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MOU Signing Between Port of Rotterdam Authority and POIC Sabah Sdn Bhd

The POIC Port at Lahad Datu has signed heads of agreement with the Port of Rotterdam Authority that will give the Borneo port an international profile and draw much needed investments to the resource-rich state of Sabah and nearby territories under Indonesia and the Philippines.

The agreement was signed on Oct 15 on the sideline of the on-going four-day 5th Sabah International Expo participated by 20 countries. The entities involved were the government-owned POIC Sabah Sdn Bhd and the Port of Rotterdam Authority, which operates Europe's largest port.

Capt Kees J Weststrate, the Senior Project Manager of Port of Rotterdam International, signed on behalf of POR. POIC Sabah Sdn Bhd, the owner of POIC Port and the cluster project, was represented by its chief executive officer Dr Pang Teck Wai.

His Excellency Mr Lody Embrechts, the Ambassador of the Netherlands to Malaysia, and the Sabah State Minister of Industrial Development Datuk Dr Ewon Ebin witnessed the signing.

Lahad Datu, in southeastern Sabah state in Malaysia, is the site of an ambitious 5,000-acre palm oil industrial cluster being developed by POIC Sabah. The project seeks to promote downstream palm oil processing industries as well as clusters for cocoa, timber and ship repairs. The project, which includes the POIC Port, is located near vast acreage of oil palm plantations and coconut plantations in Indonesia and the Philippines.

POIC Port is located in arguably the best natural harbour in Borneo with a draft in excess of 20 metres. A main liquid jetty which can berth vessels of 100,000 DWT and a series of linear jetties have already been built. A dry cargo jetty is being planned.

Sabah state itself has about 1.3 million hectares of oil palm, and produces slightly more than 30% of the palm oil produced in Malaysia, which is currently second behind Indonesia, the world's biggest producer. In neighbouring Kalimantan provinces of Indonesia, which is just south of the border from Lahad Datu, most of the country's projected 20 million hectares oil palm plantations are being planned. Whilst in the south of the Philippines, most of the world's coconut oil is being produced. These resource-rich territories belong to a regional grouping called the Brunei-Indonesia-Malaysia-Philippines East Asean Growth Area (or BIMP-EAGA) with a population of over 55 million.

The plan of the Lahad Datu cluster is to develop an industrial park with modern infrastructure to attract foreign investments. Twenty-one investors have acquired land there, and two biodiesel producers (with Australian and South Korean interests) are in operation. They are the first such plants in Borneo.

POR will use its expertise in port development and management to invest in long-term partnership with POIC Port to consolidate its cargo volume from east Asean (Association of Southeast Asian Nations). POR handled 408.8 million tonnes of cargo, and 10.8 million TEUs (20-foot containers) in 2007. About 72,000 people work in the Rotterdam port.

POR, which has been in operation since the 1400s, will seek to have substantial capital participation in the development of POIC Port and its hinterland.

POR's Capt. Kees said one of the objectives of POR's partnership with POIC is to organize the logistics to ship to Rotterdam the massive quantities of forestry and plantation biomass from Malaysia and Indonesia for industrial use, such as feedstock for renewable energy.

"We are working with the UN on this biomass-for-energy project. We are committed to reducing carbon emission," he said. "Our partners and us (POR) are committed to efforts to operate all our ports in a sustainable way. Our activities to promote a sustainability culture focus on nature and water, and in-house programmes to promote care for the environment."

Meanwhile, Dr Pang said: "Rotterdam's decision to work with us shows that as the gateway port to Europe, Rotterdam is looking not only at what Sabah can offer, but what the entire BIMP-EAGA represents in terms of resources and potential."

POR's foray into Borneo is its second outside The Netherlands. The first was the Sohar Port in Oman where POR formed a joint venture company with the Sultanate of Oman to manage the port and develop an adjacent special economic zone. It has signed memoranda of understanding with government-linked entities in Brazil and Qatar based on similar models.

"Going by the Sohar model, POIC Port can similarly ride on the expertise, reputation and network influence of POR and achieve a quantum leap in developing not only our port, but in export-oriented commodity-based industries," Dr Pang added. "POR links POIC to the multitude of companies from countries around the world which have investments in Rotterdam."

Capt. Weststrate said POIC Port and POR share the same commitment towards the principle of sustainability and the move towards 'green' ports. POIC subscribes to the principle of sustainability by way of its affiliation to Roundtable on Sustainable Palm Oil (RSPO).

Capt. Weststrate (4th left) of the Port of Rotterdam Authority exchanging documents with Dr Pang Teck Wai at the end of the signing of heads of agreements in Kota Kinabalu on Oct 15. Others in the picture are (from L-R) Datuk Ismail Abdullah (Permanent Secretary of the Sabah Ministery of Industrial Development), Victor Schoenmakers (POR), Mr Lody Embrechts (Ambassador of the Netherlands to Malaysia), Datuk DR Ewon Ebin (Sabah Minister of Industrial Development), Dr Johnson Tee (logistics consultant) and Michael Yong (Finance Manager, POIC Sabah Sdn Bhd).

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