Malaysia must simplify tariffs, cut red tape and make local ports duty-free if it wants compete with major hubs like Hong Kong and Singapore, a report said today.

The Federation of Malaysian Port Operating Companies chairman G Gnanalingam told Bernama news agency the government must remove outdated regulations and unnecessary charges to make the sector more competitive.

For example, he said tariff structures drawn up in the 1960s for local ports contained many charges that could be simplified and made more transparent to help lower the cost of logistics for shippers.

"Hong Kong and Singapore have the largest ports in the world because they do not have any bureaucracy and they are duty-free," said Gnanalingam, who heads one of Malaysia's leading port, Westport.

Dubai had also emerged as the world's 13th busiest port in terms of volume because "it is duty-free and regulation-free," he noted.

"So we need to standardise and simplify our charges so that everybody knows what the fees are," he said, calling on the government to map out a national strategy on ports to ensure "efficient service at a reasonable price."

Malaysian ports had grown from handling one percent of world trade to three percent now but an estimated investment of more than a billion dollars is needed to raise terminal capacity and win a greater share of global trade, officials have said.

Rapid growth

Its main Klang Port has jumped from the 26th largest port in the world to 12th in the past two years, while the Port of Tanjung Pelepas (PTP) is expected to emerge among the world's top 20.

PTP, which is in southern Johor state just across the narrow Tebrau Strait from Singapore, has enjoyed rapid growth since beginning operations four years ago.

Singapore lost Denmark's Maersk Sealand and Taiwan's Evergreen Marine to PTP last year, and has since overhauled its shipping strategy, including cutting handling fees and offering shipping lines the opportunity to run their own berths.