUNEI
INDONESIAMELAKA
TANJUNG PELEPAS
PENANG
PORTKLANG
PASIR GUDANG
KLIA / KLIA2
KOTAKINABALU
MIRI
BINTULU
KUCHING
KEMAMAN
KUANTAN
ASIA- POPULATION : 4.6 BILION PEOPLE- GDP : USD65.44 TRILLION (PURCHASING
POWER PARITY)
ASEAN - POPULATION : 647.5 MILLION PEOPLE- GDP : USD2.92 TRILLION U.S. - TRADE VALUE : USD2,574 BILLION (IN
GOODS)
REGIONAL ECONOMIC BLOCK
STRAITS OF MALACCA-CARRYING ABOUT 25% OF THE WORLD'S TRADED GOODS-80,000 VESSEL SAILING THROUGH STRAITS OF MALACCA
BIMP-EAGA
-POPULATION : 58 MILLION PEOPLE
-GDP : USD287.3B
-TRADE VALUE : USD102.7 BILLION (IN GOODS)
IMT-GT
-POPULATION : 83.1 MILLION PEOPLE
-GDP : USD1.258 TRILLION (PURCHASING POWER PARITY)
-TRADE VALUE : USD470.1 BILLION (IN GOODS)
INTERNATIONAL MULTIMODAL CONNECTIVITYSEA CONNECTIVITY AIR CONNECTIVITY RAIL CONNECTIVITY
SEABORNE CARGO 98.5% 2018 MALAYSIA THROUGHPUT :24.9 MIL TEUsPORT KLANG : 49.4% (12.3 MIL TEUS)PTP : 35.9 % (8.96 MIL TEUS)
KLIA - 555,704 TonnesKLIA2 - 158,965 TonnesSENAI - 9,691 TonnesPENANG - 130,127 Tonnes
351,221 TEUS5,789 TONNE
PORT KLANG WESTPORTS EXPANSION & 3RD TERMINAL AT PULAU CAREY
KUANTAN PORT EXPANSIONNEW DEEP WATER TERMINAL
JOHORBUNKER ISLAND DEVELOPMENT, PTP EXPANSION
• KLIA AEROPOLIS MASTER PLAN• E-COMMERCE BUSINESS GROWTH
SINGAPORE KUNMING RAIL LINK (SKRL)• A RAILWAY PROJECT ALONG 6,617.5 KM
• CONNECTS 8 COUNTRIES WHICH ARE CAMBODIA, LAO PDR, MALAYSIA, MYANMAR, REPUBLIC OF CHINA , SINGAPORE, THAILAND AND VIET NAM.
• OBJECTIVES - TO PROMOTE AND ENHANCE TRADE, TOURISM AND TRAVEL BETWEEN COUNTRIES INVOLVED.
• EARLY STAGE. ROUTE TO BE SET BY USING METER GAUGE
ECRL (EAST COAST RAIL LINK 2.0)• 640KM RAIL TRACK• LINKING KOTA BAHRU, KUANTAN PORT &
PORT KLANG• EXPECTED TO BE COMPLETED BY END OF
2026.
• MALAYSIA BENEFITS FROM TRADE WAR:
✓ VIETNAM IS THE LARGEST BENEFICIARY OF THE US-CHINA TRADE WAR AND
GAINED 7.9% OF GDP FROM TRADE DIVERSION, FOLLOWED BY TAIWAN (2.1%),
CHILE (1.5%), MALAYSIA (1.3%) AND ARGENTINA (1.2%).
✓ MALAYSIA EMERGE AS THE FOURTH LARGEST BENEFICIARY OF THE US-CHINA
TRADE WAR (GAINING 1.3% GDP – NOMURA RESEARCH)
✓ TRADE DIVERSION:
- SHIFTING OF SOME CHINA MANUFACTURERS OPERATIONS TO MALAYSIA
- STORAGE OF COMMODITY IN MALAYSIA
- INCREASE IN LOGISTICS BUSINESS IN MALAYSIA
TRADE WAR BETWEEN CHINA & US
ECONOMIC CONFLICTS EXTREME PROTECTIONISM
CREATE TARIFF OR OTHER TRADE BARRIERS
TRADE WAR
CAPITALIZING CHINA GROWTH
MARITIME SILK ROAD1 BELT 1 ROAD/BELT & ROAD INITIATIVE
TO REMAIN COMPETITIVE AND SUSTAINABLE AS A MARITIME NATION
THANK YOU
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