Transport boost for Cyberjaya

By Sharen Kaur
sharen@nstp.com.my
Published in NST on September 29, 2012

BETTER LINKS: Cyberview wants light rail transit and MyRapid Transit to serve the intelligent city

NEW developments are set to take place in Cyberjaya, such as a railway network, which may include a brand new light rail transit (LRT) line and the MyRapid Transit (MRT) system.

Currently, the only rail network serving Cyberjaya is the Express Rail Link, connected via Putrajaya to the Kuala Lumpur International Airport in Sepang and the KL Sentral transport hub in Kuala Lumpur.

Cyberjaya, which was conceptualised and designed some 15 years ago as the nucleus of Malaysia's Multimedia Super Corridor, needs a better public transport system to serve its growing population. Today, the intelligent city is home to 600 companies, with 35 multinational and nine educational institutions, and about 53,000 people.

"The huge leap is due to the concerted efforts that we at Cyberview, together with our stakeholders, have initiated, which include the creation of an eco-system for companies to thrive in Cyberjaya.

"We've also launched various initiatives that make operating businesses in Cyberjaya easy and appealing," said Cyberview Sdn Bhd managing director Hafidz Hashim.

He said the company is in talks with the local authorities to extend the MRT and LRT lines to Cyberjaya.

"We are soliciting with them for a LRT and MRT line to serve the population growth. We are working closely to see which is the most cost- effective," he said in an interview.

Cyberview, a federal government company, is the land owner and the Cybercity Manager of 2,800ha Cyberjaya in Selangor, deemed to be Malaysia's version of the US' Silicon Valley.

As the information technology (IT) city of the country, its goal is to attract world-class multimedia and IT firms to set up businesses there.

So far, 27 per cent of Cyberjaya has been developed, while over 40 per cent of the landbank is under development and in planning stage.

Hafidz said as the city grows to greater heights, the demand for transport, residential and commercial development and other needs will increase significantly.

He also hopes there will be better connectivity to Cyberjaya by road.

Currently, Cyberjaya is linked via the Maju Expressway, Lebuhraya Damansara Puchong, the South Klang Valley Expressway and the New Klang Valley Expressway.

Investors may shift to stocks with rise in RPGT

By Sharen Kaur
sharen@nstp.com.my
Published in NST on September29, 2012

THE planned rise in the Real Property Gains Tax (RPGT) to curb speculative activities on properties and avoid a property bubble could return investors to the stock market, say analysts.

Under the 2013 Budget, the government has proposed a review of the RPGT. Effective January 1 2013, RPGT will be imposed on profits for the disposal of properties within two years of buying at 15 per cent, and 10 per cent for those sold in the third to fifth year.

The idea of raising the RPGT is to discourage people from buying and selling houses for quick profit. RPGT is also another government's source of revenue.

Properties held longer than five years are not subject to RPGT. Also, disposals of properties between husband and wife, parents and children, grandparents and grandchildren are exempted from RPGT.

"I don't think the move to increase RPGT rate would dampen the market. In absolute terms, it is not large enough to discourage people from speculating in properties," said OSK Investment equity capital market head Gan Kim Khoon.

"However, we believe property investors will put off buying houses for a while and invest in the stock market as the property market has softened," Gan told Business Times.

Mah Sing Group Bhd group managing director Tan Sri Leong Hoy Kum said the rise in RPGT rate was within expectation and it will have less physical impact on developers as the construction period for new projects usually takes two to three years.

Leong also lauded the government's efforts in increasing housing affordability and reducing the cost of property ownership.

"There is strong demand for serviced apartments from 500 square feet and landed properties below RM1 million. The 50 per cent stamp duty exemption for first-time purchase of homes under RM400,000 will help to reduce the cost of purchasing a house by up to RM3,500," he said.

Master Builders Association Malaysia (MBAM) is, however, disappointed with the increase in RPGT rate for properties sold within a period of two years and after three years.

"We feel that the financial measures imposed by Bank Negara Malaysia to curb property market speculation is sufficient as it is," said MBAM president Matthew Tee in a statement.

Naza TTDI awards RM556m expo centre job to Daewoo

By Sharen Kaur
sharen@nstp.com.my
Published in NST on September 25, 2012

The Naza Group has awarded a RM555.9 million contract to Daewoo Engineering and Construction Co Ltd to help develop the new Matrade Exhibition Centre in Kuala Lumpur.

TTDI KL Metropolis Sdn Bhd, a wholly-owned unit of Naza TTDI Sdn Bhd, the property arm of Naza Group is developing the exhibition centre.

Naza TTDI deputy executive chairman and group managing director, SM Faliq SM Nasimuddin, said Daewoo Engineering was awarded the contract due to its commanding track record of undertaking similar projects here and Korea.Daewoo Engineering has completed, among others, Menara Telekom, Jeju Convention Center, Incheon International Airport Passenger Terminal, Korean International Exhibition Centre and Menara KLCC 3.

In a statement issued yesterday, he said the superstructure works will commence next month and is slated to complete by mid-2015.

The foundation for the exhibition centre was completed last month.He said the exhibition centre would be the nucleus for Naza TTDI’s flagship KL Metropolis development, which is estimated to rake in some RM15 billion in gross development value.

