Friday, October 19, 2007

Abdullah Relaxes Race-Based Rules to Spur Malaysian Development

Abdullah Relaxes Race-Based Rules to Spur Malaysian Development
Taken from Bloomberg

(Bloomberg) -- In the southwest corner of Malaysia, on a stretch of land between a mangrove swamp and a forest of dark green oil palms, groaning bulldozers are carving out a new city from red clay soil.

``This will be downtown Nusajaya,'' says Zamry Ibrahim, 39, a marketing manager for state-controlled developer UEM Land Sdn. who sells the site to foreign investors. ``In five to 10 years, the place will be totally different.''

Prime Minister Abdullah Ahmad Badawi has eased 36-year-old rules favoring the ethnic Malay majority to help woo 382 billion ringgit ($111 billion) in investments aimed at transforming the economy of the southern state of Johor. Investors say his decision demonstrates that the race-based program is outdated and needs to be scrapped as the Southeast Asian nation loses investment to faster-growing neighbors.

``It's an impediment,'' said Ian Beattie, who oversees $1.5 billion in Asian stocks at London-based New Star Asset Management Ltd. ``You're stopping the market from operating at its optimum level.''

Malaysia's system of racial preferences, originally called the New Economic Policy, was introduced after bloody clashes in 1969 between ethnic Chinese and Malays. The policy, which aimed to increase the wealth of Malays, gives them privileged access to government contracts, jobs and discounts on homes. Of the nation's 27 million people, about 60 percent are ethnic Malays.

Malay Voters

The prime minister is torn between his goal of boosting the Johor economy by easing the race-based program and his loyalty to the Malay voters whom the policy benefits, said Maznah Mohamad, a senior research fellow at the University of Singapore.

``He's unnecessarily trying to bend backwards,'' she said. ``To have the NEP policies and still allow these liberalizations, I would just call it incompetence.''

Abdullah reiterated the goals of the 1971 NEP the same day he announced the easing of rules in Johor. ``The disparity in income and wealth ownership among the ethnic races still persists and must be addressed,'' Abdullah told parliament in a statement in Malay on March 22.

Abdullah leads the United Malays National Organisation, or UMNO, the biggest political party in the ruling coalition, Barisan Nasional.

The Nusajaya project, a commercial and industrial development including homes, offices and a theme park, is set to become Malaysia's biggest property project.

Poorer Than Singapore

The so-called Iskandar Development Region, which includes Nusajaya, is three times larger than neighboring Singapore, but its residents earn $14,790, only half as much, according to the zone's Web site.

Malaysia's economy, among the fastest growing in Southeast Asia before the 1997-98 financial crisis, expanded 5.7 percent in the second quarter, the central bank said on Aug. 29. That's slower than Singapore's 8.6 percent, Indonesia's 6.3 percent and Vietnam's 7.8 percent.

To woo foreign money, Abdullah on March 22 said companies investing in tourism, financial services and certain industries in the Iskandar Development Region wouldn't have to allocate 30 percent equity to ethnic Malays. Those investments will also be exempt from income tax for 10 years, he said.

The government has said the Johor investments and commercial developments might generate more than 800,000 jobs in 20 years and boost growth in the state to an average of 7 percent in the 2005 to 2025 period compared with 5.5 percent without them.

Mideast Investment

Abdullah's easing of the NEP rules may be working. Kuwait Finance House and other Middle East companies on Aug. 29 agreed to spend $1.2 billion on a property project that includes homes, a medical center and a financial district in the Iskandar Development Region.

Malaysia experimented with easing the NEP with a similar project south of the capital, Kuala Lumpur, branded the ``Multimedia Super Corridor.'' Set up in 1995 by Abdullah's predecessor, Mahathir Mohamad, it sought to attract technology companies to the country.

As long as the Johor project reinvigorates the regional economy, Abdullah, 67, needn't be concerned about a backlash from ethnic Malays, said Ramon Navaratnam, a former finance ministry official and now president of anti-corruption group Transparency International Malaysia.

