News Flash ...

January 2006

WEEK 1: (1 - 7 January 2006)

Asian warning for maritime London
A Far Eastern shipping company has confirmed to Fairplay that at least three ships that it had intended to bring into the UK’s Tonnage Tax regime and lease under a tax-enhanced structure in the UK will now be financed and flagged in the Far East. This, say executives, is a direct result of the so-called 'modernisation' of the UK’s tax regime under which capital allowances are no longer available to lessors but can now only be claimed by lessees. Previously, financial institutions were able to use capital allowances on ships to set against their tax liabilities and pass on a share of the benefit to qualifying owners in the form of attractive finance. “This will score a direct hit on London’s maritime cluster,” said a company executive who will not now be recruiting extra operating personnel in London. He pointed out that the UK’s Tonnage Tax has been a key feature in the revival of the UK flag over the past five years but now, he says, there is little incentive to bring new ships on to the register. © Lloyd's Register - Fairplay Ltd 2005.

Johan Shipping set for KL listing
MALAYSIAN container ship operator Johan Shipping has obtained approval from the securities commission to list on the Kuala Lumpur stock exchange. Plans for listing in March or April are underway under Swee Joo Berhad. Swee Joo is controlled by managing director Sim Moh Hong, while Sarawak businessman Leonard Linggi Jugah owns 30% of the equity. Out of the proposed paid up capital of $54M, one-quarter ($13.5M) will be raised from the public. The cash would be used to buy new ships and repay existing borrowings, a company spokesman told Fairplay. The fleet of container ships and barges at present numbers 19 with the largest ship having a capacity of 700 TEU. Two 1,000 TEU vessels will be acquired after the listing when Johan will be a fully owned subsidiary of Swee Joo. Group headquarters would be located in Kuching, capital of Sarawak province. Service routes at present cover west to east Malaysia, Bangkok and Ho Chi Minh City. Jakarta is also served through an associate. There are plans to expand the service network. © Lloyd's Register - Fairplay Ltd 2005.

MISC in talks to take Teekay stake
Malaysian national carrier MISC is believed to be interested in taking a substantial stake in New York-listed tanker operator Teekay Shipping Corp. Talks are thought to have been underway for several weeks. "A stress test has been ongoing ... but the board has yet to discuss the matter. A decision will be made pretty soon," a source close to MISC told Fairplay. MISC, which has increased its global profile in crude carriage since acquiring Singapore’s American Eagle Tankers, wants to strengthen its energy business. There is cash available from the RM1.5Bn ($396M) net profit generated in the six months to 30 September 2005. Teekay carries about 10% of the global oil and gas market, according to its website. MISC, which is a subsidiary of state-owned oil and gas giant Petronas, has declined to comment. © Lloyd's Register - Fairplay Ltd 2005.

Piracy in Malacca Strait has decreased by Eko Nopiansyah
Jakarta - The Western Region Maritime Fleet Command succeeded in reducing the number of crimes of piracy from 98 cases in 2004 to 51 cases in 2005. According to Western Region Maritime Fleet Command chief Rear Admiral Tedjo Edhy Purdijatno, this was achieved due to the Octopus Operation involving personnel from the marine and intelligence services. “The Western Region Maritime Fleet Command deployed its forces in the Malacca Strait and have achieved significant results as regards the piracy cases in the region,” Purdijatno said while speaking with journalists at the Western Region Maritime Fleet Command headquarters in Jakarta on Wednesday (04/01). In attempts to further reduce criminal acts in the Malacca Strait, the Indonesian Navy is will be conducting joint security operations with Malaysia, Singapore and Thailand. During 2005, the Western Region Maritime Fleet Command seized 249 ships and cases involving 207 of these had already been processed at the state courts. However, as many as 42 other ships were released. “There was not sufficient evidence for legal action,” Purdijatno stated. The ships seized were related to smuggling cases involving fuel, wood, nine basic needs, illegal Indonesian workers as well as coal and fish smuggling. As regards illegal fishing, a total of 17 foreign ships have been processed at state courts. © TEMPO 2005.

PSA listing will be delayed
The IPO of Singapore container terminal operator PSA International could be delayed, the government has indicated. Minister Mentor Lee Kuan Yew, a former prime minister, explained that a decline in profits has delayed listing plans. PSA suffered a setback when Maersk Sealand and Evergreen Marine shifted their regional transhipment hubs to neighbouring PTP in Malaysia in 2001 and 2002 respectively. The move led to some tough decisions on cost cutting with nearly 800 employees losing jobs. Lee referred to PSA’s efforts to bounce back after the setback during a meeting last week with management and union representatives of national air carrier SIA. Both organisations are controlled by the government’s Temasek Holdings. Former PSA chairman Stephen Lee, who moves into the top job at SIA this month, was complimented by the minister for leading PSA’s strategy of trimming costs and linking employee benefits to performance. © Lloyd's Register - Fairplay Ltd 2005.

