Tradewinds in talks with Arab investors

By Sharen Kaur

FUNDING FOR MEGA PROJECTS: Arabs seeking a majority stake in company's developments, say sources TRADEWINDS Corp Bhd's major shareholder is in talks with rich Arab investors to help fund its developments in Kuala Lumpur, Johor and Langkawi, sources said.

Negotiations are currently centred on the Arabs seeking a majority stake in the developments, they added.

The investors are also asking for a minority interest in Tradewinds, a property development and investment group controlled by Tan Sri Syed Mokhtar Al-Bukhary.

"Tradewinds has several projects, including sizeable landbanks in Johor and Langkawi which it plans to develop over the next five to seven years. The shareholder, however, does not want to borrow from banks and prefers Arab money.
"In return, the Arabs want to control the developments that they fund and have a minority interest in Tradewinds. The terms and conditions and methods of funding are being discussed," a source told Business Times.

Tradewinds' existing projects include the upgrading of Menara Tun Razak and the development of Tradewinds Centre at Jalan Sultan Ismail, both of which are projected to cost over RM4 billion, the source said.

The group is demolishing the 40-year-old Crowne Plaza Mutiara Hotel and 33-year-old Kompleks Antarabangsa to make way for the Tradewinds Centre, which has an estimated gross development value of more than RM7 billion.

Tradewinds has said it will redevelop the 2.8-hectare site on its own over seven years.

The project will comprise Grade A+ offices, a 24-storey corporate block, a large-scale 14-storey medical centre, retail offices, serviced apartments and hotel.

The centrepiece will be a 65-floor skyscraper and 54-storey residences, complimented by a central plaza.

At Menara Tun Razak, Tradewinds is upgrading the 35-storey office tower and constructing a new 40-storey office tower adjacent to it.

Meanwhile in Langkawi, Tradewinds owns about 60 hectares of land there, which has been earmarked for mixed tourism-related developments.

It also has a 360ha landbank in Iskandar Malaysia, Johor.

Asian Pac sees RM70m a year from Imago

By Sharen Kaur
Asian Pac Holdings Bhd expects Imago Mall, its new retail venture in Sabah, to contribute up to RM70 million, or more than 25 per cent, to its yearly revenue from 2016.

Syarikat Kapasi Sdn Bhd, a unit of Asian Pac, is developing KK Times Square Phase 2 in Kota Kinabalu. The project comprises the 800,000-square feet Imago, signature offices and 631 luxury apartment units.

Asian Pac chairman Tan Sri Megat Najmuddin Megat Khas said Imago, which has 300 retail lots, is expected to rake in between RM60 million and RM70 million per year in the first few years of operation.

This is based on current market rates and rental yields in Sabah, he said at a media briefing, here, yesterday.

"We are leasing all the units to control the tenant mix. It would boost our recurring income and annual contribution to the company," he said at a press conference, here, yesterday.

For the year ended March 31 2013, Asian Pac reported a net profit of RM17.63 million on RM103.24 million revenue.

The bulk of the net profit and revenue was from property developments in Kepong, Johor Baru and Kota Kinabalu.

Its property investment segment generated income from the leasing of land and office space in Kepong Entrepreneurs' Park. There was also income derived from carpark operations.

Megat Najmuddin is bullish that the annual retail spending in Kota Kinabalu will exceed RM1.4 billion.

"The Kota Kinabalu International Airport is the second busiest airport in Malaysia with roughly three million tourists a year. Most of them are from South Korea, Japan, Taiwan and Hong Kong and so there is good catchment for Imago," he said.

Retailers such as Parkson Corp Sdn Bhd, DNP Clothing Sdn Bhd, Bonia Group, AEON Fantasy (Malaysia) Sdn Bhd and Valiram Group have agreed to set up shop at Imago, selling local and international brands.

MAS - Maximising resources

By Sharen Kaur

MALAYSIA Airlines (MAS) group chief executive officer Ahmad Jauhari Yahya said the airline will utilise its existing aircraft and workforce to grow its business.

He said the national airline, which has about 20,000 workers, will improve productivity and load factor.

The carrier has 122 planes, of which 90 fly for MAS and the rest, for MASwings and Firefly. MASwings and Firefly are profitable subsidiaries.

"The aviation industry in Asia is the fastest growing in the world. Traffic volume is projected to increase by five per cent next year. We aim to grow in tandem with the industry," he told Business Times in an interview recently.

He said the challenge for MAS is to grow profitably and the key is to address sticky costs.

For next year, MAS will look at cost reduction and drive efficiency through strategic procurement and processes, among others, he said.

"The airline business is still a tough environment and it is not easy to recover lost market share. MAS used to hold 58 per cent of market share in 2005 but by end-2011, it fell to 28 per cent. We lost close to 50 per cent of the market share. This meant MAS did not grow while the market grew."

However, Ahmad Jauhari said the carrier has started to build its market share, which is now at 32 per cent.

"We are increasing the number of seats flying out of the Kuala Lumpur International Airport (KLIA). We would like to be the biggest carrier out of KLIA," he said.

MAS has also been able to grow its passenger traffic this year by 28 per cent.

The airline's third-quarter load factor stood at almost 85 per cent, a historic peak for the 41-year-old carrier, as it focused on stimulating demand with lower average fares.

However, the load factor improvements have come at the expense of yield, pushing MAS back into the red in the third quarter ended September 30 2013.

Ahmad Jauhari said capacity is piling in Asia, with Lion Air and AirAsia, for example, buying more planes and this has put pressure on yields.

"MAS has not raised its capacity for many years. We are getting new planes to replace the older ones. Passengers like the new planes as they are more reliable and comfortable," he said, adding that for MAS, the younger fleet of aircraft translates into fuel efficiency gains.

He said by end-2014, MAS' average fleet age will be six, making it the airline with the youngest fleet in Asia.

SP Setia chief to quit next year?

By Sharen Kaur

SP SETIA Bhd's Tan Sri Liew Kee Sin will step down as president and chief executive officer, a year short of his contract that expires in May 2015, or earlier.

Liew, who joined SP Setia at the age of 37, has been with the company for 17 years.

Speaking after a media briefing here yesterday, Liew indicated his intention to step down soon and not wait until 2015.

Rumour has it that Liew will leave the company around the Chinese New Year period next year. In May 1 2014, he would have served SP Setia for 18 years.

Under his leadership, SP Setia shot to fame globally after it won the rights to redevelop the billion-ringgit Battersea Power Station project in London, together with the Employees Provident Fund and Sime Darby Bhd.

SP Setia has 27 ongoing projects, including 15 slated for launches from next year worth a combined RM102 billion.

There is speculation that Liew will have keen interest in up-and-coming property developer Eco World Development Sdn Bhd, in which his eldest son Liew Tian Xiong is a director.

Liew did not deny nor confirm the talk.

"SP Setia has been around for 25 years. It is the biggest property developer in Malaysia by net profit and sales. Five years ago, we expanded overseas and the projects are all bearing fruit.

"We have a great team, and this has led SP Setia to become what it is today.

"I have decided to move on. It has been a good journey for me."

Early this year, Liew was listed by Forbes as Malaysia's 38th richest man with a net worth of US$230 million (RM743 million).

He still owns 67.79 million shares in SP Setia, or 2.76 per cent. Based on yesterday's closing price of RM3.09, the stake amounts to RM209 million.

With Liew's departure, the next big question is what will happen to SP Setia, although it has been said that the baton will be passed on to current chief operating officer Datuk Voon Tin Yow.

