Local media reported that MMC Corp has submitted an appeal to the new Sabah state government on its proposed acquisition of a 20% stake in Sabah Ports after its earlier bid was rejected by the previous state government in April this year.
Group md Che Khalib Mohamad Noh said MMC believed that the state’s ports have huge potential for cargo volume growth and especially in the palm oil transportation segment as Sabah is one of the world’s biggest producers of the industrial commodity. The acquisition of a stake would grant MMC access to tap into this market, although the group acknowledged that the state would ultimately want to retain control of the key asset.
“We are still interested. Hopefully the new government would give us the opportunity (to buy Sabah Port). We have to accept that Sabah will never want to give away control of Sabah Port. It is pretty obvious,” said Che Khalib.
“But again, we see that we could probably have a strategic interest so we can collaborate with Sabah Port to expand the potential in Sabah. The primary reason for us to move into Sabah is because we see the vast potential in Sabah to expand,” he added.
“We have written an appeal on their recent decision to not to pursue with us. Perhaps, at the right moment, we will go back and explain why we think we can put a good business proposition to Sabah,” Che Khalib was quoted as saying on the sidelines of MMC’s annual general meeting.
The Sabah state government and its related entities have maintained tight control of the port sector. Sabah government’s investment arm Warisan Harta Sabah reportedly controls 45.4% of Suria Capital Holdings, the holding company which controls Sabah Port. Other state-linked entities with interests in Suria Capital include Yayasan Sabah Group (3.67%) and the Sabah Chief Minister with 1.66%.The state holds a combined 50.37% stake in Suria Capital.
Sabah Ports has a 30-year concession from 2004 to manage and operate eight ports in the state.
Looking further afield, Che Khalib said MMC was also eyeing other ports acquisition opportunities in Malaysia and other Asean countries.
“Ports is an area that we believe that we can expand, also regionally. Asean is a region where volumes increase as opposed to the Europe. There is huge potential for us to continue in this region. We are looking at opportunities in Asean. Hopefully we are going to make some deals in Asean,” he said.
On funding partners, Che Khalib said some local institutions like the EPF (Employees Provident Fund) and Tabung Haji had been approached and were keen to explore opportunities together, although he did not specify if any allocation had been put aside for the planned acquisitions.
Among its current network, Che Khalib said MMC expects to see growth of 6% to 7% in total container throughput this year among its ports and more than 10% growth from its key container terminals at Port Tanjung Pelepas.
MMC Corp has gradually built up interests in all the major ports along the west coast of Peninsular Malaysia, and is also involved in the massive Carey Island port project near Port Klang, with Sime Darby Property and Adani Ports and Special Economic Zone.