Suria Capital looks for strategic partner

PETALING JAYA: Suria Capital Holdings Bhd has mapped out plans to reap the economic benefits of the Sabah Development Corridor (SDC) by expanding and developing its Sapangar Bay port into a transhipment hub for the Brunei-Indonesia-Malaysia-Philippines East Asean Growth Area (BIMP-EAGA).

“Part of our plan is to look for a strategic partner, preferably a foreign player who is a port and main line operator,” chief financial officer Mohamad Yasin Abdullah told StarBiz.

Suria Capital, he said, wanted to leverage on the strategic partner's strengths to grow as Sapangar Bay port did not want to rely solely on local shipments, although he expected the domestic volume to increase as the SDC was likely to spin off a hive of activities.

In addition, the expansion of palm oil downstream activities in the state would also lead to an increase in businesses.

Partnering with main line operators would help to attract more cargo to the port.

The BIMP-EAGA was a huge market for Sapangar Bay port to tap into given the region's cargo volume of about 1.5 million boxes, Yasin said.

Suria Capital's subsidiary, Sabah Ports Sdn Bhd (SPSB), operates eight ports in Sabah. Sapangar Bay Container Terminal, which started operations in July last year, is the newest port in its stable.

The throughput volume in Sapangar Bay terminal was about 280,000 TEUs (20-foot equivalent unit) during its first six months of operation, of which 90% was local.

Yasin said the immediate task is to shift some general cargo operations to Sapangar Bay port so that it will become an integrated port. “We want to do it within two years in order to enjoy the tax break,” Yasin said.

Analysts said such a move would also streamline the group's port operations as cargo volume in the state was generally low.

SPSB has been granted investment allowance under the Approved Service Project scheme, whereby it will enjoy 100% allowance on the qualifying capital expenditure incurred with five years from the date the first capital expenditure is incurred.

The taxation refund of RM32.4mi for investment allowance has lifted Suria Capital's net profit to RM86.3mil for the nine months ended Sept 30, 2007, from RM31.9mil in the previous corresponding period.

Yasin said the Government had also earmarked areas around Sapangar Bay to develop a logistics hub and that might include free trade zone. “The development of the logistics business will help Sapangar Bay port,” he added.

On the RM1.5bil Jesselton Waterfront project comprising five- or six-star hotels, high-end condominiums, and commercial blocks, Yasin said the development, which was divided into three separate projects involving three joint venture partners, would be spread over five years. “These are equal joint ventures. So you can roughly estimate the revenue that we can earn,” he said when asked on the contribution of the project to the company's bottomline.

The company signed three memoranda of understanding on Tuesday with IJM Properties Sdn Bhd, Glomac Bhd and Kota Kinabalu Pavilion Sdn Bhd to jointly develop part of the Jesselton Waterfront project in Kota Kinabalu.

By The Star (by Kathy Fong)