Poised for change amid Asean integration

MALAYSIA’S port and logistics sector faces both opportunities and challenges as it adapts to shifting trade patterns and digital transformation in the context of Asean’s push for deeper regional economic integration.

MIDF Research says Malaysia’s Asean chairmanship in 2025 will strengthen the nation’s role as a logistics hub, with trade agreements, infrastructure improvements and sustainability initiatives shaping the sector.

“With Asean’s continued push for regional economic integration, Malaysian port and logistics players stand at a critical crossroads,” the report notes.

While this presents opportunities for growth, it also requires adaptation to changing trade dynamics and regulatory pressures.

MIDF Research maintains its “neutral” stance on the ports and logistics sector.

Trade volumes rising

Malaysia’s involvement in the Regional Comprehensive Economic Partnership (RCEP) and its strong intra-Asean trade ties are expected to drive higher trade volumes. Asean accounts for 26.6% of Malaysia’s total trade, totalling RM765.1bil.

As trade volumes increase, major Malaysian ports like Westports Holdings Bhd, Northport, and Port of Tanjung Pelepas (PTP) are poised to benefit from increased transshipment and gateway cargo traffic.

MIDF Research highlights that this growth may also intensify competition from neighbouring ports like Singapore and Thailand. To sustain their edge, Malaysian ports must prioritise operational efficiency, reduce turnaround times and enhance hinterland connectivity, it notes.

Infrastructure development key

The Asean Connectivity Master Plan 2025 is expected to boost regional logistics efficiency with key infrastructure projects such as the Singapore-Kunming Rail Link and Asean Highway Network.

These initiatives aim to improve intermodal connectivity, streamlining cargo movement among ports, railways and roads, particularly for cross-border trade involving Malaysia, Thailand and Vietnam.

Digital trade facilitation initiatives are also poised to reshape the sector.

“The adoption of digital trade facilitation initiatives, such as the Asean Single Window (ASW) and the expansion of paperless customs clearance systems, will accelerate efficiency and reduce costs,” MIDF Research points out.

It notes that logistics firms such as Tasco Bhd and Swift Haulage Bhd may need to embrace automation, artificial intelligence (AI)-driven tracking, and data integration platforms to remain competitive.

“Companies like Tasco and Swift Haulage, which handle a significant portion of Customs clearance services, might need to adapt their operations to support e-documentation and digital payment platforms,” MIDF Research suggests.

The brokerage has a “buy” call on Tasco, with a target price of 92 sen. It remains “neutral” on Swfit Haulage, with a target price of 40 sen.

Shifts in dynamics

Undoubtedly, geopolitical risks, particularly US-China tensions, are driving Asean’s efforts to diversify supply chains.

Malaysia’s strategic location positions it well to serve as a hub for rerouted supply chains connecting China, India and the Asia-Pacific region.

MIDF Research suggests that “transshipment ports, in particular, might need to enhance their service offerings to accommodate potential shifts in global shipping routes.” Shipping alliances could also restructure networks to optimise costs and efficiency, prompting Malaysian port operators to offer improved value-added services.

As Malaysia leads Asean’s sustainability agenda during its 2025 chairmanship, port and logistics players will need to align with carbon reduction targets and embrace green initiatives.

MIDF Research says key developments such as green port projects and sustainable transport solutions are expected to shape the industry’s future.

Adapting to environmental, social and governance (ESG) standards is becoming increasingly important. MIDF Research points out that “industry players might be encouraged to integrate ESG principles into their operations to remain competitive in securing new contracts, particularly with multinational corporations.”

Collaboration brings opportunities

In addition to Asean’s internal developments, Malaysia’s position within the broader Global South economy could yield further economic benefits.

MIDF Research highlights that “both Asean and BRICS are major players in the Global South, and their cooperation can significantly boost South-South trade.”

With Indonesia recently joining BRICS+ and Malaysia being a partner country, opportunities may arise for investment in infrastructure, digital economy projects and human capital development.

“We believe that Malaysia’s chairmanship of Asean in 2025 offers a unique opportunity to drive regional cooperation and integration while reaping significant economic, political and sociocultural benefits,” MIDF Research says.

By prioritising inclusivity and sustainability, Malaysia could further elevate its regional influence and solidify its position as a key player in Asean’s economic future.