Samudra to build two new tankers for EAT by Suraj Raj
E.A. Technique (M) Sdn Bhd (EAT) has appointed Sumber Samudra Sdn Bhd (Samudra) to design and construct two new tankers worth RM112mil as part of its fleet expansion exercise. Managing director Abdul Hak Md Amin said the company expected to take delivery of the first 4,200 deadweight tonne (DWT) product tanker by the first half of 2007, followed by a 6,000 DWT chemical tanker six months after that. “We believe we will be the first domestic fleet to adhere to the new requirement for double hulls,'' he told reporters after signing the contract agreement with Samudra in Kuala Lumpur yesterday. Under the new environment-friendly guidelines from the International Maritime Organisation, all single hull tankers need to be replaced by double hull tankers by 2010, as the latter offer better protection of cargo during collisions compared with single hull tankers. Perak-based Samudra has completed two harbour tugs and a security boat for EAT since 2004. The new vessels, which will be financed through bank borrowings, will increase EAT's fleet to 10 ships from the current eight. Hak said the first vessel would sail between Melaka and Sibu for Petronas Trading Corp Sdn Bhd and the second vessel would be utilised to meet the shortage of double hull tankers, especially when IMO's new rulings on chemical tankers would take effect in 2007. On business development, he said Petron Corp of the Philippines had invited the company to bid for a 10-year contract on a time charter basis at a rate of US$8,000 per day. “We have tendered (for the contract) and hope to hear from them by February next year,” he added. Hak said shipping contributed 90% to the company's revenue, with charter services being its main business. Petronas and Shell are among its major customers. For the year ended Dec 31, 2004, the company recorded a net profit of RM5.4mil, which it expects to increase to RM7.5mil for the year ending Dec 31 on RM42.3mil in revenue, excluding earnings from bunkering services. The company has forecast a net profit of RM9mil for the year ending Dec 31, 2006. © 1995-2005 Star Publications (Malaysia) Bhd.

Singapore shippers say security better in Malacca Strait
Singapore - Singaporean shippers say the security situation in the Malacca Strait has improved and that they want an end to additional insurance charges levied for trips in the busy shipping lane. The private Singapore Maritime Foundation, which represents shippers, wants the strait removed from a list of war risk areas compiled by a Britain-based group of insurance underwriters. The Joint War Committee, or JWC, of the Lloyd's Market Association put the strait on its list of war risk areas in June, requiring shippers to pay additional insurance charges of as much as US$5,000 a trip, The Straits Times newspaper reportedThursday. The Singaporean shipping group said in a statement this week that it had asked the Lloyd's committee to consider its view that the threat of terrorism in the Malacca Strait has diminished. The committee is expected to review its list of war risk areas earlynext year. "It is hoped that, following its review, the JWC will be persuaded that the security situation has very much improved and will remove the Malacca Strait from its list," the Singaporean foundation said. The foundation said the committee had labeled the strait a war risk area without consulting the shipping industry and regional governments, relying instead on the recommendation of one security consulting firm. About 50,000 ships, carrying half the world's oil and a third of its commerce, annually use the strait. Officials reported 37 pirate attacks in the strait in 2004, and some experts fear terrorists could target ships. Malaysia, Indonesia and Singapore, which border the waterway, launched air patrols of the route in September. They also conduct coordinated boat patrols. © of The Jakarta Post.

US - Indonesia military ties moving toward full normalization
The United States is taking steady steps toward full normalization of military relations with Indonesia, according to a State Department release. US - Indonesia military ties moving toward full normalization but US presses for accountability on past human rights abuses. Responding to a question taken at the January 3 press briefing, the State Department's Office of the Spokesman said the United States is resuming "selected areas" of military assistance for Indonesia, noting President Bush's declaration that "normal military relations would be in the interest of both countries." The Bush administration, the State Department says, "considers the relationship between the United States and Indonesia, the world's third largest democracy, to be of the utmost importance…. As the world's most populous majority-Muslim nation, Indonesia is a voice of moderation in the Islamic world." The State Department also noted Indonesia's "key role in guaranteeing security in the strategic sea lanes" and the progress it has made "in advancing its democratic institutions and practices in a relatively short time." At the same time, the United States "remains committed to pressing for accountability for past human rights abuses, and U.S. assistance will continue to be guided by Indonesia's progress on human rights, democratic reform and accountability," the State Department said. © U.S. Department of State's Bureau of International Information.

WEEK 2: (8 - 14 January 2006)

Audit to enhance maritime standards implementation
The auditing of members of the International Maritime Council has been set in motion to enhance the implementation and enforcement of international maritime standards. This follows the adoption of the voluntary scheme by the International Maritime Organisation (IMO) in its 24th Assembly, which met from November 21 to December 2 last year. IMO has described the adoption of the framework and procedures as a tool to achieve harmonised and consistent global implementation of IMO standards. The scheme addresses issues such as conformance in enacting appropriate legislation for the IMO instruments to which it is a party as well the administration and enforcement of the applicable laws and regulations of the member state. IMO said it would help to identify where capacity-building activities would have the greatest effect and it will also enable appropriate action to be much more precisely focused - Ports World. © The New Straits Times Press (Malaysia) Berhad.

Indonesia: talks with Malaysia on disputed oilfeild
Jakarta - The oil-rich and contested Ambalat sea block will top the agenda in talks on Thursday between visiting Malaysian prime minister Abdullah Ahmad Badawi, and Indonesia's president, Susilo Bambang Yudyohono, in Sumatra. The two-day meeting is part of a recent tradition which has seen the leaders of the two neighbouring countries meet annually to discuss issues of common interest. The Ambalat Block is a stretch of sea situated 150 kilometres north of Borneo, an island divided between Malaysia and Indonesia. The dispute exploded last February when Kuala Lumpur awarded an oil exploration licence in the area to the Dutch-British company Shell. Jakarta had already awarded a similar licence to the US petrol major Unocal. Shows of force by both parties, who sent war ships to patrol the zone, raised the political temperature in both capitals, where for several weeks there were protests which often gave way to incitements to conflict. The direct intervention of the two leaders helped calm the situation. The Ambalat Block dispute shot back onto the front pages of local newspapers last month, when Jakarta carried out a military exercise in the area, simulating an attack by a foreign power. The dispute follows that over the tiny islands of Sipadan and Ligitan, which the International Court of Justice (ICJ) awarded to Malaysia in 2002, a judgement that left the maritime boundary in the hydrocarbon-rich Celebes Sea in dispute. Despite the ongoing dispute, the relationship between the two countries - which share ethnic linguistic and religious roots - are in good shape and a return to the dark confrontational years - known as 'konfrontarsi' - is extremely improbable. The term konfrontasi refers to the period from 1963-66 during which Jakarta and Kuala Lumpur fought an 'undeclared war' over Borneo. The conflict was due to the opposition by the founder of the Indonesian republic Sukarno to the Malaysian federation, considered too pro-Western. Malaysia's prime minister Badawi will have with him 11 ministers and various industrialists. As well as discussing the Ambalat Block, the two delegations are expected to sign various memoranda of understanding aimed at improving commercial ties between the two Southeast Asian neighbours. © adnkronosinternational.

