Huge potential for MMC’s RM16b JV
Taken from The Star
KUALA LUMPUR: MMC Corp Bhd sees the sale of land as the first source of revenue for its RM16bil joint venture in South Johor with Dubai World but the country’s utilities and infrastructure giant believes that is just the tip of the project’s potential.
MMC believes there is strong opportunity for future recurring income and benefits to Port of Tanjung Pelepas, and said the project to develop a maritime centre in South Johor is attracting a lot of interest.
“Based on current demand, we think we are short of land. We have a list of interested investors who are prepared to make immediate payment to secure the right to develop the land,” MMC group chief executive Feizal Ali said in an e-mail interview.
»Based on current demand, we think we are short of land« FEIZAL ALI
MMC announced last week it had signed a memorandum of understanding (MoU) with Dubai World to build a maritime centre and develop property on its land in Johor.
The MoU would explore opportunities for joint development of a maritime centre master plan comprising oil terminal activities, dry docks, a shipyard, conventional cargo handling facilities, logistics parks and real property development in South Johor. The projects are expected to start becoming operational from the second half of 2010.
Initial studies have put the cost of developing the infrastructure and services at RM2.5bil.
“This clearly is a scoop for MMC and a shot in the arm for the development of the Iskandar Development Region (IDR),” said Kenanga Investment Bank in a note on the project.
“The proposed maritime centre would be a serious competitor to the Ports of Singapore given the synergistic effect of Dubai World being one of the largest port operators in the world the holding company that manages and supervises the portfolio of businesses and projects for the Dubai Government.”
Feizal said the most immediate revenue for MMC would be the proceeds from the sale or lease of the land.
“However, as I’ve mentioned before, we won’t be selling all of the land in one go,” he said.
Feizal said the infrastructure and services MMC planned to provide would enable it to collect charges for utilities, throughput, oil storage and terminals, which would bring long term recurring income for the group.
In addition, the provision of marine services will also benefit its subsidiary, Port of Tanjung Pelepas.
“The project will also benefit the country. It will attract major oil players, such as traders and producers, to establish hubs for their upstream and downstream activities, and create a new industrial area in south-west Johor,” he said.
Besides bringing in additional capital, this investment would also directly and indirectly create about 25,000 jobs and raise the general level of income in the area, he said.
There will also be spill-over effects into other industries and synergies with the IDR.
Feizal said significant interest in the development had been shown by a number of sectors but primarily from the oil and gas players.
“These facilities require seafront land and Tanjung Bin offers prime seafront land at the confluence of major international shipping lanes with close proximity to ports,” he said.
“We have been approached by various multinational investors, including those involved in the oil storage, oil terminalling, oil trading and maritime engineering industries.”
He said there was an oil terminalling player interested to take up 500 acres and a long list of investors wishing to take up between 100 and 200 acres for oil storage, oil trading and oil blending facilities.
“There are also specific oil and gas and marine engineering companies which require an industrial port and would like to set up manufacturing plants, specifically with port facilities for the specialised requirements of the industries,” he said.
Feizal said demand for land had resulted in extensive reclamation work in neighbouring locations, to a point where there had been development of subterranean storage facilities.
“All these make Tanjung Bin an ideal and compelling choice for investors,” he said.
Dubai World has investments and projects in more than 100 cities and serves a wide range of strategic industry segments, such as the development of the iconic real estate development The Palm Jumeirah islands.
It also developed DP World, the third largest port operator in the world, and the Jebel Ali Free Zone Authority, which is a model for free zones around the world.