Malaysia Competition Commission (MyCC) published a Block Exemption Order for liner shipping agreements (BEO)

Cooperative agreements among liner shipping companies have existed in most trades for more than 100 years. Most major trading nations in Asia and the Pacific Rim have recognized the importance of these agreements to both the shipping industry and national economies. To the extent that these countries have competition laws that could restrict such agreements, many have found after careful study that these agreements should be afforded an exemption from those competition laws for economic, public policy and international comity reasons.
On July 7, 2014, the Malaysia Competition Commission (MyCC) published a Block Exemption Order for liner shipping agreements (BEO) in its Federal Government Gazette. This decision was based on an application by local carrier and port operator associations on behalf of the liner shipping industry serving Malaysia. Cozen O’Connor acted as a foreign law advisor to those associations while working with local legal counsel.



Malaysia has launched a Logistics and Trade Facilitation Masterplan, outlining the strategic steps it will take in the sector to further boost the country’s economy and exports.

“Focus will be given to the logistics industry, which has a strong network with the other economic sectors,” said Prime Minister Najib Razak at the launch.

Najib said the plan had been formulated to provide strategic direction to increase economic efficiency and stimulate exports. In some ways, this is as much of a goal as being able to move goods efficiently.

The plan has five strategic directions and 21 action plans, which will be implemented in three phases, according to a summary provided by the Bernama national news agency.


The five directions are strengthening the institutional and regulatory framework, improving trade facilitation mechanisms, developing infrastructure and freight demand, strengthening technological and human resource development and internationalization of logistics services.

Phase one of the implementation, which covers this year and the next, will involve dismantling barriers in the industry. Phase two, which runs from next year through to 2016, involves stimulating domestic economic development.

The final phase, from 2020 onwards, is to strengthen Malaysia’s role, not just within Southeast Asia, but also in the much bigger Asian region.

“The implementation of the master plan is expected to strengthen Malaysia’s position as the preferred logistics gateway to Asia,” Najib said in a press report.

To monitor and coordinate implementation, a National Logistics Task Force will be established under the supervision of the Ministry of Transport and lead the development of the logistics industry and trade facilitation.

While the launch talked of developing infrastructure, details were sparse but illuminating.

The only confirmed undertaking, an “initial step” according to official sources, will be RM300 million (US$81 million) to improve the last-mile connectivity to Port Klang and RM12 million (US$3.27 million) to upgrade the train terminal at Padang Besar.

Train connectivity at Padang Besar has been a moot point in the past, but Port Klang has not been acknowledged to be a problem.

Industry reaction has been muted but respectful.

“We see the initiative as recognition by the government that the logistics industry represents an important contribution to Malaysia’s GDP and is a critical component in the development of the economy,” an official with Regional Container Lines told Asia Cargo News describing the plan as “ambitious.”

“We expect to see further improvements to terminal centric infrastructure development, improved transparency in dealings with the regulatory institutions and industry specific demands of a skilled workforce,” added the official.

The strategic location of the country, regional relationship networks, good transportation infrastructure as well as economic stability give Malaysia a huge potential as a regional logistics hub, it believes.

Pole position though, is contested by Singapore, much more of a hub and already with a major port and airport, and Thailand, which is better situated for the emerging market countries of the Mekong.

In some ways, Malaysia is already catching up, as the development of Penang in the country’s north shows, even though it may not be on the scale that Malaysia’s ambitions would want.

The multitude of manufacturers in the northern region, alongside exporters from southern Thailand who make up 20% of the port’s volume of some 1.3 million teus, have 34 shipping lines with 31 weekly vessel calls offering a choice of 60 destinations.

While not exactly Singapore, Hong Kong or Shanghai, Penang is nevertheless a useful intra-Asia stop, which seems to be the market it is pitching for.

“Some 70% of Penang’s trade is intra-Asia bound and these direct vessel calls ensure manufacturers are able to import and export cargo competitively in terms of logistics cost and timeliness,” Penang Port chief operating officer Steven Yoogalingam told Bernama.

Yang Ming and COSCO would reinstate Penang as a direct port of call on their mainline services between the Middle East and Far East from next month, and the port expected another two direct services to commence by the second quarter of this year, he said.

This has come about by making the port much more efficient both in terms of container handling and gate turnaround times, both up by a minimum of 30%, according to Yoogalingam.

“Over the past six months, we have managed to improve our productivity by over 30%. We are now averaging 27 crane moves per hour, compared to 18 in early 2014,” he said.


By Michael Mackey

Southeast Asia Correspondent | Bangkok