Farther Along

One of the most lucrative aspects of investing or doing business in Malaysia has always been the country’s devotion to building and maintaining its infrastructure. As the country continues to develop throughout the years, it has been this devotion to a highly effective infrastructure that has allowed the country to avoid potentially serious problems. The healthy maintenance of the country’s network of highways has provided a necessary tailwind to local industries. With commerce and industrial areas well connected to the peninsula’s various seaports and airports, the transportation of goods is simple and rapid.

SEA

Given that the South China Sea separates peninsular Malaysia with its eastern territory, the country has long relied on the sea as a primary source of transportation. Today, the sea is the means by which some 90% of the country’s trade moves, and Malaysia’s numerous seaports are well positioned and modernized, and have seen considerable growth over the past few years, in tandem with the growth and expansion of the country’s trade and economy. Malaysia’s seven international ports are Penang Port, located on the island of Pulau Pinang on the Malacca Strait; Port Klang, located about 20km west of Kuala Lumpur also on the Malacca Strait, ranked among the top 20 container ports in the world, and designated as the national load and transshipment center; Johor Port, located on the Johor Strait just across from Singapore; the Port of Tanjung Pelepas, located on the southern tip of the Peninsula, also ranked among the top 20 container ports, and designated as a regional transshipment hub; the Kuantan Port, located in the center of the Peninsula’s eastern coastline; Kemaman Port, located just north of Kuantan Port; and the Port of Bintulu, located on the central coast of Eastern Malaysia and equipped with facilities to handle liquefied natural gas. Malaysia’s cargo fleet stood at 51 in 2014. Total domestic sea cargo reached 20 billion tons in 2014, while international sea cargo throughput numbered 200,896.

AIR

Malaysia’s seven international airports, strategically located throughout the country, help cement the country’s gateway status. Malaysia’s largest airport, the Kuala Lumpur International Airport (KLIA), is capable of handling some 70 million passengers per year, in addition to more than 1.2 million tons of cargo, making it the 23rd busiest airport by passenger traffic in 2015. In May 2014, klia2 was opened just 2km from the main international airport. The new terminal is home to the region’s low-cost airlines, with more than 250,000sqm facility has just under 70 departure gates. klia2 was built to replace the low-cost terminal located in the KKLIA, as popularity for “no frills” airlines has increased staggeringly over the past decade. It is the world’s largest terminal specifically for use by low-cost airlines.

KLIA acts as a major and important airport not just for Malaysia, but acts as a hub for the Asia Pacific region. As of 2016, nearly 60 airlines flew to KLIA, offering routes to over 125 destinations. While KLIA has seen significant increases in passenger traffic over the year—with a 20% rise in 2013 from 2012 levels—increases in passengers have slowed somewhat, with 2014 growing by only 3% from the previous year and 2015 at only less than one point. In 2015 there was, however, a 4% rise in the number of aircraft arrivals, following a 4.3% increase the previous year. The decrease seen in 2014 is likely due to the opening of klia2, which took a considerable portion of air traffic from KLIA.

Malaysia’s other six international airports include Penang International Airport, located on the island of Pulau Pinang; Langkawi International Airport, located on the island of Langkawi near the Thailand border; Senai International Airport, located just north of Singapore; Kota Kinabalu Internationa Airport in Sabah in Eastern Malaysia; and Kuching International Airport in Sarawak, also in Eastern Malaysia. The country has another 23 airports serving domestic destinations. The latest data from the ASEAN-Japan Transport Partnership states that the commercial aircraft fleet in the country numbered 973. Additionally, domestic passenger traffic climbed to just over 43 million, while international passenger air traffic grew to 40.7 millon, a nearly 3 million YoY increase.

ROAD

Malaysia has over the years channeled significant amounts of money and resources toward building and improving its road network, as a means to meet the rapidly growing demand. According to the Ministry of Transport, the country contains some 210,658km of road, with 79% of that road, or 165,088km, being paved. Malaysia’s road infrastructure also comprises 1,969km of highways that accommodate the nearly 25 million registered motor vehicles. Many areas of the country are highly isolated, both in Eastern and Peninsular Malaysia. In response to the problems associated with infrastructural isolation, the government announced in 2013 the acceleration of the development and renovation of the Pan-Borneo Highway. The highway was initiated on March 31, 2015, when ground was official broken on a 43km portion between Nyabau and Bakun. The project is expected to cost MYR27 billion and has an expected completion date of early 2023. The highway, which will ultimately connect Telok Melano with Merapok and stretch a total length of 1,089km, has been regarded by the government as a much-needed means to boost economic opportunities—a mainstay for the economy and transportation system of the Sabah and Sarawak states, as well as the Malaysian economy as a whole.

RAIL

Over the past decade, in light of urban sprawl moving beyond city borders; investment in Malaysia’s rail network has grown considerably. According to the Ministry of Transport, the rail network of Peninsular Malaysia consists of approximately 1,641km of rail, 749km of which is single track, with another 761km being electrified track. The country has some 160 locomotives ready for operation, as well as 120 passenger coaches and 2,961 freight wagons. The rail passengers-per-kilometer ratio was 1.3 billion passengers per kilometer, while, in contrast, the total amount of freight carried was 6.8 million tons, a minor YoY increase. Freight was recorded at 1.7 billion tons per kilometer, up slightly from the previous year. The total domestic freight volume via rail sat at 7 million tons, with some 1.7 billion tons per kilometer of total domestic freight movement happening on rail.

Peninsular Malaysia is well connected to the rest of Southeast Asia via a variety of transport means. A portion of the Kunming-Singapore Railway was recently opened, connecting Kuala Lumpur with Bangkok. The project, also known as the ASEAN Rail Express, will be a high-speed and heavy rail and will provide extensive access throughout Southeast Asia. While much of the rail network is complete, smaller connections are underway to connect nearby areas, along with two routes to Kunming, in southern China. Ultimately, the rail will connect Malaysia with Singapore, Thailand, Myanmar, Vietnam, Laos, Cambodia, and China.

In December 2016, Singapore and Malaysia finalized a deal to build a high-speed rail (HSR) from Kuala Lumpur to Singapore. Construction on the 330km high-speed rail does not yet have an exact start date, but in order for the project to be completed before its 2026 deadline, experts say the project should start sometime in 2017. The rail will have a total of eight stations, including Putrajaya, Seremban, Ayer Keroh, Muar, Batu Pahat, and Nusajaya. The HSR is expected to cost some USD16.6 billion to construct and will consist of three parts: an express service between the two terminal stations, Jurong East in Singapore and Bandar Malaysia in Kuala Lumpur; a shuttle between Singapore and Iskandar Puteri in Johor; and a domestic Malaysian route linking all seven stations in the country.

The railway will cut down travel time between the two cities considerably; current travel times average eight hours via train, five hours via bus, and 45 minutes by plane. The HSR will bring the time down to 90 minutes. The project was included as a key project in the government’s Economic Transformation Program, with the goal of building economic investment and diversity, while enhancing the attractiveness of living in the city among the international community. The rail has been touted as a historic deal between the two countries, one that will boost not only political and economic ties between the two countries, but neighborliness as well.