Govt imposes ‘no-layoff’ condition for port takeover?

KUALA LUMPUR: The Federal government is understood to have imposed a condition, with regard to Penang Port Sdn Bhd’s takeover – that any party planning to take over the port operator
must not lay off any of its workforce for a minimum period of five years.


“The condition is non-negotiable. Any parties which intend to take over the port, must comply with the condition, even before they present their financial plan,” said a source.

Business Times was told that at least two parties are interested in taking over Penang Port.

“One is a party led by a China-owned entity, while the other is MMC Corp Bhd. But, to date, no decision has been made as the due diligence process is still being carried out,” said the source.

Penang Port is 100 per cent owned by the Minister of Finance Inc.

The company is licensed to operate, manage and maintain port and ferry services as well as undertake present and future development projects in the port area.

Penang Port, which has more than RM1 billion in bank loans to be settled, has slightly just under 1,800 people on its payroll.

Over the past 15 years, the company had tried to sell its shares to the public twice via an initial public offering exercise, but the plans failed to materialise.

The country’s oldest port, which has been operating for nearly 226 years, has seen its business being eaten up by rivals from Port Klang and Johor.

In Port Klang, there are two main operators, namely Northport (Malaysia) Bhd, the port operating subsidiary of NCB Holdings Bhd, and the privately-held Westport.

Northport and Westport are among the busiest ports in the world, collectively handling more than eight million twenty-foot equivalent units (TEUs) a year.

In Johor, there are Port of Tanjung Pelepas (PTP) and Johor Port, which are both controlled by MMC.

PTP, which is also among the top 20 ports in the world, handles some 6.5 million TEUs a year.

In contrast, Penang Port targets its container cargo at the North Butterworth Container Terminal to handle some 1.28 million TEUs this year.

The port operator itself is understood to be profitable, except for a slight blip last year.

However, its ferry operations are said to still be heavily in the red.

Penang Port provides ferry services linking Georgetown on the island to Butterworth on the mainland.

In 2010, the ferry operations suffered some RM15 million in losses. Since Penang Port’s corporatisation in 1994, the ferry operations have lost more than RM180 million.