Indonesia, Malaysia may work together on disputed waters
Bukit Tinggi - Indonesia and Malaysia may work together to explore potentially oil-rich waters claimed by both nations, the leaders of the two countries said on Thursday. Both claim the Ambalat region in the Celebes or Sulawesi Sea off Borneo or Kalimantan's eastern shore, which caused tensions last year. "It is possible that cooperation on energy can be done on the (Ambalat) waters," Indonesian President Susilo Bambang Yudhoyono told a news conference with Malaysian Prime Minister Abdullah Ahmad Badawi in West Sumatra's town of Bukittinggi. Susilo also reiterated his pledge to settle claims with Malaysia over Ambalat region, where the two countries have awarded overlapping concessions to major oil firms. "Indonesia would keep its good relations with Malaysia in regards to border (issues) over Ambalat," he said. "Looking ahead, territorial borders will be jointly managed in a mutually beneficial way." Badawi, on a three-day visit to the scenic highland town of Bukittinggi, echoed Yudhoyono's statements, adding the Ambalat dispute was not an "easy matter". "If necessary, we can work together to build the areas which are in dispute," he "That is a good option that needs to be considered." At the height of the row last March, in the biggest test of ties between the Muslim-majority neighbours for many years, Indonesia sent warships and fighter jets to the area. Tension has abated since the two countries appointed technical teams to try to work out a solution. Last year, Malaysia struck an exploration deal with Anglo-Dutch giant Royal Dutch/Shell and state firm Petronas in the area while Indonesia gave U.S.-based Unocal Corp the right to explore hydrocarbons in the same area in 2004. © The Jakarta Post.

Indonesia, Malaysia to discuss border dispute
Malaysia says it will seek to resolve outstanding border and maritime issues with Indonesia at an annual meeting of the two countries' leaders later this week. The Jakarta Post newspaper reports Malaysian Prime Minister Abdullah Ahmad Badawi and Indonesian President Susilo Bambang Yudhoyono will discuss the issues in talks starting on Thursday in West Sumatra. The two countries have clashed in the past over territorial disputes. The daily quotes the Malaysian foreign minister, Syed Hamid Albar, as saying the prime minister wants the talks to result in concrete measures to resolve outstanding bilateral issues. In April last year, warships from the two countries brushed sides in oil-rich waters near Borneo island, which they both lay claim to. The incident followed a decision by Malaysia to grant an oil concession to Anglo-Dutch firm Shell in the region, which Jakarta said was not in territory controlled by Kuala Lumpur. © ABC 2005.

Indonesia's Berlian Laju Tanker plans overseas share sale
Jakarta - PT Berlian Laju Tanker, Indonesia's biggest shipping company by market value, said it planned to sell shares overseas. "The company is planning to list the stock overseas, but that is still in discussion stage," Corporate Secretary Kevin Wong said Thursday in a statement released by the Jakarta Stock Exchange. "This is aimed to boost the value for shareholders." The statement didn't give details on the size or timing of the sale, or say where the shares would be listed. Wong didn't answer calls to his office and mobile phone. On Jan. 6, TradeWinds newspaper reported in its weekly edition that Berlian plans to sell shares and list them in New York or Singapore after canceling a US$50 million bond sale. © The Jakarta Post.

An international maritime exercise gets underway in the Andamans by Raj Kumar Atal
Port Blair (Andaman and Nicobar Islands) - Navy personnel from several South East Asian countries are taking an active part in the MILAN 2006 naval exercises that have been organised by the Indian Navy off Port Blair, the capital of the Andaman and Nicobar islands. India has been hosting these biennial meets with participant countries like Australia, Indonesia, Malaysia, Bangladesh, Myanmar, Thailand, Sri Lanka and Singapore to foster closer cooperation among navies of countries in the Indian Ocean region. However, this is the first maritime exercise being undertaken after the Boxing Day Tsunami tragedy of 2004, which left thousands of people dead and hundreds of others missing in its wake. About 3,500 people died and 2,000 have been declared missing in the wake of the tsunami hit. The aim of the Milan Maritime Exercise is to enhance military exchanges with Navies of friendly nations, and to enable these outfits interact on an informal basis and to learn the culture and traditions peculiar to each nation. “Milan is an ongoing process of building these bridges across seas. The difference this year is because of the increased thrust, post the Tsunami, which has brought about realisation in this area that there is a greater need to get together. Various security and other arrangements have developed in the last year. There has also been an increased thrust from India to interact with its Southeast Asian neighbours,” said Lieutenant General Aditya Singh, Commander-in-Chief of the Andaman and Nicobar Command (ANC). The Indian Navy has been hosting ‘MILAN' meetings since the 1990s. These biennial meetings that began in 1995 see the navies from 11 different counties having a grand meeting where apart from the seminars and exercises, the participants are promised an evening of entertainment, cultural and film shows and golfing and sailing facilities. On one of the days the ships will be open to visitors and school children.The meetwill conclude after visitor ships depart from the area on Saturday. Port Blair is a true paradise for ecologists and ornithologists with many species of birds, mammals and reptiles, some of them almost extinct still inhabiting these islands. © 2001-2005 newkerala.com.