With a gross floor area of one million sq ft, the centre would be the country’s largest exhibition area, placing Malaysia on the map as a preferred meetings, incentives, conferences and exhibitions) destination in the region.

He said more positive developments are expected at KL Metropolis, transforming the area into Kuala Lumpur’s international trade and exhibition district.

KL Metropolis will comprise residential and office towers and a regional retail centre.

Malaysia mulls rail link with Asean, Chinese cities

By Sharen Kaur
sharen@nstp.com.my
Published in NST on September 25, 2012

HIGH-SPEED TRAINS: Several options currently being explored for Kuala-Singapore route

MALAYSIA is studying the possibility of linking the high-speed rail (HSR) system from Kuala Lumpur to Thailand, and to other Southeast Asian countries, says Transport Minister Datuk Seri Kong Cho Ha.

“We want to provide connectivity beyond Thailand. But to do this, you would need government to government understanding and we have not come to that yet,” Kong said.

“High-speed trains today are more convenient and is a faster mode of transportation, from city to city , than flying,” he said yesterday, at the signing of a memorandum of arrangement (MOA) between the Ministry of Transport and China’s CSR Group.

It is learnt the government is mulling providing rail connectivity from Kuala Lumpur to Thailand, Laos, Vietnam and several cities in China.

The Land Public Transport Commission (SPAD) is currently doing a study on the HSR to link Kuala Lumpur and Singapore. The study is expected to be completed by the end of the year. If found feasible, SPAD will call for pre-qualification bids by mid-2013.

Kong said several options and alignments are being explored for the Kuala Lumpur-Singapore route.

“The train could either run non-stop from Kuala Lumpur to Singapore, or start from KL Sentral and have stops at the Kuala Lumpur International Airport, Seremban and beyond that,” he said.

Asked whether the government was eyeing the use of the magnetic levitation (maglev) technology, Kong said no decision has been made.

The MOA involves the building of a RM400 million CSR Rail Centre in Batu Gajah, Perak by CSR Zhuzhou Electric Locomotive Co Ltd. It was witnessed by Prime Minister Datuk Seri Najib Razak, Kong, China’s Ambassador to Malaysia Chai Xi and CSR vice-president Fu Jianguo.

Meanwhile, Kong said participants at the recent Innotrans convention, the world’s biggest rail industry event in Berlin, Germany have expressed interest to work on railway projects in Malaysia.

Kong, who was at the conference, said Malaysia was also invited by several European and Asian companies to use their technology.

The companies included Bombardier, Rotem, Alstom, CAF, Ansaldo, Hitachi and CSR.

“There are many things happening in the railway sector here. We have the MRT, the LRT extension, ongoing double tracking works, with the possibility of the HSR being implemented. “There is also the rapid transit system from Johor Bahru to Singapore. So there is a lot of potential for rail technology and suppliers,” Kong said.

5 groups bag MRT projects worth RM3.47b

By Sharen Kaur
sharen@nstp.com.my
Published in NST on September 14, 2012

Mass Rapid Transit Corp Sdn Bhd (MRT Corp) yesterday dished out five work packages worth RM3.47 billion for the Sungai Buloh-Kajang MY Rapid Transit (SBK MRT) project.
This confirms a Business Times report that contracts for the supply of train sets, signaling, power supply and depot equipment will be announced yesterday.

The prime winner was German engineering group Siemens AG, which won two contracts, according to an MRT Corp statement yesterday.

Meanwhile, sources told Business Times that Siemens and its consortium partner SMH Rail Sdn Bhd won the contract worth around RM1.36 billion to supply 58 sets of four-car trains, beating China's Changchun Railways Vehicles Co Ltd and CSR Zhuzhou Electric Locomotive Co Ltd.

The German group also won the contract for depot equipment, worth about RM418 million, displacing George Kent (M) Bhd-Lion Pacific Sdn Bhd.

Siemens, however, lost out to Bombardier Inc of Canada for the signaling contract worth about RM281 million.

The fourth contract for power supply valued at RM459 million was given to Japan's Meidensha Corp, a power generator producer, beating Siemens, Mitsubishi Heavy Industries Ltd and the Balfour Beatty-led group.

According to the MRT Corp statement, a fifth contract for the construction and completion of viaduct guideway and other associated works from Taman Mesra to Kajang station worth RM951 million was awarded to UEM Construction Sdn Bhd.

The statement said the contracts were awarded after the One Stop Procurement Committee (OSPC) meeting in Putrajaya chaired by Prime Minister Datuk Seri Najib Razak yesterday.

It is understood that the award of a RM500 million job for track works has been slightly deferred.

Sources said there are three bidders for the job - Balfour Beatty Rail Sdn Bhd, DRB-HICOM Bhd-Mitsubishi, and Leighton-Lion Pacific.

A source said MRT Corp had requested the bidders to re-submit their commercial clarification, including the final price, to lay tracks between Sungai Buloh and Kajang, totalling 41.5km.

Although the stretch from Sungai Buloh to Kajang involves 51km, the job excludes the 9.5km underground tunnel work awarded to MMC Gamuda JV at RM8.2 billion.

