The Melaka Gateway is a planned integrated seashore development project in the coastal areas of Melaka, a state at the southern tip of the Malaysian peninsula. It was conceptualised as a maritime centre that would host the largest private marina in Southeast Asia, reinstating Melaka’s reputation as a renowned trading zone while reviving the state’s economy.
The project was inaugurated by then-Malaysian Prime Minister Najib Abdul Razak in 2014. In May 2017, the local developer for the project, KAJ Development Sdn Bhd (KAJD), inked an agreement with three Chinese state-owned companies—PowerChina International Group Limited, Shenzhen Yantian Port Group, and Rizhao Port Group—to invest and develop in three of its islands. KAJD also announced the involvement of the provincial government of Guangdong, China to develop the fourth island.
The entire project was expected to be completed by 2025, but in November 2020, the Melaka government issued a notice of its termination. In April 2021, the project was cancelled indefinitely, and its land reclamation projects were rebranded as the Melaka Economic Waterfront Zone (M-WEZ). As of March 2022, however, the project has been handed back to KAJD and is back in development.
China’s Minister of Transport called the Melaka Gateway “the forefront flagship in support of the One Belt, One Road Initiative initiated by the People’s Republic of China.” The project supported China’s interest in improving connectivity between continents through what PRC President Xi Jinping calls “the Maritime Silk Road of the 21st century,” and its location in the Straits of Malacca, through which most of China’s exports and imports pass, made it all the more attractive. The Melaka Gateway port facilities would have provided China direct access to one of the most important trade routes in the world—one that has been historically dominated by Singapore, a nation more politically aligned with the United States than with China.
The project design includes the development of four islands, or PMEs (an acronym for Pulau Melaka East): two reclaimed (PMEs-1 and 2), one existing (PME-3), and one an extension from the shore into the sea (PME-4). PME-1 is intended to host a tourism and entertainment hub with a theme park and an esplanade, while PME-2 is planned to serve as a Free Trade Economic Zone with financial institutions. The existing PME-3, Pulau Panjang, is slated for development into a deep seaport for liquid cargo, while PME-4 is intended to be a maritime industrial park.
Insufficient Economic Rationale
The economic feasibility of Melaka Gateway’s ambitious deep seaport development has been repeatedly questioned due to the under-utilization of Malaysia’s existing ports and Melaka’s existing marina. The development of the Melaka Gateway port would only serve to shift the attention away from the dire need to address the problems of existing underutilized structures. The project’s plan to develop luxury residential and commercial areas on one of the four islands was also met with negative responses, with residents citing the oversaturation of development projects in Melaka. There is a high probability that the project would only increase the number of unsold properties in the state.
Environmental Issues with Land Reclamation
Given the size of the Melaka Gateway, a Detailed EIA(DEIA) should have been required and its findings made accessible to the public, giving ample time and opportunity for feedback, discussion, and engagement before any work on the project commenced. However, no EIA studies were conducted to assess the environmental effects of the project. Instead, the developer used a 1997 macro-EIA report as its basis, an outdated document replete with inaccuracies because more than 20 years had passed since its publication. The project also should have had a Social Impact Assessment (SIA) to look into the impacts of the reclamation works on the coastal communities, but no assessments seem to have been conducted.
Two former prime ministers endorsed the Melaka Gateway as a national project, but the details of the concession procurement were not made public. Various transparency issues concerning the structure of concessions between the government and a private company made the detailed terms of this partnership difficult to ascertain. There was no transparency on the financing arrangements, and the owner of the port was unknown. This concern was amplified by KAJD’s track record as a firm, especially since it had no previous experience owning or operating ports.