"We have set a good growth path for SP Setia where its earnings will strengthen, at least for the next three years," he said.

SP Setia sees three years of record profit

By Sharen Kaur

SP Setia Bhd expects record net profits for the next three years, led by its current unbilled sales of RM9.64 billion, which are at the highest level, and new launches.

For the fiscal year 2013, SP Setia achieved sales of RM8.24 billion, which were 50 per cent above its sales target of RM5.5 billion and doubled 2012's figure of more than RM4 billion.

This led to the group recording a pre-tax profit of RM570.34 million on a RM3.06 billion revenue for the full year. The profit and revenue went up 0.5 per cent and 21 per cent, respectively.

"This is the best ever year for SP Setia," said its president and chief executive officer Tan Sri Liew Kee Sin here yesterday.

SP Setia has 27 ongoing projects worth a combined RM31 billion.

"Our profit before tax had marginally increase because earnings from the projects in Melbourne and London can only be recognised upon completion. Cost is incurred, but not profits," he said.

Liew expects a jump in pre-tax and net profits from 2016 onwards, as contribution from the London and Australian projects flows through.

However, the challenge would be to keep costs low, he said.

There is cost pressure due to a reduction in petrol subsidies this year and the electricity tariff hike next year.

"We need to manage our profits," he added.

Liew said SP Setia will be more prudent when it comes to new property launches.

He is expecting the property market to slow down next year as the government raises the real property gains tax, among others.

"We have overseas projects, which will even out any troubles here. Locally, we need to see the impact of new measures before we do any launch," he said.

MAS may axe bleeding routes

By Sharen Kaur

MALAYSIA Airlines (MAS) may axe services to several unprofitable destinations to cut costs, said group chief executive officer Ahmad Jauhari Yahya.

He, however, did not say which routes MAS is reviewing.

It is learnt that routes to Europe and the Middle East are being studied by the key management.

"If there are routes that are not performing, we will remove them from the network. We don't want routes that are bleeding as it will drag down earnings.

"At the same time, we will review new opportunities. If we think there are profitable routes, we may fly there," he told Business Times in an interview last week.

He said if MAS were to remove any routes, it will work with its code-sharing partners to fly passengers there.

MAS has more than 25 code-sharing agreements with carriers such as Garuda Airlines and Cathay Pacific.

"For MAS, it is not just about reducing costs but increasing partnerships with other airlines and establishing new code-sharing agreements.

An airline cannot do everything these days. Partnerships and code-sharing are the way forward." The loss-making carrier flies to some 100 destinations.

Last year, it cut eight loss-making routes, namely, Langkawi-Penang-Singapore, Kuala Lumpur-Karachi-Dubai,KualaLumpur-Dubai- Damman, Kuala Lumpur-Surabaya, Kuala Lumpur-Johannesburg, Kuala Lumpur-Cape Town-Bueno Aires, Kuala Lumpur-Dubai and Kuala Lumpur-Rome.

Ahmad Jauhari said the carrier will increase flights to key regional cities so as to tap the strong growth in Asia.

"It is going to be an aggressive market and we are going to be as aggressive as possible to sell seats. But, at the same time, we will manage our costs. We will make sure our cost structure is very sharp." MAS incurred a loss of RM830.25 million for the first nine months of 2013 and does not expect to make a profit for the full year.

Despite the loss, its cash position remains strong at RM5.4 billion.

Turnaround on right track, says MAS chief

By SharenKaur
Published in NST on December 4, 2013

SILVER LINING: National carrier wants to continuously address cost issues and embark on better marketing and product positioning

THE Malaysia Airlines (MAS) chief is hopeful that the national carrier will turn around in fiscal year 2014 as its strategy to improve profitability is bearing fruit.

Group chief executive officer (CEO) Ahmad Jauhari Yahya told Business Times in an interview yesterday that MAS’ three-year business plan,introduced in late-2011,is on the right track.

However, some quarters chose to criticise the national carrier as it is still in the red.

In the third quarter ended September 30 2013, MAS reported a loss of RM375.4 million, despite a 12.4 per cent improvement in revenue to RM3.91 billion.

For the cumulative nine months, MAS’ net loss widened to RM830.25 million from RM483.96 million previously.

“One of the things thrown to us by many quarters was that MAS is not making money. At the end of 2011, MAS was bleeding very heavily.

It bled to the tune of RM2.5 billion. “The board developed quite a complex business plan to solve very deep issues that were

plaguing the airline. The business plan was not the first to address continuous losses.

“Many teams had tried before with many business plans that included asset bundling and asset sale. Despite all that, MAS is still losing money.

“It’s not one single solution, but there are multitude of things that we need to look at. We have set ourselves a target of three years to reach some form of business stability and make profits,”
he said.

Ahmad Jauhari said there have been many anticipated events, which had put pressure on margins.

These included higher fuel and non-fuel variable costs, the weakening ringgit against the US dollar, geopolitical events, and higher prices for parts and components because of foreign
exchange.

“This business is quite complex. Thus, it requires a complex solution. What we hope to do is structurally address the costs, (and) how we market and position our products and services.

“This is not a one-off thing. There are a lot of core issues we need to address for the airline to be competitive in the market. 

Aviation is a global business. We have to compete globally and we have the responsibility to fly the Malaysian flag,” Ahmad Jauhari said.

Moving forward, he said one of the biggest challenges for MAS will be cost management. 

“(The year) 2013 is an important lesson for us. We know what worked and what didn’t. What did not work was rising costs, so we have to look at that next year. We will address some of the fixed and variable costs and spread costs over a wider capacity,” Ahmad Jauhari said.

Re-engineer KTMB'

By Sharen Kaur
KUALA LUMPUR: Keretapi Tanah Melayu Bhd (KTMB) will either need to be re-engineered or allow private parties to fully utilise the electrified double-tracking (EDT) project from Seremban to Padang Besar.

Railwaymen Union of Malaya (RUM) president Abdul Razak Md Hassan said KTMB can also buy new trains or lease them to help maximise utilisation of the EDT line.

However, the loss-making national company has no government guarantee and funding to buy or lease trains, Razak said.

"The EDT lines from Seremban to Gemas and Ipoh to Padang Besar will require at least 100 locomotives. KTMB only has 44 locomotives in operation, which are being utilised in the Klang Valley.


"The best thing for KTMB to do right now is to get a private party to re-engineer the company and supply locomotives at reasonable cost with a quick delivery action plan," Razak told Business Times.

Business Times reported yesterday that the EDT line between Seremban and Gemas is completed, but may not be fully utilised until there are enough trains.

This will result in opportunity loss for KTMB, which runs into millions of ringgit every year, he said.

The government is spending RM16 billion to develop the EDT line from Seremban to Padang Besar.

The stretch between Seremban and Gemas, worth RM3.45 billion, was awarded to India's Ircon International Ltd in 2007. Ircon is expected to hand over the job to KTMB next month to facilitate operation from early next year.

The stretch between Ipoh and Padang Besar, worth RM12.5 billion, is undertaken by MMC-Gamuda Joint Venture Sdn Bhd. This line is expected to complete by the middle of next year.

KTMB president Datuk Elias Kadir did not reply to Business Times queries.

Officials from the company, meanwhile, said KTMB should get private parties like YTL (Corp Bhd), which has cement business to utilise the tracks.

"YTL can get its own supply of locomotives and wagons and pay trackage fee to KTMB," they said.

Opportunity loss for KTMB?

