MODERATOR - SPSB 1...MODERATOR Prof. Datuk Dr. Kasim Hj. Md. Mansur (Professor, Faculty Of Business,...

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 biodiversity

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


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


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.


Connectivity and its impact

Encourage FDI

Increased industrialisation

Trade expansion

Regional integration

Lower logistics cost

Higher economic growth


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


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


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


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


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


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


International Best Practices

www.drewry.co.uk


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.


ship finance and

maritime insurance

• Focus on offshore

Nordic shipping

operations


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


Global maritime hubs have developed core competence

• Growing hub for port

infrastructure and

handling services


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.


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


Leading maritime capital of the world: 2019

Source: Menon Economics and DNV GL

Note: Based on objective criteria and expert assessment


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


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


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


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)


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


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.


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

[email protected]

www.drewry.co.uk

Thank you!

1 October 2019

Author: Jayendu Krishna,

Director Drewry Maritime Advisors


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



Netherlands: Key observations



Singapore: Key observations



Comparison : DHL Connectedness Index 2018

Netherlands

Malaysia



Key observations for Malaysia: DHL Connectedness Index 2018

Singapore

Malaysia



Introduction to Drewry

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our clients.


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


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

MODERATOR - SPSB 1...MODERATOR Prof. Datuk Dr. Kasim Hj. Md. Mansur (Professor, Faculty Of Business,...

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