Maintaining security in Malacca strait by Michael Richardson
As Indonesia and other Southeast Asian states tighten security in the Malacca and Singapore straits, one of the world's key waterways for international shipping, pressure is growing for insurers to withdraw a controversial rating that classed the channel as a war-risk zone threatened by both pirate and terrorist attacks. In a series of steps over the past 18 months, coastal states flanking the 600-mile long straits have taken more effective measures to guard against piracy and terrorism. Only two cases of piracy were reported in the straits in the third quarter of 2005, compared to eight attacks recorded from January to June. This has not only led to the new demands for lower insurance rates; it is also providing reassurance to China that the U.S. military will not be directly involved in securing a maritime artery that carries about three quarters of Chinese oil imports. As a result, Beijing appears to be taking a more relaxed attitude towards countries like India and Australia, which have close ties to the United States, taking part in patrols of regional waters with the agreement of Southeast Asian governments. And for the first time, Beijing has offered to provide aid to regional countries that want to improve their maritime safety and security. Singapore shippers say that the risk of terrorism in straits has eased and they are campaigning to persuade the organization in London that sets guidelines for marine insurance to remove its war-risk rating. The classification, announced last June, led to higher insurance premiums for vessels passing through the waterway, which provides the shortest route to and from Asia for international shipping between the Indian and Pacific oceans. In some cases, ships were having to pay an extra US$5,000 per trip. As many of them pass repeatedly through the straits, this amounted to a hefty surcharge. Around 60,000 ocean-going commercial vessels ply the straits each year, carrying about one quarter of global trade, a substantial part of energy shipments and at least 75 percent of the oil imported by Northeast Asia's industrial giants -- China, Japan and South Korea. China's main concern is to ensure that its vital energy and trade supply lines through the straits are not disrupted. It wants countries close to the Southeast Asian waterway to provide protection, thus keeping America at arms length. This may include India, which has recently improved its relations with China as well as the U.S. India has naval and air bases in the Andaman and Nicobar Islands near the western end of the Malacca strait. The Chinese ambassador to India Sun Yuxi reportedly said in October that although Beijing did not favor powers from outside Southeast Asia patrolling regional waters, "as far as India is concerned, we don't have a problem." But Sun added that if the Americans "come and put their battleships there, we might worry about it." In March 2004, amid rising concern about pirate attacks and possible terrorist strikes against shipping in the Malacca and Singapore straits, a senior U.S. military commander caused controversy when he suggested that U.S. special forces or marines on high-speed vessels might be sent in to "conduct effective interdiction." The warning underlined the strategic importance of the straits to many countries outside Southeast Asia, including the U.S., Japan and China. It also prompted the three coastal states -- Indonesia, Malaysia and Singapore -- that flank the straits to take a series of measures to tighten security in the waterway and ensure that their sovereign control was not challenged. Because the straits are relatively narrow, the shipping lanes run through the national waters of the three littoral states for much of its length. In their latest step to keep the straits safe, the armed forces of Indonesia, Malaysia, Singapore and nearby Thailand have agreed on operating procedures that will allow a patrol ship from one of the four countries to cross into the waters of another in pursuit of pirates, terrorists or other suspected maritime criminals. The four had earlier agreed to mount coordinated warship patrols in their own waters in the straits and, more recently, to launch air patrols along the waterway used by an average of nearly 170 big ships each day. Australia last month reached an outline agreement with Indonesia, Malaysia and Singapore to add Australian maritime aircraft to the air patrols, saying that each flight would carry observers from one of the three coastal states. For their part, the U.S. and Japan have offered to provide vessels to Indonesia to beef up its naval patrol capacity. In September, China told a meeting in Jakarta held under the auspices of the International Maritime Organization it was ready to help coastal states that requested aid to improve security and safety in the Malacca and Singapore straits. Ju Chengzhi, the director general of China's Ministry of Transportation, said that the Chinese government supported the efforts and the dominant role of the littoral states in safeguarding sovereignty and security in the straits. "However, we have also been aware that the littoral states are facing increasing challenges from the continuing growth of maritime traffic in the straits and that their resources are being strained," he added. [The writer, a former Asia editor of the International Herald Tribune, is a visiting senior research fellow at the Institute of South East Asian Studies in Singapore.] © The Jakarta Post.

Malaysian, Indonesian leaders to tackle border, maritime issues
Kuala Lumpur - Malaysia said Tuesday that it would seek to resolve outstanding border and maritime issues with Indonesia at an annual meeting of the two countries' leaders later this week. Foreign Minister Syed Hamid Albar said Malaysian Prime Minister Abdullah Ahmad Badawi and Indonesian President Susilo Bambang Yudhoyono would tackle the issues in two-day talks starting Thursday in West Sumatra. "The meeting between the Prime Minister and President Susilo will further strengthen co-operation and pave the way for the resolution of outstanding border and maritime issues," he was quoted as saying by the state Bernama news agency. The two countries have clashed in the past over territorial disputes. Bilateral relations hit a low in April last year when warships from the two countries brushed sides near the Karang Unarang reef east of Kalimantan island or Borneo, an oil-rich area both lay claim to. The incident capped a tense period after Malaysia had granted in February an oil concession to Anglo-Dutch firm Shell in the region, which Jakarta said was not in territory controlled by Malaysia. Syed Hamid said Abdullah wanted this week's talks to result in concrete measures to resolve outstanding bilateral issues, including border demarcation. "Both countries will also strengthen cooperation in education and investment," he added. Abdullah will be accompanied by 11 cabinet ministers and chief ministers from five Malaysian states. © The Jakarta Post.