By Sharen Kaur

NOT FULLY UTILISED: Seremban-Gemas EDTP line ready but there are not enough trains, sources say

THE electrified double-tracking project (EDTP) between Seremban and Gemas is completed, but may not be fully utilised until there are enough trains, sources said.

This would result in opportunity loss for the national railway company, Keretapi Tanah Melayu Bhd (KTMB), they said.

The government is spending RM3.45 billion to build the Seremban-Gemas line covering 98.27km for KTMB. India’s Ircon International Ltd was awarded the job in 2007.

There is also a RM12.5 billion allocation to build the line from Ipoh to Padang Besar, which is undertaken by MMC-Gamuda Joint Venture Sdn Bhd.

Business Times understands that Ircon will hand over the project to KTMB next month to facilitate operation from early next year.

“There will be opportunity loss for KTMB as the tracks are completed, but there’s lack of trains. There is no order for new trains to serve the stretch between Seremban and Padang Besar.

“KTMB is using its existing fleet mostly for the Klang Valley double tracks. It has trains that can’t function as they were damaged due to accidents,” said a source.

KTMB operates 34 six-car sets and 20 threecar electric multiple unit commuter trains.

Fewer than 10 trains operate between Seremban and Rawang, Seremban and Rembau, and Kuala Lumpur and Ipoh.

The government early this year ordered 10 units of six-car electric train sets from China for about RM500 million. However, these trains will be only delivered in phases starting from
end-2014 to serve the double tracks between Kuala Lumpur and Ipoh.

“Opportunity loss for KTMB could run into millions of ringgit each year. It takes three years for new trains to be delivered upon order,” the source added.

Meanwhile, Ircon has been issued a certificate of practical completion (CPC) although the Seremban-Gemas EDPT is not fully commissioned.

“The CPC was issued two months ago by KTMB to avoid Ircon from paying penalty for late delivery. Although Ircon will hand over the job next month, it is six months behind schedule,” the source said.

Ircon has completed and commissioned the line from Seremban to Sungai Gadut. Between Sungai Gadut and Gemas, the line is only commissioned up to Rembau.

Ircon is still undergoing testing and commissioning on the systems from Tampin to Gemas, he said.

Bina Puri upbeat on 2014

By Sharen Kaur

RM2.5B BOOK ORDER: Jobs from O&G, construction sectors to provide boost

  Bina Puri Holdings Bhd is upbeat that its book order will hit RM2.5 billion by end 2014, with potential jobs from the construction and oil and gas (O&G) sectors providing the boost.

“We have a positive outlook on the two sectors. There are a lot of projects coming up, such as building police stations, bridges, government buildings and quarters, as well as civil
works.

“In Sabah and Sarawak, we are eyeing pipe laying contracts in the O&G sector,” group managing director Tan Sri Tee Hock Seng told Business Times in an interview recently.

Tee said Labuan will be a new market for Bina Puri in terms of O&G and infrastructure development opportunities.

Bina Puri is also expected to win two midsize power plant projects in Thailand within the next three months, Tee said.

It also anticipates to win a government project in Brunei before Chinese New Year in 2014, he said.

“My personal KPIs (key performance indicators) for Bina Puri is to see the group achieve new standards in the construction sector and win more jobs here and overseas,” Tee said.

Tee founded Bina Puri in 1975. It started out with construction activities and today, it is also involved in property development, highway concessions, mining, power and O&G.

Bina Puri’s unbuilt book order now stands at almost RM2 billion.

Its current most prominent job is the Kuala Lumpur International Airport 2 terminal project worth RM997.2 million, a joint venture with UEM Construction Sdn Bhd.

Bina Puri’s portion is 40 per cent, or about RM400 million. Tee said the terminal project will be completed and handed over to Malaysia Airports Holdings Bhd by the end of this month.

In terms of property development, Bina Puri has projects with a gross development value of RM3.1 billion, spread across Malaysia.

Bina Puri chairman Tan Sri James Foong Cheng Yuen said recently the group aims to seal new joint venture deals in the property, construction, mining and power sectors here and overseas within the next four months.

It has been exploring new business opportunities in Malaysia, Thailand, Brunei and Iraq.

In the last two months, the group has inked four joint-venture agreements to undertake three projects in Malaysia and one in Thailand.

UEM Sunrise set for Aussie take-off

By Sharen Kaur
Published in NST on November 23, 2013

LAUNCH BY END-2014: Melbourne chosen for its strong economic fundamentals and growth prospects UEM Sunrise Bhd will launch two projects in Melbourne, Australia, worth a combined A$1 billion (RM3.02 billion) by end-2014.

This is a key development for UEM Sunrise as the Australian venture is the group's first overseas foray as a combined entity.

UEM Sunrise is a merger between Sunrise Bhd and UEM Land Holdings Bhd, which took place in early 2011.

It has ongoing developments in Canada and Singapore, but those were projects held by Sunrise prior to the merger.

Chief operating officer Raymond Cheah said UEM Sunrise is eyeing more sites in Melbourne and Sydney because of their strong economic fundamentals and growth prospects.

"We decided on Melbourne first as there is high population growth rate, with 1,750 people moving to the city every week. The occupancy rate for apartments in Melbourne is about 97 per cent.

"The student population is also growing, helped by major universities set up in the city. We expect a lot of Malaysians investing in our two projects," Cheah told Business Times in an interview recently.

Last month, UEM Sunrise bought a 0.4ha site each in LaTrobe Street and Mackenzie Street, located within Melbourne's central business district, for a combined A$65 million.

The project in Mackenzie Street is expected to have around 388 units of one-, two- and three-bedroom apartments compressed into a 35-storey tower, priced from A$400,000 to A$600,000 each.

The LaTrobe Street project will offer around 1,000 units in two towers of more than 60 floors each, sitting above a five-storey retail podium.

Cheah said the tentative selling price for these units will be around A$450,000 and A$650,000 each.

The group had also shortlisted three Australian architectural firms - COX Architectural, Elenberg Fraser, and Fender Katsalidis Architects - to participate in a design competition.

"We will announce the winner on Monday. These are premium residential developments and they must be infused with arts and culture," Cheah said.

He is bullish on the prospect of both projects and expects the majority of the units to be bought by investors, first-time home buyers and empty nesters from Southeast Asia, including Malaysia and Australia.

"Both projects will change the landscape of Melbourne city," Cheah said.

Bina Puri targets more joint ventures

By Sharen Kaur

Bina Puri Holdings Bhd aims to seal new joint-venture deals in the property, construction, mining and power sectors here and overseas within the next four months.

Chairman Tan Sri James Foong Cheng Yuen said Bina Puri has been exploring new business opportunities in Malaysia, Thailand, Brunei and Iraq.

In the last two months, the group inked four joint-venture agreements to undertake three projects in Malaysia and one in Thailand.

These included a deal with the Kuching Hockien Association (KHA) for a mixed property development in Kuching, Sarawak, worth RM300 million, and a tie-up with Chinese and Thailand investors to build the Bangkok Marina Resort & Spa in Thailand for RM200 million.

The latest pact is with landowner Sentosa Jaya Sdn Bhd to undertake a mixed development in Kota Baru, Kelantan.

Bina Puri's winning formula has been to complete projects on time, within budget and according to all the necessary requirements.

"When opportunity knocks, it is hard not to accept. We decided to ink the four joint-venture agreements as part of the company's policy to move forward with the times.

"While many out there are pessimistic, we believe there will be progress and opportunities in the market ... which is why we are moving to Kelantan," Foong said, after inking the deal with Sentosa Jaya yesterday.