The government's race-based program is essential to maintaining stability in the country, Deputy Prime Minister Najib Razak said in a June interview. The 1969 riots occurred after opposition parties celebrated winning seats from UMNO in a general election.

`Political Realities'

``You have to realize there are political realities that we have to manage,'' Najib said. The government is prepared to make ``further adjustments'' to the policy if needed, he said.

Abdullah, who must hold an election by early 2009, is taking a gamble by easing the NEP in Johor, said Mohamed Mustafa Ishak, professor of politics at Universiti Utara Malaysia.

Johor elects 15 percent of UMNO's 110 members of parliament, according to the Malaysian parliament's Web site. Dropping the race-based program in every other state may be opposed by ethnic Malays.

``I don't think that will go down well,'' Mustafa said. ``I don't think they can do it.''

Johor home to world’s first bitubale packaging plant

Johor home to world’s first bitubale packaging plant

Taken from The Star

26 Sep 07


JOHOR BARU: Bitumen Bale Sdn Bhd is expanding by setting up the world's first bitubale packaging plant in the Pelepas Freezone.

Managing director Gordon W. Thomas said it was the “right time'' for the company to expand and that the Pelepas Freezone was the perfect choice due to its strategic location.

“It is located near the Port of Tanjung Pelepas, which will enable us to import and export bitumen more efficiently.

“We are also excited that we are able to make it a reality in just a short time,” he said after the launch of the plant recently.

Thomas said the plant aimed to package 800 tonnes of bitubale per day, which would translate into an estimated annual turnover of US$20mil.

“We have been involved in refineries in the past but are now focusing on the packaging of bitumen,” he said.

He added that the company planned to set up at least 100 similar plants worldwide in the next 10 years.

“So far, funds for nine plants have been approved and we are now working on another plant in Thailand while Mongolia, South Africa, Kazakhstan and Mexico have been identified as possible locations.''

Thomas said Bitumen Bale also planned to build a manufacturing plant near the newly launched plant as well as a research and development centre.

“Hopefully, with the help of the State Government, we can expand much quicker.

“We feel that Iskandar Development Region is an exciting concept,” he said, adding that the company planned to use local specialists for the research and development centre.

Bitumen Bale, a subsidiary of Eastern Petroleum, is involved in the provision of petroleum services and has two refineries – in Malacca and Terengganu.

The company also has a research and development centre in Malacca with sale offices in Hong Kong, Kuala Lumpur, Singapore and Dubai

Malaysia's UEM Land, GE tie up on Johor project

Malaysia's UEM Land, GE tie up on Johor project
Taken from Reuters

KUALA LUMPUR (Reuters) - Malaysian property developer UEM Land has roped in U.S. firm General Electric as a strategic partner in plans it is spearheading to build a new Asian boomtown in the country's southern region of Johor.

A spokeswoman for UEM Land said the two firms would sign a pact this week to explore opportunities to develop Nusajaya, the region's single-largest parcel of land spread over 24,000 hectares, which is owned by parent UEM World .

"Initially the agreement with GE is for three years," she told Reuters. "UEM Land is looking to GE for help with the planning of city management systems. They really need to work with someone who has that experience, and a proven track record."

She declined to give any further details.

General Electric Chief Executive Jeff Immelt and Ahmad Pardas Senin, chief executive of UEM, will attend Thursday's signing.

Late last year, Malaysia unveiled an ambitious two-decade blueprint to harness $105 billion in mostly private capital to turn 2,200 square km (850 square miles) of Johor state, bordering wealthy Singapore, into an industrial and tourism zone.

State-controlled UEM World hopes to benefit from the city state's plans to develop two large casino resorts in its project to develop vacant and developed land around the Bandar Nusajaya township in southwest Johor.

