Singapore newspapers and other media have been going to town with the story. The parliamentary Public Accounts Committee (PAC) is now worried that the Port Klang Free Zone (PKFZ) scandal may affect the confidence of foreign investors, in particular from Singapore and Dubai in the Johor Iskandar Development Region (IDR). But I believe we can kiss the IDR goodbye. We will face funding problems now that our reputation sucks big time.
I had asked a retired former port colleague of mine who is now a consultant to a major logistics company and a number of other organisations, to do some number crunching for me and he has sent me this very interesting email :
Capt, here are some figures for you to chew on.
The PKFZ total land area is 999.5 acres, purchased at RM25 per square ft.
Hence total cost of land is 999.5 x 43,560 x 25 = RM 1,088,455,500.
Assuming that only 80% of the land can be gainfully deployed, the average cost per acre is RM 1,360,570 or RM31.23 per sq. ft.
Say that one wants to lease the PKFZ land to construct a warehouse
Utilizing 3 acres of land would cost 3 x 1,360,570 = 4,081,710
Building a 60k sq.ft Whse at RM 100.00 per/sq.ft = 6,000,000
total RM = 10,081,710
Assumptions of 'holding cost'
i. interest at 8% p.a.
ii. repayment 8% of cost
iii. basic O/heads 4 % total 20% or RM 2,016.342 per/year
or RM 168,028 per/ mth
or RM 2.80 per sq.ft / mth
Compare, say with Northport Free Commercial Zone (FCZ) warehouse rental is RM 1.50 to RM 2.00 p.sq.ft/mth. Please bear in mind that the inter terminal transfer (ITT) cost to the PKFZ is said to be RM180.00 per TEU and in Northport it is only RM85.00 per TEU. Hence if one handles say 6,000 TEUs a year (or 500 boxes a month), the difference will be RM 570,000 !
On the other hand, if the total cost is spread out to the 800 acres of land available, then each acre would cost RM 5,750,000 or some RM132 per sq.ft! (Even the lots in Persiaran Raja Muda Musa sell for only $100 per/sq ft !)
Assuming that a 3 acre-plot is already inclusive of a 60,000 sq. ft warehouse,
The total cost would be 3 x RM 5.750 million = RM 17.250 million
At this cost, using the 20% factor, the 'holding cost ' per year would be RM 3,450,000.
Again based on the 60k sq ft warehouse, cost per sq. ft/mth would be RM4.79 ! So looking from all angles, the projected cost is definitely beyond current commercial rates, unless of course if Klang Port Authority wants to subsidize this project until doomsday.
It is note worthy to compare the project cost announced by Sembcorps of Singapore who has indicated that the cost to develop 750 hectares of land for similar purpose in Vietnam is only US$ 103.5 million or approx RM 357.075 million or an average of RM 192,264 per acre which equals RM 4.42 p/sq. ft.. Of course , it was not reported what was the land cost, but common sense will tell it won't be RM132 per sq.ft!
How do one expect our local company to compete say, in regional logistics hub with such a price tag?