Under the 60:40 deal led by Bina Puri, the joint venture will build 339 units of apartments, 10 shops and 11 offices, with a gross development value of RM148.7 million.

The apartments will be sold at market rates, starting from RM450 per sq ft, Foong said.

He said construction will commence in the second quarter of next year, and completed within 36 months.

Sentosa Jaya is a leading developer in Kelantan. It is also involved in mining, heavy machinery and transportation.

Its managing director Datuk Razali Daud said 20 per cent of the project with properties worth RM24 million had been sold.

The project is expected to be fully sold within eight months after its launch in the second quarter of next year.

KL Sentral to enter final phase

By Sharen Kaur

GREEN BUILDINGS: MRCB will take 4 years to develop Lot F, says group MD MALAYSIAN Resources Corporation Bhd (MRCB) will develop the last parcel of land at Kuala Lumpur Sentral in Brickfields, here, which will feature green buildings worth more than RM4 billion, from next year.

Known as Lot F, the integrated mixed development will take about four years to complete, said group managing director Datuk Mohamad Salim Fateh Din.

“We will develop the land to add value to KL Sentral. It will take shape from next year as soon as we get the concept right.

“The buildings will have platinum rating and there will be 21 per cent energy savings for companies that operate there, among other features,” Salim said in an interview recently.
MRCB is talking to several multinational companies that have indicated their interest in relocating to KL Sentral.

Spread across 29.16ha, KL Sentral encompasses the RM1.1 billion world-class transit hub Stesen Sentral, several Grade-A office towers and suites, residences, hotels and a mall.

The development, which commenced in 1995, is expected to be fully completed in 2017, with Lot F being the final phase.

Properties under construction include St Regis Hotel and Residences, Nu Sentral mall, Q Sentral, Sentral Residences and 1 Sentrum.

There are currently eight green buildings at KL Sentral.

Meanwhile, MRCB is investing more than RM35 million to upgrade Stesen Sentral and build three bridges within KL Sentral.

Salim said around 150,000 passengers use the station daily and the figure is expected to double with the opening of the Kuala Lumpur International Airport 2 in Sepang next year.

He said the mass rapid transit project will also contribute to growth when completed in 2017.

“We need to upgrade the station and add new facilities, including additional parking areas,” said Salim.

MRCB keen to replicate project

By Sharen Kaur

MALAYSIAN Resources Corp Bhd (MRCB) plans to enter countries like South Africa and Pakistan to
replicate its RM15 billion Kuala Lumpur Sentral (KL Sentral) project in Brickfields, here.

Group managing director Datuk Mohamad Salim Fateh Din said MRCB has received enquiries from a number of countries to share the KL Sentral blueprint.

"It has always been MRCB's plan to replicate KL Sentral. We will go anywhere that requires a transport hub," said Salim, who is chairman of the Malaysia-Pakistan Business Council (MPBC).

Salim said for foreign markets, it may develop the project on a public-private partnership basis or go in as a
consultant.

"We can also build and transfer technology. KL Sentral is a home-grown brand. We have stabilised the concept and are open to sharing it with the rest of the world who want to know how we succeeded."

Salim was speaking after an official visit by Pakistan High Commissioner Shahid Masroor Gul
Kiani and representatives from MPBC to the new Shell Tower at KL Sentral.

Spread across 29.16ha, KL Sentral encompasses the RM1.1 billion world-class transit hub Stesen Sentral,
several Grade A office towers, suites, residences, hotels and a mall.

The development, which commenced in 1995, is expected to be fully completed in 2017, Salim said.

Shahid, meanwhile, said Pakistan, which has a population of more than 180 million, will need a development
like KL Sentral.

"We like KL Sentral as it is integrated and well-connected via rail and road. This development can be
replicated in three major cities, namely Lahore, Islamabad and Karachi.

"We are requesting MRCB to talk to business and political leaders in Pakistan about it," he said.

`Private operators can help KTMB become profitable'

By Sharen Kaur

PRIVATE railway operators could help loss-making Keretapi Tanah Melayu Bhd (KTMB) turn profitable, says Railwaymen Union of Malaya president Abdul Razak Md Hassan.

He said the operators should be allowed to use the rail network to move cargoes at a fee payable to KTMB.

This, he said, would help maximise utilisation of the rail network, in the country.

He said there is big demand for cross-border container movements as well as those of refrigerated container and cement cargoes.

Other untapped segments include the transport of automobile, structural and ore products and dangerous items such as oil and chemicals.

Abdul Razak said KTMB, as the sole operator, is unable to meet the demand of the existing cargo business due to a shortage of locomotives and flat wagons.

It is also unable to capture new business segments as it does not have an innovative financing method to move forward.

"KTMB is too dependable on government support.

"Private operators' innovative ways will explore cargo movement and make it feasible and profitable," he said recently.

Abdul Razak said the private railway operators could develop innovative ideas, technologies and cross-border cargo business to raise the market share for KTMB, which is now at three per cent.

The rest of the cargo in Malaysia is moved by air, sea and land transport operators.

According to him, the rail network in Malaysia is underserved in many areas.

"With multiple operators operating on the line and serving untapped business segments and areas, KTMB is able to earn revenues from fees and cargo movement.

"Both the public and private sectors could also enjoy new services at rates lower than other modes of transport.

"KTMB will remain KTMB, as a rail master. The mechanism and methodology of multiple operators must be decided by the board soon," said Abdul Razak.

The total length of the KTMB rail network after the dismantling of the line between Tanjong Pagar and Kranji in Singapore is 1,677km.

KTMB is the sole operator of the rail network and is responsible for the tracks, trains and infrastructure. It runs cargo, commuter and inter-city services.

It, however, has been registering losses since it was corporatised in 1992, though it did post net profits of between RM9 million and RM15 million from 1993 to 1995.

For fiscal year 2012, KTMB recorded a net loss of RM284 million on revenue of RM361 million.

`No dent in Johor housing market'

By Sharen Kaur

 NEW initiatives imposed by both the state and federal governments to cool the housing sector are unlikely to dent the Johor market, say analysts.

MIDF research head Zulkifli Hamzah said sentiment may be affected in the short term but foreign buyers are still purchasing properties in Johor due to the huge disparity between property prices in their home countries and Malaysia.

"We believe the additional two per cent levy will not affect foreign buyers' investment decisions," Zulkifli told Business Times.

Johor plans to impose a two per cent levy on foreign buyers across all segments of the market in the state, including the secondary market, starting May next year. The rate is lower than the four per cent to five per cent mooted earlier but will still amount to more than twice the current RM10,000 fee foreigners pay to buy properties in the state.

The levy comes on top of the recent cooling measures announced in the 2014 Budget, which will require foreigners to pay a 30 per cent tax for properties sold within five years of purchase.

"We should not over-react to the precautionary measures announced by the government.

"These measures will safeguard the long-term sustainability of the property market," Zulkifli said.

Mah Sing Group Bhd group managing director Tan Sri Leong Hoy Kum said initiatives in the national budget may remove speculative element, but not fundamentals.

The developer has seven projects in Johor, including Meridin@Medini.

Leong told Business Times that as Meridin@Medini is more upper end as it is located next to Legoland and near Educity, the new measures will not dampen property sales.

He said pricing for the products is attractive for both local and foreign investors with the Meridin Suites and Meridin Linx iSovo indicatively starting from RM309,000 and RM298,000, respectively.

