Issues and Challenges of Logistics in Malaysia: a Perspective

In the Asia Pacific region, the potential for growth in logistics is very promising. Although Malaysia's economic growth rate is increasing, but advances in logistical in this country is still on modest level. Under the Third Industrial Master Plan (IMP3), which was launched in 2006, Malaysia’s logistics development were charted carefully and diligently as to keep on pace with other countries in South East Asia. However, Malaysia is still lagging behind neighbour countaries such as Singapore, Thailand and Vietnam on transportation, bureaucratic and logistical issues. These issues need to be improve so that Malaysia can compete with these three countaries. Major Comments : Author Assumptions Transport and Logistics issues The production possibilites frontier (PPF) is the boundary between those combinations of goods and services that can be produced and those that cannot produce. In this issues, logistics development are the production and the problem are poor transport infrastructure, underdeveloped transport and logistics services and slow and costly bureaucratic procedures are the big issues that gives high logistics cost in Malaysia. Furthermore, the use of technology also needed in order to make some improvements to make logistics more efficient. Almost 20 years, Malaysia still trying to reduce transport and logistics cost. However, increasing in imports and exports but storage capasity in Malaysia are not well improve gives big impact to economics growth in Malaysia. This causes demand and supply are cannot be fulfil. Eventhough Malaysia adding new berths but Malaysia still cannot cope with increasing amount of space available on both depots and depots which causes Maritim still not fully efficient. In these issues, we must build as many as the new berths in order to maintain high capasity. For multimodal transport issues, Malaysia uses containers for the maritime part of trips, loading and unloading them in the ports rather at the origin and destination of their cargo. This eliminates the main cost-saving advantages of container use. However, poor transport infrastructure makes are hard its hard for unloaded. This is because road and rail infrastructure are not so good especially in East Malaysia. Furthermore, trade documentation in customs clearances need to be simplified in order to reduce port congestion. In addition, freight forwarding industry are still underdeveloped with only 10% of trade-related transport services uses this way. This causes demand and supply are not meet in positive ways. The high costs of land access to ports, reinforced by the effects of production agglomeration, have caused an excessive concentration of export-related activities in port cities and essentially restricted the benefits of trade growth to the areas immediately surrounding ports. However, if the benefits of trade are to be more widely distributed, the penalties of inaccessibility need to be addressed. Such action could not only stimulate trade-induced growth in currently inaccessible areas, but if successful, this could reduce and slower the growth of trade-induced urban congestion and pollution in port cities. Analysis In IMP3, specific targets has been set for the logistics industry which is to grow at 8. 6% during the 15-year plan’s period. In the other hand, logistic industry shall contribute 12. 1 to GDP (Keluaran Dalam Negara Kasar, KDNK) by 2020. Moreover, Malaysian ports shall handle 36 millions TEUs (container) by 2020, 2. 4 million tonnes for air freight and 18. 6 million tonnes for rail freight. Author Suggestion on Improvement In order to make improvement in logistics development, the Goverment needs to addressed few things such as Domestic Integration, Private Sector Collaboration and Regulatory Environment for Transportation. For Domestic Integration, transportation services should be improved especially road, waterways and railways in East Malaysia. For example through postharvest services, cargo consolidation through farmer or business associations, information on prices and market demand, access to credits and human skills. In the other hand, the needs of quality logistics for high-value products needs to improve. Such as freight forwarding, 3PL, warehousing, storage, packaging, e-business use and tracking services. Private sector are tend to more competetive than public sector. To encourage private sector collaboration, the Government has established the Malaysia Logistics Council (MLC) in January 2007 which is: i. To provide leadership and serve as a focal point to address all issues relating to the development of the industry, ii. Monitor and coordinate implementation of programs and activities of the respective Agencies/Authorities at both Federal and State levels involved in the development of the industry, iii. Steer research and training activities of the Center of Excellence for Logistics and Supply Chain and iv. Streamline strategies and policies governing the logistics industry which cuts across several implementing authorities. Minor Comments (Figures) 1. Logistics Development Supply When Logistics industry increases, the supply curve shifts rightward 2. Maritime Issues However, whe n Storage capacity cannot cope with the space available make supply decreases, thus the supply curve shifts leftward. 3. Multimodal Transport Failure in multimodal transport for loading and unloading are decreases, the supply curve shifts leftward. . Ports and Land Access When Ports and Land Access are not fully functional, the the supply curve shifts leftward. 5. Air Freight The decreases in Air Freight operations makes the supply curve shifts leftwards. Conclusions The needs of major improvement need to be done in order to improve logistics arrangements such as ports and infrastructure, freight management, connectivity and usage of technology. Malaysia will continue to review and undertake progressive liberalisation of its services industry taking into account domestic capability as well as to enhance competitiveness at the global and regional levels. References: * http://academia.edu/1360843/Issues_and_Challenges_of_Logistics_in_Malaysia_A_Perspective * http://academia.edu/1059313/Logistics_and_Supply_Chain_in_Malaysia_Issues_and_Challenges * http://www.apec.org.au/docs/10_TP_SUPPLY/7.%20Trade%20and%20Logistics%20-%20An%20East%20Asian%20Perspective.pdf