Ministers probe Malacca Straits security
A worldwide meeting of transport ministers is examining ways to boost security for cargo ships through the Straits of Malacca, including those carrying Australian gas and oil exports. A special ministerial conference on international transport security with 11 major countries including G8 members, will attempt to boost security along the strait which is used by around 50,000 vessels a year. Among them are energy cargo ships carrying 50 per cent of the world's energy supplies. Speaking from the conference in Tokyo, Transport Minister Warren Truss said Australia had a key interest in security in the straits, which carry Australian energy exports including liquefied natural gas and oil. The 1,000 km straits connect the Pacific to the Indian Ocean and is the shortest sea route between India, China and Indonesia. Mr Truss said Australia had recently signed a $20 billion energy contract with China with the first shipment to begin in three months. "There was a lot of discussion (at the conference) about enhancing security in the Straits of Malacca," he said. "Around 50 per cent of the world's energy passes through the Straits of Malacca and so it's clearly a very important area. "It's a very crowded area and it's an area where piracy is a concern but also there is, therefore, the potential risk of terrorism." Mr Truss said there was a piracy risk in the straits but there had never been a terrorist attack. "There hasn't yet been a terrorism incident where a ship has been used either as a weapon or particularly to carry the tools of trade of terrorists but it has long been recognised as a possibility and for that reason we need to follow through on those issues," he said. © 2006 The Age Company Ltd.

Ministers unite against terrorism by Kaho Shimizu
Transport officials from 14 countries wrapped up a two-day international counterterrorism conference Friday in Tokyo with a joint declaration reaffirming their commitment to ensuring transport security through international cooperation and capacity-building assistance for developing countries. U.S. Secretary of Transportation Norman Mineta (left) greets his Japanese counterpart, Kazuo Kitagawa, at the end of a two-day conference on transport security in Tokyo. At the Ministerial Conference on International Transport Security, ministers called for establishment of a new international working group to promote cooperation in ground transport security. Unlike the U.N. International Maritime Organization and the U.N. International Civil Aviation Organization, there is no international framework for ground transport safety. Delegates agreed ground transportation is most vulnerable to terrorism, given its accessibility. "We need structures to collaborate and share our learning" from past experiences, said U.K. Minister for Transport Stephen Ladyman. He noted Britain has tightened security following the July bombings on the London subway system, and launched random checks of passenger belongings on high-profile transport services such as trains from London to Heathrow airport this week. "We've got so much experience as a result of (that event) and we are prepared to pass it on to the others," while London can also learn from other countries' past experiences, Ladyman said. In aviation, the ministers stressed the need to promote international research and development to improve explosive-detection technologies. "We called for the meeting to bring together senior officials from major countries that are taking the lead in transport security and to discuss the future (of the issue)," Land, Infrastructure and Transport Minister Kazuo Kitagawa said at a joint news conference after the meeting. Other officials at the conference included U.S. Transportation Secretary Norman Mineta and senior officials from Australia, Canada, China, France, Germany, Indonesia, Italy, Japan, Malaysia, South Korea, Russia and Singapore. Officials from the IMO, the ICAO and the World Customs Organization also attended. The government requested the meeting, the first involving top transport officials that dealt with counterterrorism. © The Japan Times Ltd.

One year after the Indian Ocean tsunami by Dr. Abdulla Al-Madani
One year has already passed since the Indian Ocean catastrophe on December 26, 2004, an event that killed approximately 290,000 people, left almost two million homeless, and caused economic damage worth billions of dollars in a dozen countries. This an opportunity to focus on what has been done in the past 12 months with regard to reconstruction projects and humanitarian efforts in the tsunami-hit region. It is also an opportunity to shed light on the lessons learned from the disaster. The world responded to the catastrophe with unprecedented generosity, pledging more than $10.5 billion, $7 billion of which has so far been handed over according to the United Nations office of the Special Envoy for Tsunami Recovery. Thus, there was enough supply of aid and funds that could pay for everything. The problem, however, was how to make the best use of the money. It has been reported that the aid effort was hampered by factors such as lack of information, poor management, and corruption. As a result, thousands of families who were not seriously affected by the tsunami have received more aid than those who lost everything. In Indonesia and Sri Lanka, the most tsunami-hit nations, thousands of survivors did not receive any aid due to the lack of information about distribution points compounded with the lack of transportation to reach such points. And in Thailand and South Asian countries, many survivors expressed their dissatisfaction with the disproportion between their losses and compensations offered, saying they could not re-establish their lives. Moreover, the reconstruction process has been slow, especially in the most devastated Indonesian province of Aceh, where only 20 percent of houses have so far been rebuilt. Although many schools and kindergartens have been rebuilt and refurnished in Aceh by foreign volunteers, especially from Singapore and Japan, tens of thousands of children remain without schooling or attend classes in temporarily tents. One of the major pressing problems there is the lack of teachers. It was reported that some 5,000 Acehnese teachers died in the disaster in the capital city of Banda alone. Tourism in the tsunami-hit region, on which millions of people depend directly or indirectly for making their living, has also not fully recovered. The best example could be derived from Phuket, Thailand's most popular holiday spot, where tourist arrivals are 50 percent lower than pre-tsunami levels. In other tourist hotspots in the region, horrifying images of the destruction also dissuaded tourists from making a return. Foreign and local groups in charge of humanitarian and reconstruction operations do not rule out mistakes and mismanagement. But they attributed them to the lack of experience in the handling of such a huge disaster hitting several countries simultaneously. Besides, most of the tsunami-hit areas are known for their rigid topography, overpopulation, and poor infrastructure and logistic facilities, not to mention insecurity constraints resulting from insurgencies. Several lessons, therefore, can be learned from the disaster. One is the need to beef up regional first lines of defence both in terms of disaster preparedness and prevention, particularly in developing countries. Another key lesson is the importance to set up clear measures for effective cooperation and coordination among UN agencies, the Red Cross, the military, and NGOs. Suggestions proposed by experts and geologists include the setting up of early warning systems that would help give people time to head for higher ground, the building of structures that are strong enough to withstand the waves, and the putting up of buffer zones along the coastline. This, however, must be accompanied by specific programmes aimed at educating people on how to cope with disasters and promoting their water knowledge and skills, something that Sri Lankan NOGs have already launched. Such measures and plans must not be ignored, especially with famous Thai meteorologist and seismologist Smith Dharmasaroja warning of the occurrence of a new big earthquake and tsunami in the future. According to him, "the next one would be further north than the 2004 tsunami, which brings the Straits of Malacca and -more disturbingly- Singapore and Malaysia into range". His predictions, largely based on tsunami record data for the last two centuries and on 30 years of studies, should be taken seriously. After all he is the man who has been predicting, since 1988, that Phuket island and India's surrounding islands of Andaman and Nicobar would be hit by a huge tsunami. Having been proven right in December 2004, he was appointed as a vice-minister in the office of Thai prime minister. (Dr. Abdulla Al-Madani, an academic researcher and lecturer on Asian affairs, based in Bahrain) © The New Nation, Bangladesh.

