FMM opposes Port Klang tariff hike, warns of economic fallout

Borneo Post

14-06-2025

Soh stresses that the sharp cost escalation from July could disrupt the cost structures of both exporters and importers at a critical point in Malaysia's economic recovery.
KUCHING (June 14): The Federation of Malaysian Manufacturers (FMM) has strongly objected to the upcoming port tariff hike at Port Klang, approved by the Ministry of Transport and gazetted yesterday (June 13), citing serious concerns over its timing and economic impact.
The revised tariff structure involves a 30 per cent increase in container handling charges, to be implemented in three phases, beginning July 1, 2025, said FMM president Tan Sri Dato' Soh Thian Lai in a statement today.
He added that in addition to the handling charge hike, container storage charges are set to surge between 197 and 243 per cent, posing a significant burden on manufacturers already facing cost pressures from global and domestic headwinds.
'This comes at a time when industries are already contending with unresolved external shocks, including the ongoing US tariff threats on Malaysian exports, the expansion of the Sales and Service Tax (SST), and a scheduled restructuring of electricity tariffs.
'The convergence of these cost pressures will deliver a heavy blow to manufacturers and exporters at a critical juncture in Malaysia's economic recovery, further eroding the country's export competitiveness,' he said.
Soh stressed that the sharp cost escalation from July could disrupt the cost structures of both exporters and importers at a critical point in Malaysia's economic recovery.
Under the gazetted rates by the Port Klang Authority, container handling charges for a 20-foot container will rise from RM300 to RM390 over three phases.
With Port Klang handling around 12.5 million TEUs annually, this could translate into an additional RM1.125 billion in annual costs to industry upon full implementation.
'Malaysian ports have traditionally enjoyed a competitive edge due to reasonable cost structures.
'However, with the new rates, container handling fees will approach US$120–130 per TEU, similar to rates in Singapore and Hong Kong, but well above Asean neighbours such as Vietnam, Indonesia and Thailand.
'This will erode Malaysia's value proposition and increase the risk of cargo diversion to competing regional ports,' he said.
Soh also pointed to Malaysia's recent drop to 34th in the IMD World Competitiveness Ranking and its position at 26th in the World Bank's Logistics Performance Index as warning signs.
He cautioned that the tariff hike sends the wrong message to investors and could undermine business planning and trade flow, especially as manufacturers grapple with narrowing margins and uncertain global conditions.
Given the cascading effects of multiple policy shifts, Soh called for a holistic review by the government, urging inter-ministerial coordination on cost-related measures affecting businesses and consumers.
'Port tariffs, SST expansion, electricity hikes and international trade headwinds must be evaluated together.
'No single ministry or agency can make isolated decisions without assessing the full burden being placed on industry,' he said.
He urged the government to immediately pause the implementation of the port tariff hike, electricity base tariff revision, and expanded SST scope, and to reconvene with industry stakeholders to reassess the broader economic and operational impact.
'These cost increases will eventually translate into higher prices for consumers, and a slowdown in manufacturing investment and job creation.
'FMM stands ready to work with the government to realign policy implementation timelines, ensure transparency in cost justifications, and develop a coordinated national strategy to support industry growth and protect the welfare of consumers,' he said. Federation of Malaysian Manufacturers FMM lead Port Klang port tariff