PUTRAJAYA: The Malaysian government has officially terminated the Dredging and Reclamation Concession Agreement with a company previously responsible for port dredging and reclamation projects across the nation. This decision was made after the company failed to meet the agreement’s requirements, leading to a significant shift in the management of Malaysia’s port development.
Termination of Dredging and Reclamation Concession Agreement
Transport Minister Anthony Loke announced the termination of the agreement with Integrated Marine Works (IMW) Sdn Bhd after the company failed to rectify breaches identified by the Ministry of Transport. The ministry had issued a default notice to IMW on January 29, providing a three-month period for the company to address the issues. However, IMW did not remedy the breaches by the April 29 deadline, resulting in a termination notice being issued on June 11.
Key Reasons for Termination
Unauthorized Change of Shareholders
One of the primary breaches cited by the government was the unauthorized change in IMW’s shareholders. Initially, IMW was wholly owned by Inai Kiara Sdn Bhd. However, in July 2023, it was revealed that Inai Kiara had been liquidated following a Winding Up Order from the Shah Alam High Court dated April 11, 2023. The ministry’s investigation found that IMW’s ownership had been transferred from Inai Kiara to Inai Warisan without obtaining the required government approval. This breach of the agreement’s terms was a significant factor in the decision to terminate the concession.
Failure to Pay Concession Charges
In addition to the unauthorized change of shareholders, IMW also failed to fulfill its financial obligations under the Concession Agreement. The company did not make the required concession charge payment for 2023, further violating the terms of the agreement. This failure to comply with financial requirements was another critical reason for the government’s decision to terminate the agreement.
Background of IMW’s Concession Agreement
Extension of Concession in 2022
IMW was granted a 15-year extension to its concession in May 2022, allowing the company to continue providing dredging and reclamation services at all federal ports managed by the government. These federal ports include major locations such as Port Klang in Selangor, Port of Tanjung Pelepas and Johor Port in Johor, Penang Port, and several others across Malaysia. The extension followed the conclusion of a previous 15-year concession that began in 2004.
Future Plans: No New Concession Company to Be Appointed
In light of the termination, Transport Minister Anthony Loke announced that the ministry does not plan to appoint a new concession company to replace IMW. Instead, the government will introduce a new policy aimed at encouraging the growth of a competitive local dredging and reclamation industry. This initiative is expected to foster the development of Malaysia’s ports by promoting competition among local companies.
Funding for Dredging and Reclamation Projects
Loke also emphasized that most dredging and reclamation projects at federal ports are funded by the respective port operators. This approach will continue under the new policy, ensuring that port operators play a central role in financing and managing these crucial infrastructure projects.
Conclusion: Impact of Termination on Malaysia’s Port Development
The termination of IMW’s concession marks a significant change in the management of dredging and reclamation projects at Malaysia’s federal ports. By introducing a new policy to encourage local competition, the government aims to enhance the efficiency and effectiveness of port development across the country. This strategic shift is expected to have long-term benefits for Malaysia’s maritime infrastructure and its role as a key hub in global trade.