PSA-PTP Tie Up - helping a competitor to be stronger ?
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It was reported that the Port of Singapore (PSA) and Port of Tanjong Pelapas (PTP) is planning a tie-up, that will result in a win-win situation.
This arrangement seems to offer some opportunities for PSA to expand deeper into Malaysian Port Operations, and cut out the wasteful price competition that cannot possibly be sustained over the longer period.
However, in so doing, will it not create a stronger future competitor in PTP accumulating the expertise and work culture of PSA ?
Can another "merger" of interests between Malaysia and Singapore see any success, when we have experienced the fickleness of Malaysian Politics ?
If our PSA had not been so aloof and arrogant in their condescending attitudes towards the shipping companies that are PSA's customers, then we would not have seen a loss of nearly twenty percent of PSA's turnover crossing over to PTP, which gave it the initial confidence boost in its start-up.
With open real world competition closer to home, our Singapore Government has begun to realise that "market forces" is real, and not something which they have always preached to Singaporeans but with them controlling those "market forces".
Read the following article from the Straits Times:
KL will not oppose port tie up with Singapore
http://straitstimes.asia1.com.sg/topstories/story/0,4386,204771,00.html? -
This news article will be withdrawn after 3 days, and will be available only on a subscription basis from the archives:
KL will not oppose port tie-up with S'pore
By Brendan Pereira
KUALA LUMPUR - The Malaysian government will not object to a possible tie-up between the Port of Tanjung Pelepas (PTP) and its rival port in Singapore, saying that strategic alliances were needed to compete in a global market.
Second Finance Minister Jamaluddin Jarjis said yesterday that the government would not frown upon any proposed deal between the operators of the ports, and suggested that even a move by Singapore to take a stake in the Johor port would be acceptable to the Malaysian leadership.
'Establishing a corporate alliance is a strategic choice. If there are opportunities for them to create alliances, it is for them to decide,' he said.
But would the Malaysian government object to Temasek Holdings - the parent of port operator PSA Corp - taking a stake in PTP?
He replied: 'In a global world, one has to create alliances for a strategic win-win situation. It is for them to decide who they want to be with, from which country. We leave it to them.'
Sources told The Straits Times that the thinking in government on this issue was being guided by a realisation that the PTP strategy of offering huge discounts to entice shipping lines across the Straits of Johor could not be sustained indefinitely.
It was hurting the bottom line of PTP and complicating the decision to expand the operations of the port.
Even senior ministers in the Cabinet believe that the way forward involves some form of collaboration, rather than tit-for-tat cuts in rates between the rival ports which benefit shipping companies.
PSA's strength lies in its connectivity and its overall port management, PTP has a cost advantage and a land bank that makes future expansion possible.
The neighbouring PTP, which began operations in 1999, lured Danish global container line Maersk Sealand and Taiwanese shipping giant Evergreen Marine Corp away from Singapore by offering sharply lower rates.
In Maersk's case, PTP sweetened the deal with a 30 per cent equity stake offer. With the exit of Evergreen and Maersk, Singapore lost about 15 per cent of its business to PTP, where costs are up to 40 per cent lower.
But Tan Sri Syed Mokhtar Al-Bukhary, the businessman who controls PTP, has recently been telling government officials that the strategy of dangling its low cost base cannot be a long-term strategy.
He controls about 70 per cent of PTP and 50.86 per cent in Johor Port in Pasir Gudang via Malaysia Mining Corp and Seaport Terminal.
His associate confirmed to The Straits Times that talks were under way between PTP and Temasek Holdings, but declined to offer an idea on the nature of the tie-up being explored.
PSA yesterday declined to comment.
But a spokesman for Temasek Holdings said it believed there was always scope for PSA to explore sustainable partnerships that make economic sense to all parties involved.