Mercury Securities head of research Edmund Tham said the new measures may deter speculators but foreigners will continue to buy properties in Johor as their second home.

Cooling appetite for properties?

By Sharen Kaur

COOLING measures introduced by the government in the 2014 Budget has impacted the property sector, with some developers saying they have seen dampening interest from buyers.

The lower-than-expected turnout at a major property fair here over the weekend is an indication of cooling appetite in the primary market.

"Property developers and buyers are uncertain over where the market is heading. They are not sure how the real property gains tax (RPGT) and the Developer Interest Bearing Scheme (DIBS) work," said industry players.

Given the effects of the cooling measures tabled in the national budget, Hong Leong Bank Research (HLB Research) reiterates its "neutral" stance on the sector.

HLB Research said in its latest research note that there may be an increase in non-performing loan ratios and loss of holding power.

It expects margin erosion due to raw material price spikes and/or lower selling prices, a slowdown in sales and fewer launches.

HLB Research also anticipates a slowdown in demand for the medium to high-end segment and in economic growth, as well as tighter lending policies by banks.

A survey by the research house shows that developers are avoiding offering DIBS for new projects, with some offering interest rebate schemes similar to DIBS for high-rise projects.

"Developers acknowledged that they expect the cooling measures to adversely impact their sales," it said.

It was reported that UEM Sunrise Bhd is offering cash rewards of RM4,000 a month for two years for its Arcoris project in Mont Kiara here.

The Real Estate and Housing Developers' Association Malaysia is also seeking further clarification from the government on the RPGT and DIBS, says its president Datuk Seri Michael Yam.

"The new RPGT rate is supposed to be effective from January 1 next year, but no one is sure whether it applies only to new properties purchased then or also to those acquired in the last two or three years," he told Business Times.

Yam expects the market to be soft for the next six months, with some developers delaying their launches.

"The government should monitor the situation and make adjustments if necessary," he said.

Malaysian-made train by 2020?

By Sharen Kaur

 CHINA'S major electric locomotive maker CSR Zhuzhou Electric Locomotive Co says Malaysia will be able to manufacture its own trains by 2020.

To facilitate this, CSR Zhuzhou's unit, CSR Kuala Lumpur Maintenance Sdn Bhd (CKM), will transfer its technology, expertise and know-how to Malaysia over the next five years.

This is CSR Zhuzhou's plan to help Malaysia rely less on foreign expertise before exiting the country's train maintenance service over the period, CKM director and general manager Luke Wang said.

Wang said the idea is to help Malaysia be less dependent on foreign experts to maintain trains.

"Not only will Malaysia have a sizeable workforce for the maintenance of trains, the country can one day manufacture its own rolling stocks," he said.

CKM currently carries out the maintenance, repair and overhaul (MRO) works for Keretapi Tanah Melayu Bhd (KTMB)'s trains. The company was awarded a two-year MRO contract worth RM133 million.

Three years ago, CSR Zhuzhou, a unit of China South Locomotive & Rolling Stock Corp Ltd, inked a RM1.9 billion deal with KTMB to supply 38 sets of custom-built six-car set trains.

Wang said CSR Zhuzhou is still talking to the Transport Ministry to extend the existing MRO contract which expires next February.

The Railwaymen's Union of Malaya (RUM), however, is against any extension.

According to RUM, CSR Zhuzhou or CKM did not comply with the requirements set out under the offset programme with the Malaysian Industry-Government Group for High Technology (Might).

"The deal requires CSR Zhuzhou to transfer expertise and technology to locals, but they have not done that. Only 30 per cent of its staff are Malaysians, and doing odd jobs," RUM said.

In response, Wang said CKM has been training locals here for the research and development of trains and sending them in batches to its headquarters in Zhuzhou to learn how to assemble trains.

He also said that CKM has 131 staff and 72 per cent are locals, employed mainly as technicians.

"We are working closely with Might and providing long-term education to bring more knowledge to Malaysians about the rail industry," he added.

More land swap deals in pipeline

By Sharen Kaur

 THERE will be more land swap deals between the public and private sectors in a drive to increase government revenue, which is currently at RM220 billion a year.

Minister in the Prime Minister's Department Datuk Seri Abdul Wahid Omar said besides reducing subsidies and introducing the goods and services tax, land swap is a good bet to improve the income base.

"There are parcels of land not suitable for the government because their value has gone up considerably. We will call for tenders and get developers to come in with the best plans and pricing," he said at the Public Private Partnership (PPP) conference, here, yesterday.

Wahid said under such deals, the private sector will build public facilities, such as army camps and hospitals, which will result in huge savings for the government.

"Land swap is a continuous effort. A developer can develop and commercialise the land and in return, the government will have surplus cash to fund other projects." In the past two years, major land deals have taken place in the Klang Valley.

SP Setia Bhd won a deal to build the 1National Institute of Health and apartments in Setia Alam, Selangor, in exchange for 21.2ha of land in Bangsar. It will also build a polyclinic and dental clinic in Bangsar, and pay the government RM217.11 million - the premium guaranteed profit for the proposed mixed development.

Primamuda Holdings Sdn Bhd got the old Brickfields district police headquarters land in exchange for building police stations in Jalan Travers.

On the PPP, Wahid said between 1983 and this year, 611 projects were implemented, saving the government RM182.5 billion.

"Under the 2014 Budget, the government has announced several infrastructure projects. PPP will come in for this," he added.

Dorsett sees SE-Asia travellers boosting hotel occupancy rate

By Sharen Kaur

Hong Kong-listed Dorsett Hospitality International (DHI) Ltd is targeting passenger growth in Southeast Asia to boost its business as travel in Europe and the United States is still low.

Airlines in Southeast Asia are growing rapidly as the region continues to develop economically. Low-cost carriers are expanding and gaining market share, stimulating passenger demand with attractive fares and new routes.

At home, the opening of Kuala Lumpur International Airport 2 (klia2) in May next year is expected to help drive DHI's growth in existing and new markets.

Dorsett Hospitality, controlled by tycoon Tan Sri David Chiu, owns, operates and manages 18 hotels under the brand Dorsett Hotels, d.Collection Hotels and Silka Hotels in Hong Kong, China (Shanghai, Chengdu, Wuhan), Malaysia (Kuala Lumpur, Johor Baru, Labuan) and Singapore.

In Malaysia, the group operates five hotels - Grand Dorsett Subang, Dorsett Regency Kuala Lumpur, Grand Dorsett Labuan, Silka Maytower Hotel & Serviced Residences and Silka Johor Baru.

The Malaysian properties have a combined 1,407 rooms, compared to 1,149 in China and 285 in Singapore. Hong Kong has the highest number room inventory with 2,317.

"Southeast Asia is definitely a market we are looking at developing further. Mushroom growth is the key strategy for the group," Dorsett Hospitality senior vice-president of sales and marketing Philip Schaetz told Business Times, here, recently.

"Our focus markets will still be Hong Kong, China, Singapore and Malaysia,"

For the financial year ended March 31, Dorsett Hospitality posted a net profit of HK$647.4 million (RM277.22 million) on revenue of HK$1.15 billion.

Its net operating margin was 43.3 per cent.

According to Schaetz, Dorsett Hospitality is currently looking at aggressively expanding its presence in Southeast Asia.

The group is aiming to tap the leisure markets in Vietnam, Myanmar, Thailand and Indonesia, either by setting up hotels from scratch, or buying over existing buildings and converting them.

It is also eyeing management contracts in Southeast Asia, where it intends to manage hotels as a third party operator.

