The Malaysian Insight

THE Port Klang Free Trade Zone (PKFZ) is expected to record a lower turnover this year following the Russia-Ukraine war and Covid-19 lockdowns in Shanghai.

After record turnovers in 2019 and 2020, PKFZ chairman Lawrence Low said that the logistics sector will be affected by these two major issues.

“PKFZ will continue to be vigilant in terms of collections and cost management,” Low told The Malaysian Insight.

The pandemic, however, benefited PKFZ due to higher demand for its warehouses.

In 2019, PKFZ recorded a turnover of RM95.62 million and set a new record last year with RM108.04 million, said Low.

But based on the turnover for January this year of RM9.18 million, Low said this is 15% lower than the same period last year.

“Turnover for February was reported at RM8.53 million, about 6.5% lower than the same period last year, while March turnover was reported at RM8.39 million, about 7.4% lower than the same period last year.”

He said that based on current trends, this year’s revenue and turnover may be lower than last year.

Low also noted that the World Bank had lowered Malaysia’s gross domestic product (GDP) this year to 5.5% from 5.8% previously, mainly due to the war in Ukraine.

Furthermore, China is currently experiencing the largest wave of infections since the pandemic began in 2020. Under China’s zero Covid-19 policy, all infected people must be quarantined. In order to curb the spread of the virus, China has locked down its biggest port Shanghai and parts of Jilin.

Low said that the Shanghai lockdown has affected the transportation of goods to Malaysia. Many commodities cannot be replenished in time, and problems in the supply chain will definitely affect supply, prices and choices.

“We are concerned that the continued rise in stagflationary prices will cause severe inflation.

“In 2022, it is impossible to predict the economy. Compared with the impact of the pandemic in 2020 and 2021, the global economic recession is just beginning.”

Cutting expenditure

To counter this, Low said that PKFZ will review its various budgets to save costs and come out with new sales and marketing strategies.

For example, in the face of high-pressure operations, the only way is to use more preferential marketing methods, including renting more warehouses at preferential prices, said Low.

“In terms of increasing revenue and reducing expenditure, we will increase sales by enhancing marketing and sales. In addition, monthly operating expenses will be reduced and non-essential plans will be postponed.

“In January this year, we originally planned to spend RM5.7 million, but we actually spent RM1.4 million. In February, we spent RM1.27 million, a reduction of RM1.68 million (from the amount budgeted).”

“The expenditure in March was RM1.34 million, a reduction of RM1.1 million. This is cost-saving, and the non-urgent expenses are postponed first,” said the PKFZ chairman.

He said that while PKFZ will not face a loss in profit this year, revenue will be lower than two years ago, which is due to the impact of the global economy, the pandemic and transportation.

Low said that PKFZ has postponed plans to build a second free trade zone (PKFZ2). Instead, existing warehouses will be upgraded so as to avoid administrative and overhead issues this year. – May 4, 2022.