'As a general principle, Temasek is always open to any business collaborations or partnerships which PSA intends to undertake, whether with overseas ports or shipping lines,' the spokesman said. -
Originally posted by Atobe:
This news article will be withdrawn after 3 days, and will be available only on a subscription basis from the archives:
[b]KL will not oppose port tie-up with S'pore
[/b]
Somehow, the Malaysian has a different view on this. NST columnist seems to relish at the idea of finally having brought this "sleeping dragon" on "its knees". Nationalistic flavour is never far behind those money talks and so-called business interests. I would view BT's report with skepticism considering the fact that diplomatic relation is now at the their lowest ever.
New Straits Times (P.Y. Chin, Aug17 2003)
Money Game: PTP has proven sceptics wrong but must not be complacent
SOME years ago, when businessman Tan Sri Syed Mokhtar Al-Bukhary started building his seaport at Tanjong Pelepas at the western tip of Johor, many Malaysian businessmen, corporate leaders and of course politicians were sceptical that Syed Mokhtar would survive financially beyond the completion of the port.
They commented the project was too massive, let alone getting foreign shippers to stop at the Port of Tanjong Pelepas (PTP), when the modern and sophisticated Singapore Port was just next door, less than 50 miles away.
Some of Singapore's shippers were also expecting the PTP to fail even before it got off the ground.
Today these sceptics had to eat their words. Not only had PTP not become a "corporate white elephant", as many would have wished, it has awakened the "sleeping dragon" (Singapore Port).
Reality has sunk in for Singapore Port officials and they know that PTP will not be fading away, that it is here to stay.
Singapore Port officials have put PTP on their radar screen day and night and hardly a week passes without some news on Syed Mokhtar and his port appearing in the Singapore newspapers.
Two weeks ago the Singapore Business Times reported that Singapore Port had been holding talks with PTP, for at least 10 months, for a possible "merger of operations" between the two to take on world trade, instead of fighting each other as competitors.
One can read many things into this report or one can just dismiss it. But as it is always said, there's no smoke without fire.
So if one assumes the report to be true, and there is no reason not to, then one obvious inference from it would be that PTP had not only awakened the "sleeping dragon" but has also brought the "dragon" to its knees.
One may not believe that could be possible given the sophistication of the Singapore Port, until one has read what PTP chief executive officer Datuk Mohd Sidik Shaik Osman told Malaysia's Business Times.
He said a few weeks ago that PTP had "re-routed between 300,000 TEUs (20-foot equivalent units) and 400,000 TEUs that would have otherwise gone through Sin-gapore".
This figure worked out to be about 50 per cent of the total cargo from Malaysia that had traditionally been shipped via Singapore.
"The leakage used to be from Malaysia. With PTP, now it is Singapore that is experiencing the leak." If this is not sufficient reason for Sin-gapore Port to get even more jittery, then the "sleeping dragon" is really sleeping, or rather has over-slept. PTP is definitely not going to go away. It is staying to become the biggest headache for Singapore Port.
Some Malaysian businessmen would say that Singapore had certainly under-estimated PTP.
Of course, Singapore Port would say that it was just observing, ready to strike at the right moment with the right strategy hitting at the right places.
But with about half of the cargo having gone back to PTP, it is difficult to see how Singapore Port would fight back. In setting up PTP, the plan has been seen as simple, with only one objective in mind: Re-divert all the cargoes that have for far too long been "leaking" through Singapore.
In simple terms, what Singapore has been doing all these years was to develop its port to an extent that Malaysian exporters and importers found it highly efficient and cost-saving to ship their exports and imports through Singapore.
Singapore was able to provide a point of re-export and re-import of Malaysian products going out and foreign products coming in. Singapore Port in essence has become a "toll-collector" or "gate-keeper", for Malaysia's export and import trade.
So, it is time that Malaysia gets back some, if not all, of the trade that passes through Singapore.
Indeed, in a wider context there is no necessity for Malaysian exporters and importers to ship through Singapore Port. And in a longer-term perspective, if Malaysia could develop its ports into top international ports of call for all foreign ships, why not go for it? After all, there is always the strong spirit of Malaysia Boleh, and Malaysians are good at almost anything — from building the tallest building in the world to conquering Mount Evert, sailing the Seven Seas solo and swimming across the English Channel.
