Port Expansion

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Brunei Darussalam is to establish a competitive container port on Pulau Muara Besar, dubbed the PMB port project. The 5km quay port project is expected to require a total investment of $1.5bn and will create an estimated 4000 jobs according to the Brunei Economic Development Board (BEDB). The government is prepared to contribute 70% of the investment as well as providing the necessary infrastructure. They are now looking to ally with established international shipping players which could include a major shipping line and a port operator to form a consortium by the end of the year.

Timothy Ong, the chairman of BEDB, told OBG, "Our core mission is to create new economic opportunities for the people of Brunei as well as to create new business opportunities."

Pulau Muara Besar has been identified as the most feasible location given its strategic position along the east-west maritime trade route and its close proximity to deep water, which is required to serve mega-sized container ships. Compared to other ports in the region, deep water will give Brunei Darussalam the competitive advantage it needs to attract larger vessels. Due to Brunei's natural landscape, only minimal dredging would be required to help construct the port.

The growth of trans-shipment in the region is on a steady climb and the BEDB has identified Brunei to be in an ideal position to capitalise on this trend. The port would need to capture only 5% of the market for the development to be feasible and profitable. The port must therefore handle 1.2m twenty foot equivalent units (TEU) of throughput before 2010, which would place it among the top 50 ports in the world.

"PMB is a priority area because the natural attributes for a deep water port are there and because Brunei's economic diversification requires the development of strong logistical linkages."

Since Brunei Darussalam has a relatively small industrial base, the main focus is for PMB to act as a hub and spoke port with trans-shipment generating the most activity. Nonetheless, it is hoped that with the creation of an export processing zone (EPZ) on Pulau Muara Besar, Brunei Darussalam's manufacturing and industrial bases could foresee increased growth in the future. This objective is in line with the national vision to diversify the sultanate's economy and lessen its dependency on oil. In the long term, it is hoped PMB will help the country establish a broader and more developed industrial base.

"For PMB to be economically viable, we need to develop export industries on the island and we need a good port operator. One export industry we are considering is proposed by Alcoa, the world's largest metals company. Alcoa is committed to investing $1.5bn to build a major aluminium smelter on Muara Island if we can provide power at competitive prices. The BEDB has also received strong expressions of interest from two regional port operators to invest in and operate PMB."

Ong added, "The BEDB is focusing on those areas where Brunei has competitive advantage such as petrochemical and other downstream industries. The $ 400m methanol plant developed by the Brunei Methanol Company at the Sungai Liang Industrial Park (SPARK) whereby natural gas is used to produce methanol for export is an example of this. Since methanol is used to manufacture a wide range of industrial and household products, we are also interested in developing a number of methanol related spin-off industries."

Increased trade and foreign exchange earnings will undoubtedly generate a sizeable income but in the long term, Brunei Darussalam is also expected to save some $43m in shipping costs during the first two years of operation as the current route of having goods trans-shipped to Brunei via Malaysia or Singapore will be cut out.

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