The source said based on the request from MRT Corp, the bidders resubmitted their bids this week.

"OSPC will make a decision on the contract for track works by early October, as the consensus among the members is that the matter should be resolved in the shortest possible period of time," a source said.

MRT Corp chief executive Datuk Azhar Abdul Hamid said he was pleased with the awards because they were extremely significant packages as far as the project is concerned.

On the electric trains selected, he said MRT Corp opted for the Siemens' driverless Grade of Automation 4 (Unattended Train Operation) system.

He said the system is safer by avoiding manual errors, more reliable and punctual in high frequency MRT services and less vulnerable to shortages of drivers.

MRT contract winners to be known today

By Sharen Kaur
sharen@nstp.com.my
Published in NST on September 14, 2012

Recipients of several contracts worth RM2.5 billion to build the 51km Sungai Buloh-Kajang My Rapid Transit (SBK MRT) project will be known today.
Business Times understands that the contracts are for the supply of train sets, track works, signaling, power supply and depot equipment.

The biggest award would be for the supply of 58 sets of four-car trains worth about RM1.3 billion.

The contract had three bidders - Changchun Railways Vehicles Co Ltd, CSR Zhuzhou Electric Locomotive Co Ltd and Siemens-SMH Rail Consortium.

Mass Rapid Transit Corp Sdn Bhd (MRT Corp) chief executive Datuk Azhar Abdul Hamid recently said it had completed the evaluation of the bids.

Its budget for the contract was RM1.55 billion.

Sources familiar with the matter said the front-runner for the job to supply the trains is Siemens-SMH Rail Consortium.

"We do not think the Chinese companies would get the job, though they offered a lower price and one firm said it would set up a manufacturing facilities in Batu Gajah, Perak," a source said.

The source said track works worth about RM500 million may be awarded to a joint venture between a Japanese company and DRB-HICOM Bhd.

"For the signaling contract, we expect Siemens or Bombardier Inc to get the job. The contract should be worth about RM300 million," the source said.

He said for the estimated RM200 million to RM250 million power supply contract, MRT Corp may award it to Japan's Meidensha Corp, which produces power generators and water treatment systems.

The final contract, worth about RM150 million, is for depot equipment and the winner could be a joint venture between a Chinese firm and George Kent-Lion Pacific, the source said.

"As of now, this is the status of the five awards. More awards are expected soon," he said.

The source said the foreign parties who may win the contracts have transfer of technology and local participation, as stipulated by Malaysian Industry-Government Group for High Technology (Might).

So far, MRT Corp has awarded 40 of the total 85 contract packages for the Sungai Buloh-Kajang MRT, worth a combined RM16 billion.

iProperty expects slight drop in residential deals

By Sharen Kaur
sharen@nstp.com.my
Published in NST on September 12, 2012

KUALA LUMPUR: Malaysia's residential property transactions will fall marginally this year as buyers move away from the high-end segment to focus on houses priced RM500,000 and below.

 
"Although transactions are dipping in the high-end segment, there is a bit of supply there which is why we think the fall will be marginal," Shaun Di Gregorio, chief executive officer of iProperty Group, said.

Based on the data released by the National Property Information Centre, the residential segment accounted for RM61.83 billion of the total RM137.83 billion worth of properties sold last year.

The top-end market comprising bungalows, semi-detached homes and serviced apartments in hot spots had a bull run for a long period. But there is concern now on rising house prices across the board and their affordability.

In the past 12 months, developers had been shifting their focus to build houses priced between RM300,000 and RM500,000 because of demand in this price range, Di Gregorio said.

"We understand they are going to be building more landed properties priced between RM150,000 and RM500,000 on the outskirts of Kuala Lumpur for the next two to three years.

It is a business decision driven by analysis, data and demand," he said.

Di Gregorio said companies which have ongoing mixed development projects like SP Setia Bhd and Mah Sing Group Bhd will be spreading their launches according to market demand and sentiment.

"They will not flood the market at one go, but focus on building properties based on demand," he added.

According to iProperty Group's recent online property survey, 73 per cent of the 11,966 respondents preferred landed properties as there is better price appreciation.

The survey showed that price and location were the two key factors that the respondents viewed as important ahead of political/economic climate, when deciding to purchase a property.

Some 31 per cent of the respondents were looking to buy properties in the next six to 12 months and around 19 per cent said they would buy in the UK, Australia and Singapore.

Around 52 per cent of those surveyed considered the current economic and political climate to be conducive for property investment.

"The figure reflects a slight reduction from the previous survey as the market is anticipating the upcoming general election," Di Gregorio said.

Gadang hands over Runway 3 at KLIA2

By Sharen Kaur

sharen@nstp.com.my

Published in NST on September 10, 2012

FLYING HIGH: Company upbeat on winning more contracts after completing MAHB job in time

and on budget

AIRPORT operator Malaysia Airports Holdings Bhd (MAHB) has taken possession of Runway 3, one of the major components for the Kuala Lumpur International Airport 2 (KLIA2) project in Sepang, Selangor.

The Runway 3 contract worth RM291.2 million was awarded to Gadang Holdings Bhd in 2010. The job includes building taxiways, site preparation, earthworks and main drainage.