Rolls-Royce seeks strong presence in Malaysian naval industry by Dennis Wong
British engine-maker Rolls-Royce wants to establish a strong presence in the naval industry in Malaysia. It opened a naval office last December providing customer and after-sales service for the Royal Malaysian Navy (RMN) and other navies in the region. Rolls-Royce International sales director (naval) Nick Baker said Malaysia’s geographical location is good for its naval industry. “With Singapore being the centre for the marine and energy industry in the region, we want to have a strong presence in the naval industry as well and Malaysia offers the best geographical location in the area,” Baker said. Rolls-Royce is also a global leader in marine propulsion, engineering and hydrodynamic expertise, with full systems capability for supply to vessels including the RMN frigates KD Lekiu and KD Jebat. They also supply the controlled-pitch propellers on the Meko A100-class corvettes and offshore patrol vessels. Rolls-Royce has five offices in Malaysia. Baker said with the establishment of the Malaysian Maritime Enforcement Agency (MMEA), Rolls-Royce sees the need for small water-jet vessels. “MMEA has bought two small patrol craft with our engines, making them the first operator of water-jet engine craft in the region,” Baker said. Rolls-Royce also supplies Kamewa water jets to the Perantas fast patrol boats for the Royal Malaysian Customs, and has a significant presence in the commercial marine sector with customers including MISC and Star Cruises, the world’s third-largest cruise ship operator. The new naval office in Malaysia is part of Rolls-Royce’s plans to advance its presence in the country. “In addition to supplying and supporting customers, Rolls-Royce is also committed to the transfer of technology to Malaysia,” he said. © The New Straits Times Press (Malaysia) Berhad.

The Russians are coming by David Wall
London - Analysts and journalists have been trying hard to find something interesting to say about the first East Asia Summit (EAS) held in Kuala Lumpur in mid-December. The most frequent comment is that China was prevented from hijacking the summit, but they have mostly got it wrong. In fact, Japan had already killed off the notion of the EAS as a meaningful regional entity worth hijacking by insisting that Australia, New Zealand and India be invited to join it as full members. As the three countries can hardly be described as being in East Asia, their presence made nonsense of the concept of the EAS as an East Asian community (EAC) of any sort. China, among others, most notably the host country Malaysia, rightly complained that their presence meant that the meeting could not achieve its original goal of starting to work toward setting up an EAC. Three interesting events did, however, take place at the summit. These rang diplomatic bells and suggest that a re-balancing of power relations in East Asia is under way. These related to the "spectator at the feast": Russia. Russia, unlike Australia, New Zealand and India, is a genuine East Asian state. But while the other three were invited to attend as full members, Russia was only invited to attend as an observer. The United States sought an invitation to the meeting but was refused one. There is a strong view among many real East Asian countries that Russia should be invited to join the EAS as a full member, and the EAC, when it is set up. The first of the interesting things to happen at the summit was that Australia, a new boy on the block, flexed its tiny political muscle and took a strong line against ever admitting Russia. One wonders at whose instigation Australian Prime Minister John Howard took this line; he was presumably singing a song in the U.S. hymn book. It looked strange for Howard, as premier of a country that is not even an East Asian state, to impudently press for Russia, which is an East Asian state, to be banned from the organization. The second interesting development at the meeting was that Philippines President Gloria Arroyo took the lead in publicly calling for Russia to be admitted as a full member with effect from next year's summit and be allowed to take a full part in developing its institutions. Real East Asians know that they are all going to become increasingly dependent on Russia for energy supplies. Over the next 10 years it is expected that East Asia will collectively increase the share of their oil and gas that they buy from Russia from the current 3 percent to more than 30 percent. Each of the customer countries is seeking to woo Russia and make their case to be treated on a preferential basis. While China and Japan are tripping over themselves trying to stuff billions of dollars in Russian pockets in attempts to influence the routes of Russia's pipelines, smaller and poorer countries have to limit themselves to good public relations. I am sure that Russian President Vladimir Putin made a note in his little black book about plucky Arroyo's public support. Putin's presence at the meeting was the third and most important thing to happen at the summit. In the last year or so he has been making great efforts to shift the policy of "leaning toward the West," introduced after the collapse of the Soviet Union, and to replace it with a tilt toward the East. Over the last 12 months Putin has cemented Russian ties with President Hu Jintao's China. Together they have strengthened the Shanghai Cooperation Organization and given it an anti-American role. They, and their fellow authoritarian leaders in Central Asia, met in July last year and gave the U.S. marching orders to get out of the area. Then Russia and China went off to play war games, sharing and testing equipment whose only possible real world role is to contain U.S. power in East Asia. Communism destroyed most of Russia's assets, but it could not touch the assets under the ground. Putin knows that Russia's position on the global scene is a function of his ability to use Siberia's oil and gas as diplomatic weapons. Most of Russia's reserves of both are in Siberia, i.e., East Asia. East Asian countries will be increasingly dependent for their energy supplies on those reserves. China, Japan and South Korea have already signed contracts for long-term supplies of oil from Russia's Sakhalin Island. Sakhalin Island is, of course, one of the pieces of territory that Russia took from China in the humiliating treaties of 1858 and 1860 -- along with the Maritime Province, including Vladivostok and also Khabarovsk Province. This region is crucial to Russia's ability to trade its oil and gas in East Asia. This is why Putin was in a hurry to sign a border agreement with China last year. This confirmed that the rapidly depopulating provinces are in Russia -- although many people in Northeast China do not agree with this. This year is the Year of Russia in China; next year has been designated the Year of China in Russia. Putin has appointed a new czar of Russia's Far East provinces, Presidential Special Envoy in the Far Eastern District Kamil Iskhakov. He took him with him to Kuala Lumpur for the EAS. He also took the mayor of Vladivostok, Vladimir Nikolaev. As the Kremlin put it: "The participation of the Russian president in this forum constituted a weighty proof of the growing authority of our country in Asian affairs and of the vigorous and constructive Russian policy in the Eastern sector." However, the appointment of Iskhakov and the elevation of the mayor of Vladivostok to a presidential delegation are a reflection of the fact that the Far East of Russia is to a large extent outside the control of the boys in Moscow. On the day (Jan. 6) that the Kremlin announced that the pipeline from the Siberian oil fields to the Pacific coast (or China, whatever) would start to be built in April, Putin also said "We won't be able to efficiently manage the territory unless we solve social issues there." This refers to the worsening governance of the region, where there is a pronounced drift into organized crime. The clumsy attempt of Japan to "contain" China in the East Asia Summit almost certainly means that the EAC it was intended to give birth to will never arrive. What will arrive instead is a new ASEAN plus 1: ASEAN plus Russia to run alongside the existing bilaterals, the active ASEAN plus China, the divisive ASEAN plus Japan and the moribund ASEAN plus South Korea. ASEAN plus Russia has already had its first meeting on the sidelines of the EAS, where Russia will have a stronger role in East Asia than it would have had in an active EAC. Another step has been taken in the isolation of Japan in East Asia; Japan is doing a good job of shooting itself in its regional diplomacy foot. [David Wall is an associate member of the faculty of Oriental Studies at the University of Cambridge and an associate fellow of Chatham House]. © The Japan Times Ltd.