|Project & Contract Phase||Project Information||Score||Response||Link to Information|
|Project Identification 2.5||Project owner||KAJ Development Sdn Bhd is the main owner of the project.||ISEAS article: https://www.iseas.edu.sg/wp-content/uploads/pdfs/ISEAS_Perspective_2019_78.pdf|
|Sector, subsector||Industries, logistics||Malaysian Investment Development Autority: website: https://www.mida.gov.my/home/3272/news/kaj-development-sdn-bhd-signs-rm30-billion-agreement-with-powerchina-international-for-investment-developmentconstruction-of-melaka-gateway/|
|Project name||Melaka Gateway||Melaka Gateway Project site: https://melakagateway.com/|
|Project Location||Jalan Pulau Melaka 1, Taman Pulau Melaka, 75000 Melaka||https://www.google.com/search?q=Melaka+Gateway+project+location&rlz=1C1SQJL_enNL813NL814&oq=Melaka+Gateway+project+location&aqs=chrome..69i57j33.10929j0j7&sourceid=chrome&ie=UTF-8|
|Purpose||Aim to increase tourism in the area with the bringing of 2,500,000 tourista and increase employment with a workforce of 40000-45000 peoples. Among the planned facilities are a marina for yachts, luxury condominiums, bungalows with private marina, tourist eco-parks, theme parks and ports for cruise ships.||Melaka Gateway Project Site: https://melakagateway.com/vision-mission-values/ The Star Newspaper: https://www.thestar.com.my/business/business-news/2016/06/23/malacca-intl-cruise-terminal-to-be-completed-next-year/|
This is a detailed project that aims to incorporate the world’s first and only combined tourism, lifestyle, business development, integrated with port and maritime industries. This is a project that is part of the one belt one road project by China. Through this project, it aims to develop the area of the project into Melaka’s first central business district with a range of facilties.
|Detailed outline of the Melaka Gateway project: https://www.msiglobal.org/wp-content/uploads/2019/12/Investment-Book_-9Sept-5.pdf|
|Project Preparation 1.6||Project Scope (main output)||Incentives and government subsidies are included in the provision of construction capital and this is known as seeding capital. There are phases in the construction and operations period which allow for the build up of cash and non cash support means together with guarantee proceedings in the construction phase. Navigable Water Depth Construction has been accomodated to further allow for bigger volumes of tankers to arrive at the ports.||Detailed outline of the Melaka Gateway project: https://www.msiglobal.org/wp-content/uploads/2019/12/Investment-Book_-9Sept-5.pdf|
|Environmental impact||Environmental Impact Assessments have been conducted and approved for the building of the deep sea port and Maritime Industrial Park. State governments have approved of the measures and the department of environment had given the go ahead to start the reclamation process. Furthermore, a hydraulics study was conducted to measure the amount of water passing through pipelines. However, these were not made public.||Detailed outline of the Melaka Gateway project: https://www.msiglobal.org/wp-content/uploads/2019/12/Investment-Book_-9Sept-5.pdf|
|Land and settlement impact||Total land usage of 70 million square feet used for the project. 609 acres of land was acquried for reclamation for the land areas of the project.||Development plan for Melaka Gateway plan: https://www.msiglobal.org/wp-content/uploads/2019/12/Investment-Book_-9Sept-5.pdf|
|Contact details||KAJ Development sdn bhd email address: [email protected] or [email protected] Postal address: No 1, Jalan Baiduri 2, Taman Pulau Melaka, 75000 Melaka, Malaysia||KAJ Development Sdn Bhd: https://melakagateway.com/contact/|
|Funding sources||About 40% of the project will be funded by five foreign investors, namely TRE Development Pte Ltd, Skyye Group Pte Ltd, Rinani International Aero Marine, Kasen International, Royal Caribbean Cruise. Another 26%-30% of the project will be funded through joint ventures with KAJ Development.||Funding Sources: https://www.thesundaily.my/archive/952676-ERARCH240534|
|Project Budget||No conclusive evidence found in regard to the topic|
|Project budget approval date||No conclusive evidence found in regard to the topic|