At first, it was thought that the traditional re-export and re-import distribution channel through Singapore could be countered with the West Port, building it near Port Klang; the latter being the traditional gateway for Malaysian and foreign shippers.
At the same time, Port Klang and North Port were also beefed up to show that they had become more efficient in providing foreign shippers with better quality services.
Though all the ports in Port Klang gained substantially in cargo transshipments, none was able to outdo Singapore Port, which continued to flourish. Then came the PTP idea: To create an entirely different port with a different concept but with the objective remaining the same. PTP is today working beyond every of the planner's expectations and many wondered what it has that Singapore does not.
The answer is very simple: Study Singapore Port's weaknesses and limitations, and capitalise on them. As it is always said in combat, "Hit at your enemy's weak points, and you will win the fight." Singapore Port has over the years developed to such an extent that foreign ships arriving at there are finding it too crowded for their liking at times, and many ships have to wait for hours to unload their cargoes. And Singapore Port being limited in space finds it difficult to expand fast to cater to the increasing traffic.
PTP planners use this disadvantage to their advantage, turning it into an opportunity.
What the planners did was to site PTP in an area where there is a vast hinterland, which could be leased out in parcels for transshipment storage. Singapore lacks the hinterland to provide for such facilities.
With this strategy, PTP has been able to draw Maersk Sealand and Evergreen Marine Corp to call at the port, with more coming soon.
PTP handled about 2.66 million TEUs at its six wharves last year, though its current capacity is about five million TEUs.
But with the completion of the two new wharves by early next year, PTP's container capacity would increase by 750,000 TEUs. PTP has set itself a target of 3.5 million TEUs by year end.
It certainly looks like PTP is not going to go away for a very, very long time. Singapore would now have to accept the fact that there is a strong competitor at its doorstep, who is not only sitting there pretty well but also stealing its business.
For now Singapore Port could have under-estimated PTP. But given the resourcefulness of Singaporeans, it would not be long before Singapore Port fights back with a vengeance.
It is advisable for PTP not to remain complacent and continue to bask in its glory that it could take on the mighty Singapore Port.
END. -
We should have confidence that Singapore will handle the competition well, as Singapore also did with most competitors.
If eventually the PTP have the experience and the skills as of Singapore's port, the only problem with us would be the costs.
Although we always say that the high cost is appropriate for our quality work, but this tactic may not work for long. This change of attitude of the low cost yet quality work is because of China open-markets. Because they provide cheap costs and quality work (even it is not of high quality, eventually they will become one).
That's why recently businesses start retrenching people alot, because they have to consider retrenchment as a corporate strategy to improve productivity. Globalisation has made world competition ver shiong. Singaporeans now must understand that now, we may not work for a company for as long as 10 to 20 years. Singaporeans must learn diverse skills to survive. -
i think that's the worst oxymoron ever.Originally posted by Eiizumi:retrenchment as a corporate strategy to improve productivity.
you fire 5 workers, and tell the remaining 5 to do the work of 20? -
Actually, Singapore is NOT able to handle competition well.
Lets look at the 60s and 70s .. we had no competition in ASEAN and we grew like mad at the expense of the rest of the countries like Malaysia and Thailand.
In the 80s and 90s, we held our own against HK, but look at how many filthy rich HK businessmen there are compared to Singapore.
Our airlines now lose out against MAS and CP. Our Telco is winning only because HKT is distracted. Our MFG base is in trouble. Our Singapore One initiative is something like the MSC in Malaysia and finally, PTP competes against PSA on a somewhat equal footing.
All this points to the fact that we do not recognize competition early. We milk the gravy train and arragontly do not change until it is forced upon us.
Air Asia is very new. Silk air has been around longer. Yet which is ASIAs FIRST discount airline?
Its time to wake up Singapore. This is just the start of the race. We are not facing threats from other governments ... its the businessmen from other countries that will be challanging us. -
ken ken ken, if Singapore won't able to hold its own for the last 38 yrs in competitive era of politicals, economic and strategic powerplay, PTP and MAS would not have taken THAT long to play catchup. And if one can rest on the belief that this island republic is done for, then why are Malaysians still using her tiny neighbour as a benchmark measurement of success?Originally posted by kenhor:Actually, Singapore is NOT able to handle competition well.