Outside of the Southeast Asia region Dorsett Hospitality is eyeing Australia as a bigger market, Schaetz said.

"We have a good mix of properties in the low-scale (three-star), mid-scale (four-star) and up-scale (five-star) range." Scheatz said.

`New property measures to drive away investors'

By Sharen Kaur

NEW property cooling measures, such as raising the ceiling price of properties for foreign buyers to RM1 million, will be a big blow to Johor's Iskandar Malaysia region, says RHB Research.

The research house views that the 30 per cent real property gains tax (RPGT) for foreigners, for disposals within the first five years, will wipe out short-term foreign speculators to a certain extent as the minimum five years' holding period will drive them away.

Given such a situation and potentially higher land holding costs, it is uncertain if the Johor government will go ahead with the proposed four to five per cent processing fee that will be imposed on foreigners, as the impact of the 30 per cent RPGT is already detrimental, RHB said.

"We see downside potential for valuations of some stocks, particularly those that are highly exposed to the Iskandar region and have high proportion of foreign buyers," it said in its latest research note.

RHB said developers with high exposure to the Iskandar region will be the most adversely affected as the area has gained significant traction among foreigners over the past one to two years, especially Singaporeans, due to the strong Singapore currency.

They include UEM Sunrise Bhd, Sunway Bhd, SP Setia Bhd, Mah Sing Group Bhd, IJM Land Bhd and Eastern & Oriental Bhd.

"Medini, in particular, which has no Bumiputera quota, will likely see a knee-jerk slowdown in property sales over the near term, as the market is now less lucrative compared with before.

"While there is still demand for some attractive projects compared to a simple buying decision previously, potential foreign buyers will now think twice before purchasing properties in Malaysia," RHB said.

According to CBRE, foreign purchasers accounted for 54 per cent of total high-rise residential sales (sales by developers) in Nusajaya, and 39 per cent in Johor Baru and major suburbs.

In Penang mainland, RHB still sees healthy growth as local property demand is largely driven by genuine buyers for occupancy purposes.

EDTP works to start next year

By Sharen Kaur

Construction of the RM8 billion electrified double-tracking project (EDTP) from Gemas to Johor Baru will start next year before the high speed rail (HSR) project linking Kuala Lumpur and Singapore takes off.

Land Public Transport Commission (SPAD) chief executive officer Mohd Nur Ismal Kamal said the HSR project will take longer to start as the awarding of contracts will start only in the latter part of next year.

The Gemas to Johor Baru EDTP project, involving around 200km of double-track on existing alignment, is among the key projects highlighted by Prime Minister Datuk Seri Najib Razak in the 2014 Budget.

Mohd Nur Ismal said both projects are important in cutting travel time between Kuala Lumpur and Johor Baru, introducing regional KTM services to serve Penang, Kedah and Johor, and increasing freight by rail.

"It will be very similar to the Klang Valley KTM Komuter services. I can't comment on the cost for the projects. The Transport Ministry will award the contracts," he said yesterday.

Nur Ikmal Ismal said the ministry has completed the Gemas-Johor Baru EDTP study and SPAD will review the railway scheme that it submitted.

"The Gemas-Johor Baru and the HSR projects are different. They will each have their own alignment."

The Gemas-Johor Baru line development will complete the entire EDTP network.

The government has awarded EDTP contracts for the Ipoh-Padang Besar stretch, worth RM12.5 billion, to the MMC-Gamuda joint venture, and the Seremban-Gemas stretch, worth RM3.45 billion, to India's Ircon International Ltd. Both are ongoing.

The Rawang-Ipoh stretch was completed in 2008.

Meanwhile, Syarikat Prasarana Negara Bhd group managing director Datuk Shahril Mokhtar said he had hoped for allocation under the 2014 Budget for stage buses as this segment of public transport is facing tremendous challenges.

He said there was an urgent need to address the rising cost of tyres, spare parts and diesel.

On the extension of the light rail transit system to Port Klang, Shahril said he is unable to comment unless the feasibility study is completed and submitted to the authorities for approval.

Impact on builders

By Sharen Kaur

THE hike in the real property gains tax (RPGT) and raising the threshold for properties that can be bought by foreigners to RM1 million will have an impact on developers, builders say.

Glomac Bhd managing director and chief executive officer Datuk FD Iskandar Mansor told Business Times that the government should punish speculators and not genuine investors or serious house buyers.

"The RPGT of 30 per cent is high. When you buy a property, you want some form of capital appreciation. Some buy and sell houses within three to four years for emergency reasons," he said, adding that the measures may cause a slowdown in the property market and impact growth as the banking sector would also be affected.

SP Setia Bhd president and CEO Tan Sri Liew Kee Sin said while residential properties will be exempted from the goods and services tax (GST), it does not mean that the cost of supplying such homes will be free from GST.

Liew said developers will still have to pay a six per cent GST on nearly all the inputs required to build houses, and this can further increase the cost of construction.

Mah Sing Group Bhd group managing director Tan Sri Leong Hoy Kum said the RPGT is aimed at speculators and since it is not an upfront tax, it would not be a deterrent to owner-occupiers or investors who buy properties for rental gains.

"In the long term, it may help to curb property speculation," he said.

Master Builders Association Malaysia president Matthew Tee believes that the RPGT increase can be maintained for a definitive period as there have been continuous hikes since 2010.

`Policies to cool property sector will affect secondary market

By Sharen Kaur
Property experts say any new policies introduced by the government in the 2014 Budget to cool the real estate sector will affect the secondary market.

Adzman Shah Mohd Ariffin, chairman of the Property Management, Valuation and Estate Agency division of the Royal Institution of Surveyors Malaysia, said those policies, including raising the real property gains tax (RPGT), will affect people who are upgrading or buying for their own stay.

"If the RPGT is raised, the seller won't make enough money to upgrade. Those buying in the secondary market may likely be paying more for their property as the seller marks up the price," he said after a briefing on the 23rd National Real Estate Convention 2013 recently.

Malaysian Institute of Estate Agents president Siva Shanker said speculation is now in the primary market, a segment that makes up about 15 per cent of total property transactions per annum.

"The RPGT jump in the first two years is not going to have any effect on the sellers as they are most likely to sell their properties in the third or fourth year after buying it.

The Association of Valuers, Property Managers, Estate Agents and Property Consultants in the Private Sector, meanwhile, proposed a slight rise in the RPGT to 20 per cent for disposals within two years, 15 per cent for disposals in the third year, 10 per cent in the fourth year and five per cent in the fifth year.

Glomac sees 7 good years ahead

By Sharen Kaur
Published in NST on October 25, 2013

SUSTAINED GROWTH: Developer has 12 ongoing projects with estimated RM7b GDV remaining


GLOMAC Bhd expects to sustain earnings growth for the next seven years, driven by RM7 billion worth of new launches during the period.

The developer has 12 ongoing projects with estimated RM7 billion gross development value. That could reach RM10 billion by April next year as it targets strata properties for higher margins and townships in Greater Kuala Lumpur.

Group managing director and chief executive officer Datuk FD Iskandar said growth will be driven by the company's healthy unbilled sales of RM852 million, launches of RM1.4 billion in the current fiscal year and new landbanking activities.

Glomac is eyeing land in Greater Kuala Lumpur, Iskandar Malaysia in Johor, Kota Kinabalu and Penang.

"We may announce something in Iskandar Malaysia and Kota Kinabalu next year. But the focus is on Greater Kuala Lumpur, which needs one million new houses by 2020," said Iskandar yesterday after the company's annual general meeting and extraordinary general meeting, here.