Gadang completed the job last month and handed it over to MAHB on August 28.

With the completion of Runway 3, Gadang managing director and chief executive officer Tan Sri Kok Onn said the company is now eyeing earthwork packages for projects under the Economic Transformation Programme (ETP).

"We are upbeat on winning some jobs. We are confident to take on bigger jobs after completing Runway 3 within schedule and on budget," he told Business Times.

Kok said working on the KLIA2 project has been one of the biggest achievements for Gadang.

"There were a lot of challenges because of the soil condition.

"We were supervised by our consultant and had full support from MAHB. MAHB has acknowledged that we did a good job and they are happy with the result," Kok said.

Gadang, which has RM1.5 billion in its order book, will look for similar earthwork projects in Malaysia, he added.

Runway 3 at KLIA2 is important due to the anticipated growth of aviation traffic in Asia Pacific. The 4km runway can support the A330 and B747 aircraft and will specifically cater to AirAsia Bhd's expansion plans.

It will help to ease congestion, reduce taxing time and serve as a backup in the event that Runways 1 or 2 are closed.

An official from MAHB said with the opening of the KLIA2 by April next year, it is anticipated that existing low-cost carriers will increase their flight frequency and new airlines are expected to come in.

The RM4 billion KLIA2 will be the world's largest purpose-built terminal for low-cost carriers and will have the capacity to serve 45 million passengers annually.

The opening of KLIA2 will help make the Kuala Lumpur International Airport (KLIA) as one of the aviation hubs in Southeast Asia.

Bolton plans to sell retail assets

By Sharen Kaur
sharen@nstp.com.my
Published in NST on September 10, 2012


SUBANG JAYA: Bolton Bhd, one of the oldest property developers in the country, plans to dispose of its retail assets to focus on property development, its chief said.

The company currently owns the Langkawi Fair Shopping Mall, situated at the south eastern tip of Langkawi Island.

Sprawled on a 3.45ha site, the mall is the largest shopping centre in Langkawi and it is estimated to be worth about RM45 million.

"The mall is giving us reasonable rental yields. But at the right time, we will dispose of the asset at a good price. We are not big enough a developer to keep property investments," said Bolton executive chairman Tan Sri AzmanYahya.

Bolton currently has operations in three segments: property development; property investment (which includes property management and maintenance); as well as construction and quarry operations.

The company, set up in 1964, made its name with the 105ha township development in Taman Midah - the pioneer housing estate in Kuala Lumpur.

As part of its business rationalisation, Bolton disposed of its 20-storey Campbell Complex in Kuala Lumpur for RM50 million in 2010.

The rationalisation included selling non-core assets and investments that did not yield reasonable returns, and re-focus on property development.

For the first quarter ended June 30 2012, Bolton registered a pre-tax profit of RM9.2 million on revenues of RM75.1 million, and over 90 per cent of the earnings was derived from property development.

Azman said Bolton plans to also sell The Wharf lifestyle retail mall in Taman Tasik Prima in Puchong, Selangor.

The mall, which is under construction, is part of a bigger development called The Wharf, which comprises three serviced apartment blocks and an integrated complex with boutique showroom offices and flexi suites.

The three-storey neighbourhood mall has a gross floor area of 500,000 sq ft and is worth about RM200 million.

"We intend to sell the mall en bloc to a major retail group. Negotiations are ongoing," Azman said.

The mall is expected to open in the second half of next year.

By Sharen Kaur
sharen@nstp.com.my
Published in NST on Spetember 8, 2012

Sugar ops to sweeten Brahim's earnings

BRAHIM'S Holdings Bhd says its current dependence on airline catering, and food and beverage (F&B) businesses will be reduced by 2015, once its sugar business kicks off.

The company expects earnings to surge significantly from 2014 as it starts to sell refined sugar, commercially marketed under the Borneo Sugar brand.

For fiscal 2011, Brahim's posted net profit growth of 42.4 per cent to RM9.37 million on higher revenue of RM184.46 million. Some 75 per cent of the earnings were driven by in-flight catering services at the Kuala Lumpur International Airport. The rest was from its F&B operation.

Brahim's aims to dominate the sugar market in Sabah and Sarawak via its 60 per cent unit, Admuda Sdn Bhd.

Admuda has a licence from the Ministry of International Trade and Industry (Miti) to manufacture refined sugar and molasses for the two states.

Currently, the sugar market in Malaysia is controlled by Felda Global Ventures Holdings Bhd's unit MSM Malaysia Holdings Bhd and Tan Sri Syed Mokthar Al-Bukhary's Central Refinery Sdn Bhd, with two sugar refineries each in Peninsular Malaysia.

As sugar is a regulated commodity, the licence awarded to Admuda was the third by Miti in 37 years.

"This is a very valuable licence and we are honoured to be in this business. Once in full swing, we expect equal contribution from airline catering, F&B and food manufacturing, which includes sugar processing," Brahim's director Datuk Howard Choo told Business Times recently.

Choo said Brahim's has finalised the design for the RM130 million sugar refinery in Kuching, Sarawak, and will be starting construction soon.

"We have completed soil test and will start landfill this month. We target to finish building the refinery by December 2013 so it could began operation by early 2014," Choo said.

