OBOR

One Belt One Road - A New Economic Paradigm
"Maritime Silk Road has the potential to shape global trade and investment well into the future and it is vital that Malaysian companies understand what Maritime Silk Road could mean in the years ahead.”

Maritime Silk Road (MSR)
The 21st Maritime Silk Road - One Road One Belt (MSR) is the name of a development initiative by the Chinese government to revive the ancient Silk Road which has a history dating back to 130 BCE during the Han Dynasty. It is an ambitious strategic, political and economic plan with the potential to create a new model of growth from Asia to the Middle East and Europe. MSR will involve more than 65 countries - including Malaysia - on three continents, 60% of the world's population and nearly half of global GDP.

The Belt which is the land component consists of a network of rail routes, overland highways, oil and gas pipelines and other infrastructural projects, stretching from Xian in Central China, through Central Asia and Russia, with one artery crossing Kazakhstan and the other through Mongolia but both linking up with the trans-Siberian railway and going on to Moscow, Rotterdam and Venice.
The Road is the maritime component which envisages a network of ports and other coastal infrastructures from China's eastern seaboard stretching across south-east Asia, South Asia, the Gulf, East Africa and the Mediterranean, forming a loop terminating at Piraeus (Greece), Venice (Italy) and Rotterdam (Netherlands) in Europe and Mombasa (Kenya) in Africa.

Both the Road and the Belt include regional loops and branches which extend the reach of the emerging transportation networks and which also tie the two components at critical points.
The document on The Vision and Actions on Jointly Building the Silk Road Economic Belt and 21st-Century Maritime Silk Road announced by the China National Resource and Development Commission and the Ministry of Foreign Affairs in March this year sets out the overall rationale behind the initiative.

According to Vice Premier Zhang Ga oli, and head of the high level group charged with piloting the project, the Maritime Silk Road objectives are:
•    Enhancing policy coordination across the Asian continent
•    Trade liberalization
•    Financial integration
•    Connectivity including people-to-people links
The document describes the MSR as "a systematic project which should be jointly built through consultation to meet the interests of all and effort should be made to integrate the development strategies of the countries along the Belt and the Road".
Impact of MSR on Malaysia, Ports and Logistics Providers
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With the Maritime Silk Road encompassing 65 countries across Asia, Europe, the Middle East and Africa, there will be exciting new commercial opportunities in the short, medium and long term. The MSR has the potential to shape global trade and investment well into the future and it is vital that Malaysian companies understand what the MSR could mean for them in the future.
The participation of Chinese companies in Malaysian projects has been steadily increasing. Some major development projects in Malaysia which have a strong Chinese presence include:
•    In Pahang, a RM5.6 billion initiative to build a steel mill and upgrade port infrastructure in the Malaysia-China Kuantan Industrial Park is being undertaken jointly by Chinese and Malaysian private and public sector entities.
•    In Johor, the state-owned China Railway Corporation is building the RM7 billion Gemas-Johor Bahru electrified double-tracking rail project. The track which will allow existing trains to travel up to 160kph will improve the transportation of goods across the country, including to Singapore.
•    In Malacca, Guangdong Province is teaming up with the state government to promote tourism and manufacturing opportunities in the state while private Chinese firms have also indicated interest to participate in the Melaka Gateway project.
•    In Kuala Lumpur, a consortium led by Iskandar Waterfront Holdings (the master developer of Danga Bay) and China Railway Engineering Corp has acquired a 60% equity for RM7.41 billion in Bandar Malaysia. CREC will also invest RM8.1 billion to build its own regional centre at Bandar Malaysia which is also the site of the Kuala Lumpur station for the upcoming high-speed rail to Singapore and two proposed MRT stations.
About 70km south of Kuala Lumpur, the Xiamen University Malaysia, located on a 150-acre site in Sepang, was opened recently. The Malaysian campus which offers a full range of studies, and has a target intake of 10,000 students, is the first overseas expansion of the renowned Chinese university.
The rapid growth in Chinese investment in Malaysia is not only a reflection of the good relations between the two countries but also of China's commitment to making the MSR initiative a reality. As the MSR concept takes shape, Malaysian businesses should not overlook the potential but should take steps to embrace the opportunities arising.

The MSR is expected to exert multi-dimensional impacts on the global supply chain and maritime connectivity. Ports and logistics providers in ASEAN countries and stakeholders of various regional economic blocs will be impacted by the initiative because they play a key role in maritime networks and the global supply chain system.
Malaysia is strategically located along the Straits of Malacca, one of the world's busiest shipping routes connecting east and west between the Indian Ocean and the Pacific Ocean. This puts the country in an excellent position to capitalise on the expected increase in seaborne trade volume and investment in maritime infrastructure that will arise from the MSR initiative.