Last year, Glomac posted a record net profit of RM101.5 million, 19.1 per cent more than the previous year.

In the first quarter ended July 31 2013, it registered a net profit of RM24.13 million, up 14.9 per cent from the RM21 million recorded a year ago.

Iskandar said in terms of profitability and unbilled sales, Glomac is among the top 10 of 92 listed developers on Bursa Malaysia.

"We hope to maintain our performance, if not do better, this year. We have been building new grounds for 2013, buying land and developing new townships, including Saujana KLIA," Iskandar said.

He said Glomac will continue to develop mixed integrated projects, gated communities and townships with properties of all price ranges.

Developers selling lifestyle

By Sharen Kaur
Published in NST on October 22, 2013

 The local property market landscape is changing as developers turn more innovative in their product planning.

Malaysian Institute of Estate Agents (MIEA) president Siva Shanker said gated and guarded property and integrated projects are the in thing now.

Siva said home buyers today are looking for properties that offer lifestyle and security.

"Developers today are not selling houses, but lifestyle. A developer is not going to build and sell a single or double-storey house. They will build homes that come with a lifestyle.

"So when you hear about properties increasing in price, it is because of the lifestyle," he said recently, after a briefing on the 23rd National Real Estate Convention 2013 (NREC 2013).

Siva said inner city living is also becoming more popular because of the perception of being on the high-end of the society and due to traffic.

According to Siva, a boutique developer in the Kuala Lumpur city centre is able to sell a property for about RM3,000 per square feet because of lifestyle.

"That is a huge leap forward. People are prepared to pay for a branded house," he added.

The NREC 2013 will be held on Thursday at Hilton Hotel in Petaling Jaya and several topics will be discussed.

Siva will present a paper on "Changing Trends in the Property Market". Senator Datuk Abdul Rahim Rahman from Savills Rahim & Co Chartered Surveyors will talk about "The Property Market Outlook for 2014", while Ho Chin Soon will discuss "New Growth Centres in Malaysia - Klang Valley, Penang, Johor and Kota Kinabalu."

Andrew Wong from the BAR Council will explain the "New Legislation on Strata Living - The New Strata Management Act 2013" and PR1MA's Datuk Mutalib Alias will discuss "Affordable Housing".
 

KTMB targets non-rail revenues

By Sharen Kaur
Published in NST on October 22, 2013

KERETAPI Tanah Melayu Bhd (KTMB) aims to develop land along its rail network into bonded warehouses to grow its non-railway revenues, said its president Datuk Elias Kadir.

A bonded warehouse is a building in which dutiable goods may either be stored or undergo manufacturing operations.

Upon entry of goods into the warehouse, the importer and warehouse proprietor incur liability under a bond. This liability is then cancelled when the goods are withdrawn for supplies.

"I personally think there is great business in this. We will approach overseas investors to manufacture their goods at the bonded warehouses and subsequently move them by train," Elias told Business Times.

Elias is also talking to hypermarkets to set up shop at the train stations throughout Peninsular Malaysia.

The national railway company has 196 train stations nationwide and 53 are located in the Klang Valley.

"We want to create a lifestyle where peo-ple can travel and shop. I am also looking at selling advertising space inside the trains and the stations," he said.

KTMB is currently involved in moving goods and people. It runs cargo, commuter and inter-city services and this business contributes 100 per cent to its yearly revenues.

The company, however, has been loss-making since its corporatisation in 1992.

It did, however, post net profits of between RM9 million and RM15 million from 1993 to 1995.

For fiscal year 2012, KTMB recorded a net loss of RM284 million on revenue of RM361 million.

"KTMB is a bankrupt company with liabilities of RM2.5 billion, and assets worth around RM500 million. But that can change. It can be profitable but not under the present structure and system. With the present structure and system we can only do repair works," Elias said.

Instead of a rail fare hike, which is determined by the Land Public Transport Commission, KTMB will have to find new ways to make money.

"We have brought in Lloyd to assess our tracks as we move from single track to double tracks, and increase capacity by fivefold. I am obsessed with seeing a KTMB turnaround. I think it can be done as we have good people," Elias said.

Developers and Rehda wary of RPGT increase

By Sharen Kaur
Published in NST on October 22, 2013

DEVELOPERS believe curbing speculative buying in the property market should be approached with care instead of introducing policies that will affect foreign buying.

IJM Land Bhd chief executive officer and managing director Datuk Soam Heng Choon said foreign buyers are still an important component of the housing market, as they serve as purchasers of high-end properties.

"We still need foreign buyers to buy high-end properties priced RM1 million and above.

"We also need foreigners employed in sectors such as oil and gas to support the rental market for high-end properties.

"The government must not forget that Malaysia Property Inc was set up to promote Malaysian properties overseas and get foreign buyers here.

"Flip-flop policies will serve only to drive away interested foreign investors."

Analysts have predicted another round of policy-tightening, including increasing the real property gains tax (RPGT) and stamp duty in the 2014 Budget to rein in household debt.

Last month, Urban Wellbeing, Housing and Local Government Minister Datuk Abdul Rahman Dahlan said the government would not hesitate to further tighten fiscal policies to curb property speculation and ensure reasonable and affordable property prices.

Rahman had said that his ministry was studying the possibility of increasing the RPGT as the rate had not been effective in curbing speculative buying.

The rate currently stands at 15 per cent for properties sold within two years, 10 per cent for properties sold in the third to fifth year, and no tax for properties sold after five years.

Real Estate and Housing Developers' Association Malaysia (Rehda) president Datuk Seri Michael Yam said a hike in RPGT and stamp duty on the transactions of properties would cause uncertainty among foreign investors because of the swing in government policies.

Yam said this would have a bearing on property-buying decisions, leading to a possible wait-and-see attitude among foreign investors.

"There are better mechanisms to curb speculation than just increasing the RPGT."

Eversendai expects good earnings next year

By Sharen Kaur
Published in NST on October 18, 2013

Eversendai Corp Bhd expects a healthy showing next year, given that some of its new projects have only just started, says its chief.

Founder and executive chairman Tan Sri A.K. Nathan said the group's stellar project execution and strong cash flow-generating ability, coupled with an order book of around RM1.7 billion, provides clear earnings visibility for the next two years.

Eversendai, a structural steel turnkey and power plant contractor, is tendering for RM8 billion to RM10 billion worth of projects and expects to land some of the jobs soon, Nathan told Business Times.

Early this year it won a US$107.8 million (RM344.9 million) job to undertake structural steel works on the US$3.2 billion Midfield Terminal Project at Abu Dhabi International Airport.

For the first six months of its current financial year ending December 31 2013, Eversendai posted lower net profit of RM40 million versus RM57.6 million in the same period last year.

Eversendai is not dependent on a vibrant economic environment to do well as being a niche player in the market, its expertise is always on the hunt by corporate giants.

Earnings fell due to lower gross profits of 16.7 per cent and 73.9 per cent recorded in its Middle East and India segments in the second quarter ended June 30. Gross profit in the Malaysian segment rose 187.1 per cent, driven by its Manjung and Tanjung Bin 4 power plant projects.

"The prospects for Eversendai look bright. The Middle East is abuzz with construction activities and India has new developments. We expect gross profits to improve," Nathan said.

China firm to clinch RM150m KTMB job?