Brahim's initial target is to control 30 per cent of the sugar market in Sabah and Sarawak. There is annual demand of about 350,000 tonnes of sugar there, met via imports from the peninsula.

The company is able to meet part of that as its sugar refinery will have initial production of 100,000 tonnes a year. The facility is designed to have a maximum capacity of 400,000 tonnes per annum.

Brahim's executive chairman Datuk Ibrahim Ahmad Badawi has said it expects 10 to 15 per cent in earnings contribution, and some RM250 million in revenue from the refinery in its first year of operation.

Brahim's shelves plans to buy rest of BLSG

By Sharen Kaur
sharen@nstp.com.my
Published in NST on September 7, 2012

KUALA LUMPUR: Brahim's Holdings Bhd has shelved plans to buy the rest of Brahim's-LSG Sky Chefs Holdings Sdn Bhd (BLSG) as it is seeking clarification from Malaysia Airlines (MAS) on its intention to renegotiate a catering agreement.

MAS issued a letter to LSG Sky Chef-Brahim's Sdn Bhd (LSGB) on its intention to renegotiate the terms of the agreement to realign the objectives of the parties under the catering agreement. But it did not provide specific terms about the relevant provisions of the agreement that it intends to renegotiate.

Brahim's group executive chairman Datuk Ibrahim Ahmad said at its extraordinary general meeting (EGM) yesterday that it had been advised by several legal parties that the terms and the obligations of all parties under the agreement remained intact.

LSGB, which operates the in-flight catering business, is 70 per cent own by BLSG and 30 per cent by MAS. Brahim's owns 51 per cent of BLSG and the rest is held by LSG Asia GmbH, a company owned by Deutsche Lufthansa AG.


BLSG has a 25-year concession to provide catering and related services to MAS at Kuala Lumpur International Airport (KLIA) and the Penang airport.

Should the catering agreement be terminated, Brahim's would seek compensation from MAS as spelt out in the concession agreement, which includes a fair value with 20 per cent premium.

It is understood that the concession, which runs from 2003 to 2028, is worth about RM400 million. Based on the number of years left, the shareholders of BLSG should get about RM280 million.

Brahim's director Datuk Howard Choo told Business Times at the EGM that it is seeking clarification from MAS on several areas.

"We want to know to what extent they want to renegotiate the agreement and whether it would disrupt the concession. The term negotiate is making us uncomfortable."

"Brahim's is ready to acquire the rest of BLSG but we want clarity and certainty from MAS on the catering agreement. If all goes well we hope to conclude the deal within the next one to two months," Choo said.

Brahim's is proposing to buy LSG Asia's stake in BLSG for RM130 million cash. The deal values BLSG at RM265.31 million or historical implied per earnings ratio of 9.27 times based on Patami (profit after tax and minority interests) of RM28.63 million.

About 25 shareholders and 30 proxies at the EGM sought for the meeting to be adjourned to consider the viability of the proposed acquisition, after hearing the explanation from Brahim's on MAS' intention. It has three months to hold its next EGM.

By Sharen Kaur
sharen@nstp.com.my
Published in NST on September 6, 2012

Bolton to raise RM380m via sukuk issuance

SUBANG JAYA: Bolton Bhd, one of the oldest property developers in the country, is raising RM380 million via sukuk issuance to fund projects worth around RM1.7 billion in 2013.

Its executive chairman Tan Sri Azman Yahya said the sukuk, with a seven-year facility, will be issued by the end of the year.

"We are gearing for growth and the RM380 million will help us replenish our landbank for new projects. We are bullish on landed residential properties in the Klang Valley and will continue to buy land here," said Azman yesterday after the company's shareholders meeting.

Bolton currently owns 520ha, the bulk of which is in the Klang Valley. It has some RM100 million in cash and its net gearing ratio is 0.15 times.

Azman expects unbilled property sales in the current financial year ending March 31 2013 to exceed last year's record of RM559 million.

He said early bookings remain strong for projects like The Wharf, 51G Kuala Lumpur and Tijani Ukay, which are slated to be launched in the next six months.

Bolton is launching serviced apartments and a retail mall at The Wharf, 71 condominum units at 51G Kuala Lumpur and 118 zero-lot bungalows at Tijani Ukay, with combined gross development value of RM850 million.

Azman said for Tijani Ukay, Bolton achieved up to 70 per cent bookings during the pre-launch in July. The price tag for each bungalow lot was from RM2.2 million to RM4.5 million.

"There is a good hedge against inflation. The people are still buying properties despite all the government measures to cool off rising prices.

"What we see is a slowdown in purchases made by speculators but buying interest remains strong from owner occupiers and investors," Azman said.

Azman does not foresee property prices dropping because of issues like rising cost in land and building materials.

He said what the country need is a fundamental shift towards the provision of affordable housing at between the RM100,000 and RM300,000 price range for the lower to middle income groups.

"The country needs affordable housing and the only party that can address the issue is the government as they have the landbank," Azman said.

Call for review of low-cost home quota

By Sharen Kaur
sharen@nstp.com.my
Published in NST on September 5, 2012


PETALING JAYA: Property developers are asking the government to review the 30-year old low-cost housing quota and allow them to build affordable houses on public land.