|Project Completion 1.7||Project status (current)||The project has been returned to its private developer, KAJD, after its termination in November 2020.||The Star: https://www.thestar.com.my/news/nation/2022/03/09/melaka-gateway-project-goes-back-to-developer|
|Completion cost (projected)||Projected project cost is estimated to be at RM42 billion||ISEAS Article: https://www.iseas.edu.sg/wp-content/uploads/pdfs/ISEAS_Perspective_2019_78.pdf|
|Completion date (projected)||The projected completion date is in the year 2026||The Star: https://www.thestar.com.my/news/nation/2022/03/09/melaka-gateway-project-goes-back-to-developer|
|Scope at completion||PME-1: Construction of:
– Cruise Terminal and Duty-Free Shop
– The Gateway District
– Maritime Museum
– River Valley
– Central Park, Education and Healthcare
– Integrated Resort
– Central Business Hub
– Effective Transport Solutions
PME-2: SMART Commercial City
PME-3: Integrated Deep Sea Port and Liquid Terminal
|Reasons for project changes||No conclusive reason was given for the project’s cancellation in 2020.||https://www.theedgemarkets.com/article/melaka-gateway-developer-cries-foul-over-project-termination|
|Reference to audit and evaluation reports||No conclusive evidence found in regard to the topic|
|Contract Phase 0.9||Procuring entity||KAJ Development Sdn Bhd||Melaka Gateway Site: https://melakagateway.com/kaj-development-sdn-bhd/|
|Procuring entity contact details||Postal address: No 1, Jalan Baiduri 2, Taman Pulau Melaka, 75000 Melaka, Malaysia Email address: [email protected] and [email protected]||Website address KAJ Development for postal and email addresses: https://melakagateway.com/contact/|
|Procurement process||No conclusive evidence found in regard to the topic|
|Contract type||No conclusive evidence found in regard to the topic|
|Contract status (current)||No conclusive evidence found in regard to the topic|
|Number of firms tendering||No conclusive evidence found in regard to the topic|
|Cost estimate||No conclusive evidence found in regard to the topic|
|Contract administration entity||No conclusive evidence found in regard to the topic|
|Contract title||No conclusive evidence found in regard to the topic|
|Contract firm(s)||No conclusive evidence found in regard to the topic|
|Contract price||RM30 billion||https://govdocs.sinarproject.org/new-unsorted/st-84-2017-mida-ar-2016-bm.pdf|
|Contract scope of work||There are phases carried out with the contract. Phase 1 is the development of the International Cruise Terminal, Tourism & Lifestyle, Business services on reclaimed island no.1 Phase 2 consists of the development of a maritime sea port and maritime industrial park on reclaimed island no. 3 and 4. Phase 3 consists of the development of a smart city on reclaimed island no.2||Detailed outline of the Melaka Gateway project: https://www.msiglobal.org/wp-content/uploads/2019/12/Investment-Book_-9Sept-5.pdf|
|Contract start date and duration||Project was launched on February 7th, 2014 by the former prime minister Najib Abdul Razak. The project is predicted to be completed in the year 2025.||Melaka Gateway Site: http://melakagateway.com/achievements/ ISEAS Article: https://www.iseas.edu.sg/wp-content/uploads/pdfs/ISEAS_Perspective_2019_78.pdf|
|Implementation 0.7||Variation to contract price||No conclusive evidence found in regard to the topic|
|Escalation of contract price||No conclusive evidence found in regard to the topic|
|Variation to contract duration||The project was originally intended to have been completed in 2025, but due to its brief cancellation, it has now been moved to 2026.||
Expected initial date of completion: https://themalaysianreserve.com/2019/01/03/melaka-gateway-project-to-continue/
New target date of completion: https://www.thestar.com.my/news/nation/2022/03/09/melaka-gateway-project-goes-back-to-developer
|Variation to contract scope||No conclusive evidence found in regard to the topic|
|Reasons for price changes||No conclusive evidence found in regard to the topic|
|Reasons for scope & duration changes||Delays in on going procedures of the Melaka Gateway Project due to changes in the government from Barisan Nasional to Pakatan Harapan. There is over-capacity in Malaysia’s port sector, and the growth of containerized traffic through the region has increased.||ISEAS Article: https://www.iseas.edu.sg/wp-content/uploads/pdfs/ISEAS_Perspective_2019_78.pdf|