Transport ministers urge better anti-terror steps
Tokyo - Representatives of 14 countries including the United States, China, Japan, and Indonesia on Thursday urged tighter maritime, aviation and land transport security to prevent acts of terrorism. The call came at a two-day international conference in Tokyo -- site of a deadly sarin gas attack in the subway in 1995 -- on ways to improve the security of air, land and sea transport. "We recognise that acts of terrorism pose a serious threat to international maritime transport and that acts of piracy and armed robbery against ships recur with alarming consequences," a statement issued on behalf of the transport ministers said afteran initial session. "We, therefore, believe that it is essential to reduce the vulnerability of international maritime transport to such unlawful acts." Represented at the meeting are Japan, China, South Korea, Singapore, Malaysia, Australia, Britain, Indonesia, France, Germany, Italy, Russia, the United States and Canada, along with the international Maritime Organisation and three other global bodies, officials said. Noting that security measures have been tightened since the Sept. 11, 2001, attacks on the United States, another statement said: "Terrorists are refining and adapting their tactics to perpetrate further acts of unlawful interference againstaviation." The representatives also voiced concerns that it was difficult to fully ensure security for land transport. "Attacks against land transport, the most accessible and frequently used method of public transport, are attractive to terrorists due to its high volume of passengers, critical infrastructure, economic importance and psychological impact,"they said in a separate statement. The only attacks on Japan in recent years have been of domestic origin. In 1995 members of the Aum Shinrikyo doomsday cult released sarin gas in the Tokyo subway during the morning rush hour, killing 12 people and making more than 5,000 ill. © The Jakarta Post.

Transport ministers wrap up talks at Tokyo anti-terror conference
Transport ministers from more than a dozen countries, including the United States, vowed to fight terrorism on land, sea and air as they wrapped up a conference aimed at laying the foundations for a global anti-terror effort. Concluding the three-day talks, the ministers said in a joint declaration that efforts must be enhanced to fight terrorism directed at transport systems and stressed the need to develop international cooperation toward that goal. "Acts of terrorism can be attempted at any time and at any place," the declaration said. "High priority must continue to be given to addressing vulnerabilities in transport systems, to ensuring that measures deal effectively with the threat" and to helping resource-strapped countries fund anti-terror programs. The ministers specifically noted the need to strengthen security in the Straits of Malacca, a major sea lane between southeast Asia and Indonesia. The meeting offered little in the way of new policy initiatives, however. Instead, the ministers mainly stressed the need to enhance the effectiveness of existing treaties and international organizations in fighting the threat. "We will report our findings to international organizations and hope it will be reflected in their future talks," said chairman Kazuo Kitagawa, Japan's Minister of Land, Infrastructure and Transport. United Kingdom delegate Stephen Ladyman, secretary of transportation, said London has learned the value of sharing information and the lessons gleaned from the attack on its subways and buses last July. "We benefited greatly from the closed circuit TV on our transit network," he said. "That was an important lesson that we were able to pass on to others." The conference was the first to bring together ministers of major countries responsible for transport security to discuss policy measures and share information. Along with U.S. Transportation Secretary Norman Mineta, senior transport officials attended from Australia, China, Indonesia, Japan, Malaysia, South Korea, Russia, Singapore and the U.K. Canada, France, Italy, Germany and the European Commission sent representatives, along with the International Maritime Organization, the World Customs Organization and the International Civil Aviation Organization. At the suggestion of Mineta, they noted the need to work together to mitigate the impact of bird flu, and cut the risks of its spread being speeded by transport in ships or on planes or trains. Mineta also stressed the need for increased attention to railroad security, but said existing organizations should be used to do that. "We didn't want to establish any further organizations," he said. "But what we are looking for is a working group for transit and rail." (AP) © The Mainichi Newspapers.