The are also proposing for an auto release mechanism for unsold Bumiputera properties as it is affecting their cash flow.

Real Estate and Housing Developers' Association of Malaysia (Rehda) president Datuk Seri Michael K.C. Yam said developers are suffering as the houses built on subsidies are eating into their profit margins.

The government, in 1982, imposed the 30 per cent low-cost housing quota on private sector developers as a social obligation. Developers have been building low-, low-medium and medium-cost houses, at prices that have been maintained at between RM42,000 and RM99,000 each.


"The government should do research as to how many units are really required. We think there is more than enough low-cost houses here. We understand some are not even occupied, while others own two to three units that are on rental.

"It shows the lower income group have the purchasing power and can afford better homes. For the hardcore poor, we suggest the government take on the role to do social housing and let developers focus on building medium to high-end houses," Yam said at a media briefing here yesterday.

He said the country's housing stock as at end-2011 was around 4.5 million units, comprising 1.04 million low-cost houses. Bungalows and semi-detached homes accounted for 402,000 and 296,000 units respectively.

Rehda is also requesting the government to establish an auto release mechanism for unsold Bumiputera properties, where the unsold units can be sold to other buyers six months after a project receives Certificate of Fitness.

"If we continue to hold the Bumiputera units, the burden falls on the developer and is passed on to other buyers through higher property prices," he said.

Yam said Rehda has presented the idea to the Ministry of Finance as one of its proposals to be included in the 2013 Budget.

The annual Budget is scheduled to be tabled in Parliament by Prime Minister Datuk Seri Najib Razak on September 28.

Meanwhile, Malaysian Resources Corp Bhd director Che King Tow is suggesting that the government offer incentives to developers to build affordable houses.

"Since the government is giving incentives to foreign companies to come here, why not give developers some tax free incentives to build affordable houses on public land. Developers can build 150 to 200 units," Che said.

"The best located properties are usually government-owned. The government has prime land along Jalan Duta and in Sungai Buloh. These locations are good for mass affordable housing. It is a political decision but it matters a lot to us," he said.

Property developers optimistic of improved second half

By Sharen Kaur
sharen@nstp.com.my
Published in NST on September 5, 2012

REHDA'S OUTLOOK: There may be a bit of cautiouness in early 2013 

DEVELOPERS are upbeat the local property industry will do better in the second half of this year due to positive market sentiments, but cautioned of setbacks in the early part of 2013.

"There is a bit of cautiousness out there because of negative news like a possible property bubble and concern over the general election. All these will affect the market in the first half of 2013, but minimally.

"If there is any bubble, it will only happen in one or two hotspots in Kuala Lumpur," said Real Estate and Housing Developers' Association of Malaysia (Rehda) president Datuk Seri Michael K.C. Yam.

Yam said another myth faced by the property industry is complaints of houses being overpriced because of higher foreign ownership and speculation.

But Yam said only less than two per cent of residential properties here are owned by foreigners, majority of which are located in the Kuala Lumpur city centre.

Yam said properties have become more expensive because of the hike in price of building materials and increasing labour and land cost.

He said Rehda is, in fact, encouraging foreign ownership of high-end properties in Malaysia to add to the vibrancy here.

"We should not worry as foreign buyers are not tampering the bread and butter properties here. There are ceiling prices where they can only buy properties of a certain range," Yam added.

Meanwhile, according to a recent property industry survey by Rehda, about 56 per cent of the 180 companies which has responded said they will launch new projects in the second half of this year compared with 46 per cent in the first six months of 2012.

More than half of the respondents said they expect their sales performance to be above 40 per cent for the next six months, from bigger scale projects.

The survey shows that majority of the developers will price their properties between RM250,000 and RM500,000, comprising a mix of single- and double-storey terrace houses and service apartments.

The market will be driven by domestic buyers, mainly for their own use.

"The loan tightening rule by Bank Negara Malaysia has left out an increasing number of potential buyers facing difficulties in obtaining loans. We hope the government will relax some rules," Yam said.

EPF not selling stake in MRCB

By Sharen Kaur
sharen@nstp.com.my
Published in NST on September 5, 2012

DISPOSAL TALK QUASHED: Fund is holding on to the (42.2pc) equity for now, says an official
THE Employees Provident Fund (EPF) has dismissed talk that it is planning to sell its entire stake in Malaysian Resources Corp Bhd (MRCB), a property and infrastructure developer.

"It is not true that we are selling our stake in MRCB. We are still holding it for now," an official familiar with the matter told Business Times.

Speculation has been rife that EPF is looking to dispose of its stake in MRCB, the reason being the company has not won any major government projects since a year ago.

MRCB is the developer of KL Sentral, an integrated transport hub with a gross development value of over RM8 billion. The project is slated to finish in 2016.

KL Sentral is the only current development for MRCB, which is 42.2 per cent owned by the EPF.

Analysts say MRCB will be in troubled waters if it does not win any job soon, given that the earnings from the project will be recognised in about three to four years.

The last big win for MRCB was in August 2011 when it won a RM1.33 billion contract for the Ampang light rail transit (LRT) extension project.

