BMI View: Continuing, albeit slower, economic expansion and trade will support activity levels in Malaysia's main ports in 2015. Port Klang and Port Tanjung Pelepas further benefit from expansion projects and developments which have been completed over the last two years.
BMI is predicting a slowdown in Malaysian economic growth in 2015, with GDP rising by 4.2%, compared to an estimated 5.8% in 2014. The slowdown reflects weaker domestic consumption and export demand. The expected introduction of a 6.0% goods and services tax (GST) in Malaysia in April 2015, along with a likely reduction in fuel subsidies and higher electricity tariffs as the government seeks to control the fiscal deficit, will combine to limit household spending. Meanwhile, the slowdown in China, one of Malaysia's key trading partners, will restrain export demand. China is Malaysia's third largest export destination, accounting for 12% of total exports. We believe that the recovery in the US will be unable to fully offset the drag from the decline in Chinese demand, resulting in slower export growth in 2015. Over the medium term (2015-2019), we expect Malaysian economic growth to average at 4.1% y-o-y.
Headline Industry Data
The real value of Malaysia's total trade will rise by 4.5% in 2015, marginally down on the 4.7% rate estimated for 2014.
Total cargo volume handled at Port Klang will rise by 1.4% to 202.33mn tonnes in 2015, while volume at the port of Tanjung Pelepas will rise by 3.7% to 131.02mn tonnes.
2015 box traffic at Port Klang is projected to rise by 7.3% to reach 11.87mn twenty-foot equivalent units (TEUs), while at the port of Tanjung Pelepas a gain of 4.6% to 8.97mn TEUs is expected.
Key Industry Trends
Continuing Concern Over Renewed Piracy: A Vietnam flagged tanker, the M/T VP Asphalt 2, was attacked by pirates, southeast of Pulau Aur, Malaysia in the South China Sea, on December 7 2014. The Vietnam bound tanker was carrying 16 Vietnamese crew members and 2,300...