CEO Morning Brief

Putrajaya to Develop New Policy for Dredging and Reclamation Industry at Ports, Says Loke

Publish date: Fri, 14 Jun 2024, 10:32 AM
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TheEdge CEO Morning Brief

PUTRAJAYA (June 13): Transport Minister Anthony Loke Siew Fook has confirmed that the government terminated the 15-year concession agreement for port dredging and reclamation works with Integrated Marine Works Sdn Bhd (IMW) for breach of contract.

To end the monopoly for this segment, Loke said the ministry will not appoint a new concessionaire following this termination. Instead, a new policy will be developed to encourage the growth of the dredging and reclamation industry among more competitive local companies for the development of the country's ports.

"On May 29, 2024, the Cabinet had agreed to terminate the dredging and reclamation concession agreement between the government, the port authority and IMW that was signed on May 30, 2022.

"Although the Ministry of Transport has issued a default notice dated Jan 29, 2024 to the company with a three-month remedy period, until April 29, 2024, IMW had failed to remedy the breach of the terms of the agreement," he told a press conference here on Thursday.

This confirms a report by The Edge on Wednesday, citing sources, that the concession agreement with IMW had been terminated. The report noted that the termination notice was issued to the company on Tuesday, effective immediately. It was also noted that IMW will not be entitled to any form of compensation following the termination, according to the source familiar with the matter.

Loke explained that IMW had committed at least two breaches of the concession agreement, namely changing its shareholder without approval from the government and failing to pay concession charges.

IMW was previously wholly owned by private company Inai Kiara Sdn Bhd. However, Loke said that Inai Kiara was wound up by the High Court of Shah Alam on April 11, 2023, and that subsequently another company named Inai Warisan Sdn Bhd took over as the shareholder of IMW without the government's approval.

IMW was initially granted a 15-year concession that gave the company exclusive rights to provide dredging and reclamation works at all federal ports owned by the government in December 2004.

When the concession agreement ended in December 2019, Loke revealed that the Pakatan Harapan government at the time did not intend to extend the concession agreement with IMW, in line with its then policy of ending monopoly.

"However, after the change of government due to the 'Sheraton Move', the new Cabinet on July 7, 2021 decided to reappoint IMW to carry out dredging and reclamation works for all federal ports in the country with a concession period of 15 years that will expire in 2036," he said.

"I would like to emphasise that most of the dredging and reclamation projects in the federal ports are implemented and financed by the respective port operators, which does not involve funds from the government," Loke added.

Federal ports owned by the government include Port Klang, which is made up of Northport and Westports in Selangor; Port of Tanjung Pelepas and Johor Port in Johor; Penang Port; Teluk Ewa Port in Langkawi; Tanjung Bruas Port in Melaka; Kemaman Port in Terengganu; Kuantan Port in Pahang; and Labuan Port.

Source: TheEdge - 14 Jun 2024

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