Isn't "Malaysia Boleh" a sufficiently uplifting experience ?
Or that is it not enough and by constantly placing Singapore up as its target-board rather than global challenges gives an average Malaysian that feel-good factor ?
Maybe an overseas "happy Malaysian" can provide a good pointer of how sustainable PTP's business practices can be.
New Straits Times » Letters
PTP must look at profitability, not just volume (Aug 20)
I REFER to P.Y. Chin's article "Money Game: PTP has proven sceptics wrong, but must not be complacent" [NST, Aug 18]. As a Malaysian living abroad I am happy to see Malaysia succeed, particularly in areas where Singapore has previously triumphed.
But when it comes to the port industry, I believe Malaysia needs to be more circumspect about the perceived "success" of Port of Tanjung Pelepas.
According to its own management, PTP remains unprofitable. As an old port industry hand, I find this to be a problem given that PTP has been attracting so much new business that it is nearly 70 per cent full.
Based on commercially viable tariffs, any well-run port (even if fairly new) ought to be breaking even at utilisation rates of 50-60 per cent.
It is well known, however, that PTP attracts business by offering rock-bottom prices to shipping lines. This would be fine if the shipping lines' cost savings were passed on to Malaysian shippers.
However, the majority of PTP cargo is either long-haul transhipment between Europe and the Far East, or short-haul transhipment between Asean countries and the rest of the world. There is little cargo of Malaysian origin that goes through its gates, so any cost savings are pocketed directly by PTP's foreign customers. Therefore, by undercutting Singapore at the expense of its own profitability, I fear PTP becomes only a means for Malaysia to subsidise foreign trade passing through the Straits of Malacca.
In the spirit of Malaysia Boleh, I hope Malaysia takes a second look at the structure of its port industry, and decide on how to develop it in a manner that maximises profit for the country.
Our champion port, Klang, is the real gateway for Malaysian trade, by virtue of its proximity to the Klang Valley. With an abundance of gateway traffic to pick up anyway, shipping lines might be enticed to conduct transhipment activities with further incentives. Overall, Malaysia should decide how to best allocate its investment ringgit for the port industry, such that growth can be achieved in a profitable manner. It is always satisfying to beat Singapore, but if we lose money in doing so, there may not be much "success". -
38 years ago, there was no competition. They rest of ASEAN had their problems and were just trying to survive.
Malaysia was a primary resource produce up to the 80s and only during the 80s they started industrialising. Its only late 90s when they moved into services. And since 2002 then they stole away BMW, Exxon Mobil, DHL and Shell's data centres.
I base my assumptions on a number of factors.
When PSA and SingTel was the monopoly, they were bad and arrogant. They gave bad service to their customers. Now, they are more humble when competition come in.
Same with Air Asia, Silk air had a 10 year lead over Air asia, and now, they are tripping over themselves to follow. ... years squandered due to arrogance. SIA had a commanding lead while MAS was in trouble and once MAS cleaned up their shit, they became the AP's 3rd best airline. (www.skytrax.com) and the worlds best cabin crew 3 years running.
Singapore One was launched with plenty of pomp back in 2000. Yet when newspapers talk about the cities of high tech development, they mention Bangalore before Singapore.
We lost most of the call centres to Philippines and the food industries to Thailand. China took Yeo Hiap Singh. Our tourist company Ken Air is going burst, while Star Cruise is owned by the Malaysians.
What did we do to prevent all this from happening? How come we only react once the competitor wins major deals? Is this your definination of being able to be competitive, like closing the door once the horse left?
Gun Gun Gun, wake up. Just because you have some personal problems with me doesn't give you the right to drag the whole country down just to spite me. I am calling a spade a spade. If YOU REALLY THINK that Singapore is doing well in this new age and our neighbours are incompetants, unable to react, then I suggest that you lift your head from the sand. I for one, see the signs.