Two Malaysian Trawlers Detained In Langkawi Waters
Langkawi - The Malaysian Maritime Enforcement Agency detained two Malaysian trawlers and their nine foreign crew for fishing in waters less than 6 nautical miles from Pulau Rebak, Langkawi on Sunday. The Commander of the agency's vessel, KM Segantang, Lt Yusoff Abu Bakar said trawlers cannot conduct fishing activities within 12 nautical miles from the coast and the crews were detained because they had no work permit. He said both trawlers were detained under Ops Satria which began in Jan 3 in efforts to eradicate smuggling activities and encroachment by foreign fishermen in the waters of northern Malaysia. The boats from Kuala Perlis and the foreign crew had been handed over to the Langkawi Fisheries Department for further action, he said when contacted by Bernama here, Monday. The first trawler and its crew was detained at about 4 pm and the second one half an hour later at the same area. © 2005 BERNAMA.

WEEK 3: (15 - 21 January 2006)

MISC quashes Teekay talk
MALAYSIAN shipping enterprise MISC has denied reports that it is making a bid for Teekay Shipping Corp. The company, a subsidiary of state-owned oil and gas giant Petronas, told Kuala Lumpur stock exchange that it was unaware of the claims that it is seeking a strategic stake in Bermuda-based Teekay. Rumours that MISC was keen to add to its take-over of American Eagle Tankers from NOL were sparked by reports that it wanted to strengthen further its presence in the crude oil transport sector. MISC officials told Fairplay the company’s reply to the stock exchange’s query is the company’s present position on the issue. MISC president and chief executive Shamsul Azhar Abbas said the company’s main business is now focused on three areas: petroleum services, LNG shipping and offshore floating terminals solutions, which are comparatively new. He added that the bulk of MISC’s capital expenditure will focus on LNG and petroleum fleet expansion. © Lloyd's Register - Fairplay Ltd 2005.

Mokhtar may start budget airline
Syed Moktar, the reclusive Malaysian tycoon who controls Singapore rival Port of Tanjung Pelepas, Johor Port and Senai Airport, is looking to start a budget airline, sources say. Mokhtar is a close associate of former prime minister Mahathir Mohamed, who is still said to wield a lot of influence. The airline option is being considered as part of a strategy to strengthen business at Senai Airport, a regional facility also in Johor province. Mokhtar, whose interests include rice imports and distribution, is also looking to acquire two ships for his privately held entity JP Logistics, which is a division of his publicly-traded Johor Port. JP Logistics handles the transport of cargo from Johor port on land and is said to be in discussions with Malaysian Merchant Marine for rice imports. Mokhtar has already made his move to take Johor port private. His flagship enterprise MMC Corp has offered RM2.50 ($0.66) a share for equity it does not own in Johor Port. © Lloyd's Register - Fairplay Ltd 2005.

Shipping rates may fall again by Saijel Kishan
Shipping rates will probably fall for a second straight year as the fleet of coal and iron-ore vessels grows faster than the world’s demand for commodities. Revenue for the largest dry-bulk vessels may average US$32,000 (US$1 = RM3.74) a day this year, based on the estimate of analysts surveyed last month. Average revenue was US$37,552 a day last year, according to Drewry Shipping Consultants Ltd in London. “I don’t like the look of the market this year,” said Martin Stopford, head of research at Clarkson plc, the world’s largest shipbroker. “Owners are in for a rough ride.” Shipbuilders are delivering new vessels and creating a glut of carriers on world markets, hurting earnings for owners including Bocimar International, a unit of Cie. Maritime Belge SA, Belgium’s biggest shipping company, and DryShips Inc. The capacity in the global dry-bulk carrier fleet may rise 6.9 per cent this year, outpacing the 4.5 per cent rise in trade in commodities, according to Drewry Shipping. The Bloomberg Dry Ships Index fell for the first year in four in 2005 as new vessels were delivered. The index, which was at 1,573.7 points today, is still almost triple its 10-year average. “The party may be over, but shipowners are still in for a good time this year, as rates stay above historical averages, said Aarti Gupta, an analyst at Drewry Shipping in New Delhi. — Bloomberg. © The New Straits Times Press (Malaysia) Berhad.

Singapore overtakes HK as busiest container port
Hong Kong - Hong Kong was overtaken by Singapore as the world’s busiest container port in 2005, for the first time in seven years, after growth in the city’s cargo volume slowed because of competition from neighbouring Chinese ports. Hutchison Whampoa Ltd and other operators of Hong Kong’s port handled 22.4 million standard 20-foot containers, a 2 per cent increase from a year earlier, according to provisional figures posted on the Hong Kong Port Development Council’s Web site yesterday. Singapore handled 23.2 million boxes last year, surpassing Hong Kong for the first time since 1999. Hong Kong’s container volume has increased at a slower pace in recent years, as more companies move their goods through other southern Chinese ports including Shenzhen to save costs. Singapore has benefited from increased shipments from other South-East Asian nations that go through the city state before reaching their final destinations. Growth in Hong Kong’s container volume slowed from 6.8 per cent in 2003 and 7.5 per cent in 2004. In December, cargo movements rose 6.8 per cent from a year earlier to 1.88 million boxes, the Port Development Council said. Cargo volume at Singapore’s port, operated by PSA International Pte and Jurong Port Pte, grew 8.7 per cent in 2005, according to the city’s Maritime and Port Authority. In Shenzhen, volume rose 19 per cent to 14.78 million boxes in the first 11 months of last year. — Bloomberg. © The New Straits Times Press (Malaysia) Berhad.