Controversial Melaka port project scrapped by state govt

An artist's impression of the Melaka Gateway joint venture.
An artist's impression of the Melaka Gateway joint venture.PHOTO: MELAKA GATEWAY

KUALA LUMPUR - A controversial RM43 billion (S$14 billion) port project off the coast of Melaka that was touted as being the largest in the region when ready - overtaking Singapore - has been scrapped by the state government.

The Melaka government said in a letter dated Monday (Nov 16) that the developer of the Melaka Gateway project has failed to complete the reclamation works after three years as contracted, but the developer is calling the termination "unfair" and mulling legal action.

"We want to settle this amicably. But if not, we are ready" for legal action, Melaka Gateway's chief executive officer Michelle Ong told The Straits Times on Saturday (Nov 21). She said no reason was given for the "sudden termination".

The project was initially a venture between little-known Malaysian company KAJ Development and China's PowerChina International. It involves the reclamation of three islands off Melaka, two of which would be man-made.

The Chinese partner has since left the venture. Datuk Ong is also CEO of main developer KAJ Development.

Apart from the giant deep-sea port, Melaka Gateway was to include an international cruise terminal, bungalows with a private marina, condominiums, hotels and theme parks.

The Melaka state government terminated the sea reclamation agreement with KAJ Development, saying it has failed to complete the 246ha development - roughly half the size of Sentosa island - three years after signing a Oct 4, 2017, deal.

The Chief Minister's Office said in a letter sighted by The Straits Times: "The company is also required to return the project site, effective upon the termination notice issued by the Melaka state government.

"Therefore, all matters arising regarding the Melaka Gateway project site should be directly communicated with the Melaka state government."

Melaka Gateway was planned with the ambition of overtaking Singapore as the largest port in the region.

The project was first announced by then-premier Najib Razak in 2014 after a visit to Beijing.

After Najib was ousted in the 2018 general election, the Pakatan Harapan (PH) government dropped, or renegotiated, several Chinese-backed infrastructure mega projects with large price tags including the East Coast Rail Line connecting Port Klang in the Strait of Malacca to Kuantan on Malaysia's east coast.

The Melaka Gateway project was among those scrapped, but the PH government later allowed it to continue.

Two of Malaysia's largest ports are located along the same Malacca Strait, but Melaka Gateway was three years ago seen as part of a wider port alliance between Kuala Lumpur and Beijing to increase bilateral trade and boost shipping and logistics along China's much-vaunted Maritime Silk Road.

Port Klang in Selangor, Malaysia's largest port, is located north of Melaka and the Port of Tanjung Pelepas, Malaysia's second largest, is in Johor.

Ms Ong said the company has requested to meet with the Melaka government, but to no avail.

She said RM700 million has been spent on the Melaka Gateway project so far.

"We have managed to bring in tens of billions in FDI," she said, referring to foreign direct investments.

"We have various investors," she said at a news conference in Kuala Lumpur on Saturday when asked, adding that agreements signed for one of the three islands brought in US$3 billion a year.

Investments obtained for the deep sea port totalled RM3.8 billion, she said, while the cruise jetty had brought in investments of RM1.4 billion.

Ongoing construction at the project site was halted in March due to the Covid-19 pandemic, but work had resumed two weeks ago, Ms Ong told The Straits Times.