We need people who dare to tell the emperor that he has no clothes on. We don't need the sychrophants who fiddle while rome is burning. -
And also, I agree with the letter which you posted. Port Klang (westport and northport) is their main port. PTP is a transhipment port which is meant to steal business away from PSA. Port Klang is their main export port. They are very quiet but their TEUs are much higher than PTP.
That is what malaysia is all about. They set up one company for domestic usage and one company for international competition. Even their tourism industry has that kind of distinction (Malaysia Truly Asia and Cuti-Cuti Malaysia .. 2 different themes)
PSA is not hurting because of PTP taking away Maersk and Evergreen ... those are just bad PR. PSA is hurting because less Malaysian exporters use PSA to exxport their goods compared to the 80s. If you notice the border crossings, its mostly cars and food trucks. Gone are the big trailers that bring stuff into the country for export. Loads of PSA business has gone to Klang.
The next will be the air-freight business. Senai will be transformed into a huge air freight area. Watch as Fedex relocates out of Singapore into Senai, citing cost expenses. We can forsee all this at the layman level. I just hope that the government can do something BEFORE we lose a big customer. -
knowing malaysia, they'll be too lazy to adopt any expertise n work culture from singapore...most prob they'll sit under the containers for shade singing n dancing...or eating their nasi lemak..Originally posted by Atobe:However, in so doing, will it not create a stronger future competitor in PTP accumulating the expertise and work culture of PSA ? -
ken ken ken, Mind sharing how exactly was Singapore any better off than the rest of the region in 1965 ? Which of those newly independent countries given the best chance of survival. Was Singapore in the wishlist ?Originally posted by kenhor:38 years ago, there was no competition. They rest of ASEAN had their problems and were just trying to survive..
How nice of you to paint a Singapore-paradise in the class of 65.
But then, I find your "assumption of a few facts" a little hard to comprehend, considering what was written in any history book when communist insurgency, communal tension, labour unrest, high unemployment and withdrawal of British military dominates that era. Or were you yourself had find great convenience of burying your head in the sand of self-apprassial about "I see the sign"
One last reminder ken, please read my posts again before puting words into my mouth about "believing" Singapore is alright.
You don't get very far by lecturing off anyone. I think your own little history in this forum bares that testimony.
Get it ken ? -
Gun Gun Gun,
Singapore had all the factories when we were independant back in 1965, We had a deepwater port even before Port Klang exported anything. Our electornics industries were established even before anything of the same ilk came out in Malaysia.
Singapore was the GIBRALTAR of the east, and the British had their HQ here even back in the 1940s. Malaya was the primary resource producer and Singapore was the port. Malacca was fading in the limelight as both Penang (Georgetown) and Singapore gained in prominance.
As for my stance, I am very consistant in all forum. I have stood out more often than you in my attempts at warning ourselves of hubris. While I note that all you do is to parrot some news articles from various sources. And when it suits you, you defend Malaysian opposition wbesites, when it doesnt, you condemn it as typical malaysian "journalism"
I stand for peaceful reunification with Malaysia, I am anti forward defense and I want the FT out of singapore. What is your stance beside being anti-kenhor? -
Ken. I'm deeply curious about something that you have mentioned as per your post above.
What do you mean by 'a peaceful reunification with Malaysia'? -
we are not taiwan.Originally posted by kenhor:I stand for peaceful reunification with Malaysia, -
Nor pushovers.Originally posted by nismoS132:we are not taiwan. -
I am not sure if u are aware what drove ken to say this, but do allow me to share his thoughts which is filled with mistrust and dislikes on the Singapore institutions. "Dislike" might be an understatement, but I realise that this character is prepared to sell his soul to the KL gov in the name of "peaceful reunification", at whatever price that KL demands.Originally posted by [ Neo ]:Ken. I'm deeply curious about something that you have mentioned as per your post above.
What do you mean by 'a peaceful reunification with Malaysia'?
Let me share with u abt his thoughts that i've gathered over the past months:
To ken:
you are welcomed to correct me here. At least, my statements are open to other's judgement, instead of simply being accused of waging a 'anti-ken' campaign.