By SharenKaur
Published in NST on October 17, 2013

THE Ministry of Transport is expected to award an MRO (maintenance, repair and overhaul) contract worth over RM150 million for six-car set (SCS) trains owned by Keretapi Tanah Melayu Bhd (KTMB).

It is learnt that the contract will be awarded to China's CSR Zhuzhou Electric Locomotive Co (CSR ZELC) Ltd.

This could be the second big win for CSR ZELC this year, which recently won a ministry job worth more than RM500 million to supply 10 units of six-car train sets (ETS) for KTMB.

CSR ZELC is one of the major electric locomotive manufacturers in China and a subsidiary of China South Locomotive & Rolling Stock Corp Ltd.

Three years ago, CSR ZELC inked a RM1.9 billion deal with KTMB to supply 38 sets of custom-built SCS trains.

The SCS trains are to improve commuter service in the Klang Valley under the government's National Key Result Areas initiative for public transportation.

The first consignment arrived in Malaysia in August 2011. Full delivery of the train sets were made by middle of 2012.

As part of the deal, CSR ZELC was awarded an MRO contract for two years for the SCS trains, managed by CKM Sdn Bhd, its 100 per cent- owned company. CKM employs more than 100 people.

The MRO deal, worth RM133 million, is set to expire in February 2014.

Sources close to CSR ZELC said the company is seeking an extension to help boost its presence.

However, the Railwaymen's Union of Malaya (RUM) is against CSR ZELC securing the new contract as it did not comply with the rules and procedures of the offset programme with Might (Malaysian Industry-Government Group for High Technology).

"The deal requires CSR ZELC to transfer expertise and technology to locals, but they have not done that. Only 30 per cent of its staff are Malaysians and doing odd jobs.

"CSR ZELC is now proposing to use a 100 per cent local Bumiputera company, Landas Efektif Sdn Bhd, as a frontier company, with the management and control of the contract fully executed by CSR ZELC," the source said.

The source said KTMB has not been able to carry out the MRO works for the SCS trains as there was no transfer of technology and know-how on maintenance by CSR ZELC.

Jamaludin may succeed Liew as SP Setia chief

By Sharen Kaur
Published in NST on October 16, 2013

UNLOCKING VALUES: PNB undecided between I&P chief and its own internal candidate
I&P Group Sdn Bhd's Datuk Jamaludin Osman is among candidates tipped to head SP Setia Bhd with the imminent departure of its president and chief executive officer Tan Sri Liew Kee Sin next year.

Business Times understands that Permodalan Nasional Bhd (PNB) is considering appointing either Jamaludin or a senior executive from within the PNB group of companies as the new SP Setia chief.

When contacted, Jamaludin said he wasn't aware of any plans to appoint him as SP Setia head.

"There is a lot of talks, but I personally do not know anything," he said.
Jamaludin has been I&P group CEO since October 1 2004 and managing director from January 1 2005.

I&P was formed from the merger of three property companies in the PNB stable, namely Island & Peninsular Bhd, Pelangi Bhd and Petaling Garden Bhd.

The company's assets are worth about RM10 billion.

Jamaludin has also served as Syarikat Perumahan Pegawai Kerajaan Sdn Bhd MD since 1999 and was a civil engineer with Petroliam Nasional Bhd prior to that .

Meanwhile, Liew has confirmed his departure, although the timing remains unclear.

CIMB analyst Terence Wong believes that Liew is likely to retire in March next year when the third put option at RM3.95 per share for his remaining stake in SP Setia is due.

SP Setia's major shareholder is PNB. However, as PNB does not have management control yet, the current succession plan calls for SP Setia deputy president Datuk Voon Tin Yow to take over as CEO when Liew retires and for chief financial officer Datuk Teow Leong Seng to assume the deputy president's role.

It was reported that PNB is exploring ways to unlock the value of its property assets housed under I&P, either by a direct listing of the company and/or injecting its RM10 billion worth of assets into SP Setia.

PNB is inclined to inject the assets into SP Setia as a consolidation between the two companies would enhance the value of I&P's projects, and see SP Setia emerge as a mega property company.

SP Setia's market capitalisation of close to RM8 billion, combined with I&P's assets, could create a company with a market capitalisation of RM18 billion.

Higher property tax on foreigners will dent mart'

 By Sharen Kaur
Published in NST on October 12, 2013

IMPOSING a higher tax on foreign buyers in Johor will put a dent on the property market.

IJM Land Bhd chief executive officer and managing director Datuk Soam Heng Choon said yesterday the move will slow down foreign buyers' investment participation and dampen buying sentiment.

He in the longer term, this will have an impact on 140 industries supported by real estate, although the move currently involves only Johor.

The Johor government will be hiking property processing fee from RM10,000 per transaction to four and five per cent of property value for foreign buyers.

This new measure will take place from January under a new policy being considered to boost the state's revenue.

The new fee, which will apply to all properties, including those purchased from the secondary market, will enable Johor to also control the sale of properties to foreigners.

It is estimated that there are about 130,000 foreign property owners in Johor.

"The policy will affect developers selling luxury properties and targeting the foreign market. IJM Land will not be affected as most of our projects in Johor are in the affordable range and we are targeting owner occupiers," Soam said.

Developers in Johor with high exposure to foreign buyers include UEM Sunrise Bhd, SP Setia Bhd, Sunway Bhd, Iskandar Waterfront Holdings Bhd, IGB Corp Bhd, Tebrau Teguh Bhd and Tropicana Corp Bhd.

Analysts said property developers are against proposals that will lift prices.

However, they said Johor properties will still be attractive to Singaporeans, given the current development of Iskandar Malaysia.

A spokesperson from Mah Sing Group Bhd said demand for properties in Johor should remain strong as the population base is targeted to double to three million by 2025.

He said Mah Sing will not be affected by the new fee as most of its projects in Iskandar Malaysia are predominantly townships offering bread and butter products for locals.

Dr Mahathir : Build MRT lines simultaneously

By Sharen Kaur
Published in NST on October 11, 2013

LINE 2 and 3 of the Klang Valley Mass Rapid Transit (KVMRT) system should start simultaneously with the ongoing Sungai Buloh-Kajang (SBK) Line, says former prime minister Tun Dr Mahathir Mohamad.

"We should do it simultaneously and not wait until one line is completed. It also depends on the demand for the MRT.

"I am sure this underground network will be well accepted," he said after visiting the MMC-Gamuda MRT construction site in Cheras, here, yesterday.

Construction of the SBK Line started in 2011. Line 2 and 3 consist of the Circle Line looping around the Kuala Lumpur city centre and the north-south line from Selayang to Putrajaya.

Mass Rapid Transit Corp Sdn Bhd chief executive officer Datuk Azhar Abdul Hamid has said a delay in starting Line 2 and 3 will result in rising costs.

All three lines are estimated to cost around RM80 billion. The overall cost of the project, however, will only be finalised once all the contracts have been awarded.

Dr Mahathir said Malaysia needs to have a complete rail network, including the high speed rail link between Kuala Lumpur and Singapore, to move people and goods.

He said the current priority is to complete the electrified double-tracking project (EDTP) from Padang Besar to Johor Baru.

The government has awarded contracts for the EDTP stretch between Ipoh and Padang Besar worth RM12.5 billion to the MMC-Gamuda joint venture and the Seremban-Gemas worth RM3.45 billion to India's Ircon International Ltd.

Both the projects are ongoing.

The Rawang-Ipoh strecth was completed in 2008 while the link between Gemas and Johor Baru, which is estimated to cost more than RM10 billion, has yet to be awarded.