Business Times reported two months ago that MRCB is expected to win a RM1 billion job for the Sungai Buloh-Kajang MY Rapid Transit (MRT) line.

But project owner Mass Rapid Transit Corp Sdn Bhd (MRT Corp) said the award of the contract to build viaduct guideways between the Taman Mesra and Kajang stations is subject to government approval.

It was also reported that MRCB has emerged as the frontrunner to develop a prime 8.09ha site on Jalan Bangsar in Kuala Lumpur where the Unilever headquarters and factory once sat.

However, an MRCB official said it will not be landing the job, declining to elaborate.

"We believe there is something going on in MRCB - from its chief resigning to not winning major jobs. The only good thing is that the government is taking over its expressway project," the analysts said.

MRCB chief executive officer Datuk Mohamed Razeek Hussain tendered his resignation in July. MRCB has yet to announce the appointment of a new CEO.

Last Thursday, the government said it will take over the Eastern Dispersal Link built by MRCB at a cost of RM1.4 billion, to settle the issue on toll charges.

MRCB's share price closed unchanged yesterday at RM1.75, with 4.48 million shares traded. The stock has been trading between RM1.60 and RM1.79 the past one month.

"We think MRCB should move into the private sector to survive, whether or not the EPF sells its stake in the company," said one analyst.

The company is studying a proposal by private developer Nusa Gapurna Development Sdn Bhd to buy into a project the latter owns, in exchange for a 20 per cent stake in MRCB.

Nusa Gapurna's prime asset is the 16ha land behind PJ Hilton in Petaling Jaya, where the construction of PJ Sentral Garden City, a multi-billion ringgit project, will start next year.

Kamunting hunting for M&A opportunities

By Sharen Kaur
sharen@nstp.com.my
Published in NST on August 27, 2012

KUALA LUMPUR: Medium-size planter Kamunting Plantation Sdn Bhd is on the lookout for merger and acquisition (M&A) opportunities in a bid to speed up the listing of the company.

The company is mulling listing its business on the local stock exchange in about three years, says its executive director, James Chan Kean Chiu.

"It could be faster, depending on the M&A opportunities. We are interested to acquire small plantation companies to create synergistic values. We also plan to acquire plantation land in Perak, Sabah and Indonesia and are looking at several deals now," Chan told Business Times in a recent interview.

According to Chan, Kamunting Plantation is aiming to become a large scale player in the industry, to join the ranks of companies like TSH Resources Bhd and unlisted Pontian United Plantations Bhd.

Kamunting Plantation, which ventured into the plantation business in the 1990s, is founded by Chan's father, Datuk Chan Wan Kah, a prominent businessman with interest in property development and resort operation in Malaysia and Australia.

The company currently owns a fully planted 640ha estate in Perak. It invested some RM20 million in the last three years on replanting the palm oil trees and managing the estate, Chan said.

In Sumatera, Kamunting Plantation has a 30-year concession with rights to acquire and develop 14,000 ha. It has spent over RM30 million since the 1990s to acquire 1,500 ha and plant palm oil trees.

"We have managed to reap an average fresh fruit bunch (FFB) harvest of about 31 tonnes per hectare a year, from both the estates. This is higher than the average rate," Chan said.

"As a medium-size planter we invests a lot in the business from the seedlings and fertilisers to infrastructure. So production is better," he added.

Chan said Kamunting Plantation will acquire an additional 1,500ha in Sumatera within the next three to five years.

"We will slowly acquire land, compensate the locals and start planting. As the plantation grows, we will have a bigger cash base to buy the estate and expand," Chan said.

On the outlook of the industry, Chan expects crude palm oil (CPO) price to rise because of shortage of fruits, attributable to the current dry weather. Currently, the CPO price is hovering around RM3,000 a tonne.

Sweet success for Strawberry Park Resort

By Sharen Kaur
sharen@nstp.com.my
Published in NST on September 1, 2012

KUALA LUMPUR: Strawberry Park Resort Sdn Bhd, which owns and operates the Strawberry Park Resort in Cameron Highlands, sees business thriving amid the global financial downturn.

Its executive director James Chan Kean Chiu said the resort has been seeing more arrivals from Europe, the Middle East, Singapore and Thailand.

"Despite the number of resorts, hotels and apartments mushrooming in the highlands, holiday makers continue to stay with us, thanks to our efforts in marketing the brand internationally," Chan told Business Times in an interview recently.

Chan said the company has been promoting the resort through travel agencies, local and international exhibitions and trade fairs.
"Today, we have many repeat guests who come here to relax and enjoy the cool breeze. A property sells on its own when there is brand loyalty and we believe the resort has achieved that level," Chan said.

Strawberry Park Resort is one of the first few holiday homes that came up in Cameron Highlands. It was built in 1983, in an equal partnership by Chan's father and developer Datuk Chan Wan Kah and the late Datuk Michael Ang.

The resort, which comprises seven blocks of walk-up studio rooms and apartments with 148 units, opened its doors in 1985.

Chan said the current average occupancy is 65 per cent a month and the rates range between RM320 and RM480 per room a night.

He said the resort has been recording revenue growth annually and its earnings are in the low double-digit range.

