Port Klang free zone investment up, but occupancy only 18pc

THE Port Klang Free Trade Zone (PKFZ) has won MYR226 million (US$65.1 million) in new investment in 2008, but occupancy remains low at 18 per cent, reports Lloyd's List.

But disappointing occupancy should be compared to the history of Jafza [Dubai's Jebel Ali Free Zone]., where it took 10 years to reach full capacity and six years to reach 40 per cent, said Malaysian Transport Minister Ong Tee Keat.

Jafza was established in Dubai in 1985 and is recognised as the most successful and fastest growing free zone operation in the world, said the company website.

PKFZ has attracted funding since its new management took over in May, gaining a 30 per cent increase in investment in the free zone originally designed to follow the successful model of Jafza to boost volume through Malaysia's biggest port.

Whether the project was handled professionally, is cost-effective or exorbitant is what I've been harping on about, and it is what will appear in the PriceWaterhouse-Coopers [auditor's] report, Mr Ong said.

PKFZ is entirely owned by the Port Klang Authority and was originally managed by Jafza, which pulled out in 2007 three years into a 15-year contract. A full audit is expected within weeks.

Troubles centre on costs with MYR2.94 billion paid for land and construction, which give rise to questions whether PKFZ can pay the MYR4.6 billion loan it received from the government, according to Lloyd's List.

CN wins clearance from Surface Transportation Board to buy EJ&E

THE Canadian National Railway has been given the go ahead from the US Surface Transportation Board (STB) to buy the principal lines of the Elgin, Joliet & Eastern Railway (EJ&E), which had been held up because of local environmental objections.

The US$300 million railway acquisition from US Steel is vital to make CN's Prince Rupert Port on the northern Canadian Pacific Coast effective in moving Asia cargo though congested Chicago to the Midwest and eastern US hinterlands.

Nearly three days are gained using Prince Rupert to Chicago for Asia cargo, over the more circuitous the LA-Long Beach route, but CN's gains are lost getting freight out of the sprawling metropolis.

CN commends the STB for issuing its decision approving our transaction - a transaction that was subject to unprecedented scrutiny and stakeholder involvement, said CN chief executive Hunter Harrison.

While the STB has approved, we are disappointed the STB has mandated significant additional mitigation beyond the recommendations provided in the Final Environmental Impact Statement issued by the STB's Section of Environmental Analysis, he said.

The Montreal-based railway has met with 10 suburban municipalities in the Chicago area through which trains must go, striking mitigation agreements on noise and environmental problems after locals objected to the deal after the deal closed between CN and US Steel. The STB bowed to suburban opinion and compelled CN to win local approval before approving the deal.

Source: American shipper