Linking historical sea routes from past to present

Seafaring has long influenced the growth and trajectory of Brunei Darussalam’s economic, social and cultural development. Trade with neighbouring regional powers like China under the Tang dynasty (618-907 CE) goes back centuries. Remains discovered in archaeological digs as at Limau Manis, Kota Batu and Tanjong Nangka reveal evidence of frequent trade with China, including shards of vases and coins from various Chinese dynasties, from Emperor Kao Tzu of the Tang dynasty (618-627 CE) to Emperor Hui Tsung ( 1101-1125 CE) of the Northern Song dynasty. Hundreds of years later, Brunei Darussalam continues to look to the sea as a way to further its economic aspirations.

Muara Port

The primary gateway for goods to enter and exit the Sultanate today is Muara Port, situated on the northern-most tip of the country at the entrance to Brunei Bay. Due to Brunei Darussalam’s central location astride primary north-south shipping routes along the South China Sea, Muara is well placed to serve not only the Sultanate’s domestic needs, but also to act as a trans-shipment hub for cargo in the East Asian region. First established for commercial operations in 1973, the facility hosts a six-berth conventional cargo terminal with a total quay length of 611 metres, as well as a 250-metre container terminal wharf with two berths, according to the Ministry of Communication’s (MoC) Ports Department. Both terminals have a draught depth of 12.5 metres. In addition to its cargo-handling infrastructure, Muara also houses the Serasa passenger ferry and car ferry terminals.

Muara Container Terminal’s (MCT) annual capacity currently stands at around 200,000 twenty-foot equivalent units (TEUs), meaning it has significant room for growth going forward, as the current average volume stands at roughly half of that. While there is a fair amount of fluctuation in container traffic from year to year, annual volume at the port rarely exceeds 100,000 TEUs, ranging from a low of 76,515 TEUs in 2003 to a high of 108,103 TEU in 2005 in the period running from 2003 to 2011, according to data from the MoC.

The vast majority of this traffic is for local containers, with little, if any, trans-shipment traffic passing through. Total container and general seaborne cargo discharged in Brunei Darussalam amounted to about 1m tonnes in 2013, according to Department of Economic Planning and Development (JPKE) statistics, down from the 1.12m tonnes recorded in 2012 and on par with the 1.02m tonnes registered in 2011. The volume of imports far outweighed outgoing shipments, which totalled 23, 21.8 and 24.1 tonnes, respectively, in 2011-13. These figures do not, however, take into account the country’s main exports — oil and natural gas — which are shipped out separately from dedicated terminals located off Brunei Darussalam’s western coast. Of the BN$14.31bn ($11.22bn) in goods that were exported in 2013, 96.5% were energy exports (BN$6.4bn, or $5.02bn, in crude oil and BN$7.41bn, or $5.81bn, in liquefied natural gas). This left export shipments worth BN$497.9m ($390.50m) to be shipped out through the cargo terminals, according to JPKE.

On The Rise

While the majority of current volume consists of inbound cargo, exports will rise in the coming years as several large-scale industrial projects come online. These include substantial investments like a new petrochemicals plant, an aluminium smelter, carbon steel pipe factory, food processors, pharmaceutical factories and others. More trade within the region as a result of trade agreements is also expected to boost shipments. In total, port traffic is expected to rise on average by 5% per year, according to the Ports Department, in line with economic growth and developments in the country’s industrial and manufacturing base.

“Establishing the country as a service hub will be an important contributor to diversifying the economy away from oil and gas,” Pengiran Haji Mohd Zain, the director of the Ports Department, told OBG. “Being a regional hub for transport is one way to accomplish this: land, sea and air transport can complement each other to help develop multi-modal connectivity and make Brunei Darussalam a service hub,” he added.

Wider Port

To support the planned growth of the shipping industry, Brunei Darussalam is also preparing to expand the MCT’s capacity. Following a feasibility study in June 2014 for an extension of the existing wharf, the MoC and Ports Department are now reviewing proposals to expand the quay by 150-200 metres, and are expected to come to a decision by the end of the year. The upgraded infrastructure will be able to handle a second container ship, as well as support infrastructure like an expanded dockyard and associated equipment. Upon completion in 2017, the port’s capacity is set to double to more than 400,000 TEUs per annum.

Should further expansion be necessary, the Ports Department also has a parcel of land on Pulau Muara Besar (PMB) Island, which is set to house a second industrial port. Located just off Muara Port in Brunei Bay, PMB is being developed by the Brunei Economic Development Board (BEDB) with the intention of making it the region’s lowest-cost deep-sea container port. The initial construction phase would include a straight-line quay of 660 metres for container ship berths supported by post-Panamax cranes, a 42,681-sq-metre container yard with 156 reefer points, and warehousing and free zones, all in a total area of 34.3 ha, according to the master plan. Although construction work had not yet started as of August 2014, the signing of PMB’s first major industrial client, China’s Hengyi Industries, in 2014 could spur its development.


According to Shahbudin Musa, managing director of Brunei Gas Carriers, the development of a local workforce will also be key. “It is crucial to create further employment opportunities for qualified locals in maritime transport. Through both the training offered at the Brunei Maritime Academy, set up in early 2014, and the efforts of industry players, we hope to build up a qualified local workforce,” he told OBG.


The government is also moving forward with the corporatisation of Muara Port. New Muara Container Terminal Services, a fully owned unit of Manila-based International Container Terminal Services, has run the port since it was awarded the management, operation and maintenance contract in 2009. The current contract expires in May 2015, and the government is looking to form a new partnership with the aim of boosting efficiency and price competitiveness, as well as attracting international shipping lines. “Operational efficiency, infrastructure capacity, availability of services, price competitiveness, shipping-line connectivity, incentives and organisational responsiveness are all ingredients of a successful service hub and improving port services,” noted Zain.

The Ports Department is one of four key state-owned enterprises (SOEs) currently set for privatisation by the MoC, alongside the Maritime and Port Authority of Brunei Darussalam, the Postal Services Department and management of Brunei International Airport. To facilitate these moves, the MoC proposed a budget of BN$83.9m ($65.80m) for the 2014/15 fiscal year at the Legislative Council session in March 2014. The process would convert the SOE into a new independent firm, with the government retaining majority ownership in the venture. The MoC has stated that after this point it could be possible to go ahead with full privatisation, whereby the government would transfer its stake to a private entity. With port operations outsourced, oversight and regulatory duties would then be taken over by a new Brunei Darussalam Maritime Port Authority.

Operating Costs

But for the new corporatised port to be attractive to private investors, its operations need to be efficient and, most importantly, profitable. For Muara Port to be competitive with its larger rivals in Borneo – the major container ports in Sarawak and Sabah boast capacities of 350,000-400,000 TEUs – the Ports Department will need to first look into reducing operational costs and review port charges when it becomes a corporate entity. While logistics costs are higher in Brunei Darussalam for a number of reasons, actual port fees represent only a fraction of the total logistics costs. Much of the rest is due to freight and bunker surcharges incurred as a result of the imbalance between exports and imports, in that importers must essentially pay for outgoing empty containers.


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