He is prepared to make the Malaysian a "happier" neighbour by allowing extra cash for water OUTSIDE the stated legal agreement of 3sens per 1000gallon of raw water without any negotiations.
Kenhor is prepared not to fight for Singapore's independence stating his belief that its system is unfair and is now working for his dream of unification with KL.
He is a great believer in the Malaysian system and its potential can rander Singapore's independence questionable.
He is an saleman who deals with regional clients, but prefers to be based in Singapore while the times are "good".
He believes that the confrontational Malaysian diplomacy towards Singapore are triggered by:
Singapore being conditional in her cash loan request from KL during 1997 financial crisis.
and of not being supportive of Dr.M creation of EAEC org.
Last but not least, he claims that even being a Singaporean NS-man, he is not prepared commit his duties when the need arises because of his lousy experiences during his NSF days of being brain-washed by his instructor about "Malays will come raping your mother".
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Originally posted by kenhor:
ken ken ken, your only " consistancy" in ANY forum is never failing in making sweeping statements . From Singapore have "no competition" to it "had all the factories" back in 65, you seemed bend on damning the very existence of an independent Singapore
Gun Gun Gun,
Singapore had all the factories when we were independant back in 1965, We had a deepwater port even before Port Klang exported anything. Our electornics industries were established even before anything of the same ilk came out in Malaysia.
Singapore was the GIBRALTAR of the east, and the British had their HQ here even back in the 1940s.
Funny that you still called Singapore as "Gibraltar of the East" while fully aware that the later hasn't been a British colony for almost 40yrs while the 6 sq-km real-mcoy is still one.
I can't find any worst comparison than that !
I often find myself in difficult position when selecting source of info in order to avoid being seen as baised in my argument. Hence it surprises me that now you say I am just parroting news articles that only suit my taste even if I've quoted MOST of my source from the Malaysian media ?
Or do you find discomfort whenever I highlight certain Malaysian news reports about how they slap themselves in the face when getting reporting SGP/KL issues?
I've no say on the sort of "journalism" that is being practiced in Malaysia. But if one were to borrow what was published in their ever inflammatory columns regarding Singapore or even as far back in the 60s, it is anything but flatory.I stand for peaceful reunification with Malaysia, I am anti forward defense and I want the FT out of singapore. What is your stance beside being anti-kenhor?
Don't know . Go figure this yourself.
Speaking of flatory, your "parroting" of my salutation to you is most interesting. I hope this is not a reflection of your own self esteem. -
Its been said that the businessmen in HK are more willing to take risks cos they simply need to. HK doesn't have buffers like CPF for their people and as such, people there are more willing to take risks to make a living.Originally posted by kenhor:Actually, Singapore is NOT able to handle competition well.
Lets look at the 60s and 70s .. we had no competition in ASEAN and we grew like mad at the expense of the rest of the countries like Malaysia and Thailand.
In the 80s and 90s, we held our own against HK, but look at how many filthy rich HK businessmen there are compared to Singapore.
Our airlines now lose out against MAS and CP. Our Telco is winning only because HKT is distracted. Our MFG base is in trouble. Our Singapore One initiative is something like the MSC in Malaysia and finally, PTP competes against PSA on a somewhat equal footing.
All this points to the fact that we do not recognize competition early. We milk the gravy train and arragontly do not change until it is forced upon us.
Air Asia is very new. Silk air has been around longer. Yet which is ASIAs FIRST discount airline?
Its time to wake up Singapore. This is just the start of the race. We are not facing threats from other governments ... its the businessmen from other countries that will be challanging us.
I don't think Silk Air was intended as a discount air line in the first place. . .
But yes, SIA should learn to improve it self. Its been said also that SIA continues to face difficulties simply because the management refuses to lower the extremely high profit margin the company currently enjoys from the tickets. And the CEO would never dare to do as such cos he'll be sacked or kicked out if he ever wanted to lower the profit margin per ticket, even if it does reduce losses for SIA.