"We believe it will move up as tourism is improving in Cameron Highlands. We have some locals who stay with us now," Chan said.

It is interesting to note that Strawberry Park Resort is sprawled over 2.8ha, the former site of a strawberry farm. The farm, owned by Chan and Ang, was the first of its kind in Malaysia.

A few years after the resort opened, Chan acquired Ang's share and since then, the property has undergone several rounds of upgrades.

The last major refurbishment was in 2011 where the resort spent RM10 million to renovate all the rooms.

Chan expects to recoup the investment within the next two to three years.

"Now that all the rooms are rejuvenated and we have established a good name in the international arena, we will focus on building the business," he added.

MRCB seeks EDL compensation

By Sharen Kaur
sharen@nstp.com.my
Published in NST on September 1, 2012

Malaysian Resources Corp Bhd (MRCB) hopes the government will take over the 8.1km Eastern Dispersal Link (EDL) in Johor and its debt as soon as possible, as the highway is eating into the group's profitability.

"We will also be seeking compensation from the government. In the meantime, we will focus on existing projects and other ventures," a company official told Business Times.

However, he declined to say how much MRCB will be seeking from the government.

MRCB, a property and infrastructure developer, reported a 71.32 per cent fall in net profit to RM5.2 million in the second quarter ended June 30 2012, from RM17.98 million in the previous corresponding period. This is attributed to non-recognition of revenue from the EDL due to non-tolling issues.

The EDL, which opened on April 1, became a hot topic after it was announced that road users to and from Singapore face a RM15.30 toll.

The RM1.4 billion expressway links the Customs Immigration and Quarantine Complex (CIQ) and the North-South Expressway via the Pandan Interchange in Johor Baru. MRCB was awarded the project under a 30-year concession.

The concession agreement stated clearly that toll collection will be at the CIQ and start in May, which will then allow MRCB to meet its debt repayment obligations.

As at December 31 2011, MRCB had senior and junior sukuk amounting to RM1.06 billion, which were secured by the EDL project and repayable in a series of yearly redemption commencing in 2018.

MRCB is required to service the finance costs - to the tune of RM7 million a month - despite no toll charges for the EDL.

It is learnt that MRCB has accumulated some RM40 million start-up losses for the EDL when it opened in April.

At the company's shareholders meeting in April, MRCB chairman Tan Sri Azlan Zainol expressed hope that the government will consider buying the EDL at market value.

"We hope that there will be a win-win situation for the government, the people and MRCB shareholders. We do not know the market value but the total project cost was RM1.4 billion," Azlan said.

MRCB has been negotiating with the government since May for some form of compensation to cushion the operating costs as well as the possibility of agreeing in-principle to take over the expressway.

On Thursday, Minister in the Prime Minister's Department Tan Sri Nor Mohamed Yakcop said the government will acquire the EDL from MRCB to settle issues related to policy and toll charges.

He said the cost and terms are expected to be known before the end of the year.

Foreign investors eye PKNS stake in Genting Sanyen

By Sharen Kaur
sharen@nstp.com.my
Published in NST on August 31, 2012

The Selangor state investment arm has a 25 per cent interest in Genting Sanyen Power via Worldwide Holdings Bhd.

The Selangor State Development Corp (PKNS) has been approached by foreign investors to buy its stake in power producer Genting Sanyen Power (GSP) Sdn Bhd for around RM900 million to RM1 billion.

It is learnt that the management of PKNS, led by general manager Othman Omar, will bring up the matter to its board of directors.

The Selangor state investment arm has a 25 per cent interest in GSP via Worldwide Holdings Bhd.

Genting Bhd holds the balance of 75 per cent stake in GSP through its 97.7 per cent-owned Mastika Lagenda Sdn Bhd.
The power and gaming group announced recently it was selling its entire GSP stake to 1Malaysia Development Bhd (1MDB) for RM2.3 billion cash.

When contacted, Othman told Business Times that PKNS had been approached by foreign investors for its stake and negotiations are ongoing.

"We are not in a hurry to sell our stake but this is an investment. If the price is right, we will consider selling. As an investor, there will always be an exit strategy and we will find other things to do," he said.

Othman said GSP is providing a steady source of recurring revenue for PKNS and the investment is expected to continue to contribute significantly to its bottom line.

Based on PKNS' website, the group's investment in GSP was the major contributor to its profitability in 2006.

The share of results in GSP, after tax, amounted to RM48.9 million, an increase of 18 per cent over 2005.

GSP operates a 720 megawatts gas-fired combined cycle power plant located within the Genting Sanyen Industrial Complex in Kuala Langat, Selangor, under a build-own-operate basis.

The plant began commercial operations in 1995 and supplies electricity to Tenaga Nasional Bhd under a 21-year power purchase agreement (PPA) that expires in February 2016.

GSP had submitted a bid to the Energy Commission under the "Track 2 Renewal of Existing Power Generation Facility" process, proposing a 10-year extension to the PPA based on a set of proposed terms.

Othman also said PKNS has new property developments in the Klang Valley that will boast an estimated gross development value of about RM16 billion.

"That will keep us busy for the next seven to 10 years while we source for new investments," he added.