Port Klang, owing to its location, is ideally placed to be a key MSR gateway and transshipment hub. PKA is spearheading efforts on behalf of Malaysian ports in support of the government's initiative to prepare the local maritime and logistics industry for the advent of MSR. A recent boost for PKA's efforts has been the Transport Ministry's formation of the China-Malaysia Port Alliance comprising six federal local ports and ten Chinese ports. The Memorandum of Understanding on the formation of the Alliance was signed by Transport Minister Datuk Seri Liow Tiong Lai and his Chinese counterpart Yang Chuangtang in November 2015.
PKA on its part has established sister port relations with ten Chinese ports with the objective of enhancing cooperation in key areas of port development and trade and networking. The sister port relations will not only be a useful platform for cooperation and expansion of trade but also beneficial for all concerned in the MSR context.

ISPS

International Ship and Port Facility Security Code (ISPS Code)
The ISPS Code is a set of measures to enhance the security of ships and port facilities. It was developed in response of the perceived threats to ships and port facilities after the 9/11 attacks (World Trade Centre US).

The ISPS Code is part of the Safety of Life at Sea Convention (SOLAS) and compliance is mandatory for the 148 Contracting Parties to SOLAS.The ISPS Code was adopted by one of the resolutions that was adopted on 12 December 2002 by the Conference of Contracting Governments to the SOLAS, 1974 (London, 9 to 13 December 2002).

Another resolution includes the necessary amendments to chapters V and XI of SOLAS that mandates compliance with the Code on 1 July 2004. The existing chapter XI of SOLAS was amended and re-identified as chapter XI-1. A new chapter XI-2 was implemented based on special measures to enhance maritime security.

Part A of the ISPS Code contains the mandatory requirements regarding the amended provisions of chapter XI-2 of SOLAS , 1974; Part B provides guidance regarding these amended provisions.

Security Levels in ISPS Code
In setting the security level Contracting Governments (CG) should take account of general and specific threat information. CG should set the security level applying to ships and port facilities at one of three levels:

Level 1

Level 2

Level 3

NORMAL

The level at which the ship or port facility normally operates.

Security level 1 means the level for which minimum appropriate security measures shall be maintained at all times

HEIGHTENED

The level applying for as long as there is a heightened risk of a security incident.

Security level 2 means the level for which appropriate additional protective security measures shall be maintained for a period of time as result of heightened risk of a security incident.

IMMINENT

The level applying for a period of time when there is the probable or imminent risk of a security incident.

Security level 3 means the level for which further specific protective security measures shall be maintained for a limited period of time when a security incident is probable or imminent, although it may not be possible to identify the specific target.

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Malacca Straits VLCC traffic doubles in a decade as shipping traffic hits all time high in 2017
Defying difficult market conditions traffic in the world's busiest shipping lane, the Malacca Straits, continued to grow over the last three years hitting an all time high of 84,456 transits in 2017.

A report by Singapore-based Nippon Maritime Center (NMC), provided exclusively to Seatrade Maritime News, and based on figures from the Marine Department of Malaysia, showed that traffic had grown consistently since 2011.

“In the last three years, daily transit reports to Klang VTS increased from 222 vessels per day in 2015 to 231 vessels per day in 2017, despite challenging shipping market conditions,” the NMC said. This equates to nearly 10 vessels entering or leaving the straits every hour, or one vessel every six minutes.

The number of transits is based on reports by vessels over 300 gt to the STRAITREP system at One Fathom Bank in the north of the Malacca Strait and Iyu Kecil in the south where it meets the Singapore Strait.

Containerships, which remain the largest users of the strait accounting for around 33% of traffic, saw a slight dip in transits 24,446 vessels last year compared to 25,786 in 2016. However, the average number of containerships transiting the strait daily remains at about 70 despite rapid growth in the size of boxships on the trade with lines now deploying 18,000 – 22,000 teu megamax ships on the Asia – Europe trade. “Container ports in the Straits have been handling increasing number of containers in recent years,” the report noted.

Tankers, including VLCCs, are the second largest users of the straits accounting for 29% of traffic.

VLCC traffic in the strait has nearly doubled over the last decade to 6,711 transits last year compared to 3,753 in 2007, equating to 20 VLCCs a day. Over the last five years VLCC traffic has increased 7.8% annually.

For small to medium sized tankers traffic has grown 3.8% annually over the last three years to hit 20,629.

Bulk carrier traffic in the strait saw a slight dip in 2017 to 15,411 transits from 15,547 in the previous year. “For the most part since year 2011, bulk carrier transit reports have been growing steadily at 6.0%, reflecting East Asia’s import of raw materials such as iron ore and coal,” the report commented.

LNG and LPG vessel traffic saw a small increase in transits to 4,137 last year compared to 4,057 in 2016.

“There has been a slow growth in LNG/LPG vessels using the Straits, with 1.7% increase in the last three years, and these would mainly be vessels using the route from Middle East to East Asia,” NMC said.
“Sources of LNG and LPG cargoes are widely distributed around the world, and there are many routes that do not use the Malacca Straits.”

Meanwhile ro-ro traffic saw decline to 2,629 transits of the straits last year compared to 2,873 vessels in 2016.