Shares of UEM World last traded at 3.78 ringgit. They have soared 116 percent since the beginning of the year, while UEM Builders , another group firm, rose nearly 5 percent.

Earlier this year, GE said it expected sales and profit growth of 30 to 40 percent in emerging countries over the next three to five years.

"By 2010, we're estimating sales of $50 billion," GE International's chief executive, Ferdinando Beccalli-Falco, told reporters in the Malaysian capital in July.

GE makes jet engines, gas turbines and other heavy equipment, and is involved in consumer finance and health care businesses.

It sold $30 billion in the emerging economies of China, India, Southeast Asia, Middle East and Africa, and Latin America last year.

SP Setia to go big in commercial properties

SP Setia to go big in commercial properties
Taken from The Star

27 Sep 07


PETALING JAYA: SP Setia Bhd wants to go big in commercial retail properties to take advantage of the strong demand for quality commercial developments in the Klang Valley and other parts of the country.

The property group, which already has a well-established name in the residential sector, is eager to make a name for itself as a serious commercial retail player with the line-up of interesting projects.

Group managing director and chief executive officer Tan Sri Liew Kee Sin is excited about the prospects for the commercial sector and is seeking potential partners, including those from overseas, to undertake projects.

The biggest project on the drawing board is Setia City in the company's 2,524-acre Setia Alam township in Shah Alam.

The mega commercial project on 150 acres will have office towers, recreational destinations, retail malls and residential components.

Tan Sri Liew Kee Sin
Liew said SP Setia was working with a panel of architects and consultants to develop an iconic development in Setia City.

“As an eco-themed development, it will be energy saving with avenues to generate its own electricity for self sustainability,” he added.

The project, with an estimated gross development value of at least RM10bil, will take five to 10 years. Construction is scheduled to start in the first half of next year.

To kick-start the development, SP Setia has identified Sydney-based Land Lease Australia as its partner to undertake the development of a retail mall.

The mall, on 40 acres, would initially have a gross lettable area of 500,000 sq ft, which could later be expanded to 1.5 million sq ft. It will take two years to complete.

Next on the list is Setia EcoCity in the Iskandar Development Region in Johor. The project, to be developed on 80 acres, is scheduled to kick off in 2009 for completion in five years.

“These two projects will establish SP Setia as a serious commercial property developer and widen the company's earning base in the coming years,” Liew said.

The company is also eyeing a number of commercial retail projects in the Klang Valley, including Kuala Lumpur. These projects are expected to start within two years.

SP Setia also has other ongoing commercial projects in the Klang Valley, including the RM167mil Setia Avenue shop-offices in Setia Alam and the RM800mil Setia Walk in Puchong.

Century Logistics To Reward Shareholders More

Century Logistics To Reward Shareholders More

(Bernama) -- Century Logistics Holdings Bhd intends to reward its shareholders more due to the expected strong financial performance from its robust oil and gas logistics activities.

For a start, its managing director Steven Teow said, it has declared a special gross dividend of five sen a share following the improved revenue in the first half of its financial year ended June 30, when it rose 29.9 percent to RM76.4 million and net profit surged 599.6 percent to RM8 million during the period.

"The future growth is further enhanced and driven by our supply chain solutions domestically and abroad," he told a media briefing here Thursday.

The company provides value added oil and gas logistics, supply chain solutions and total logistics services.

These logistics services encompass international freight forwarding, transportation and distribution, and warehousing.

It also assembles and procures inbound and outbound logistics services to cover the entire value chain.

Meanwhile, its deputy managing director, Dr Mohamed Amin Kassim, said Century Logistics aspires to be a regional logistics group with joint ventures expected in China and Vietnam by year end.

It has already established regional joint ventures in Thailand, India, Sri Lanka and Dubai.

"We aim to replicate the oil and gas logistics services and supply chain management in our joint ventures abroad," he added.

Century Logistics has just sold its two-single detached warehouse in Port Klang to Mapletreelog (M) Holdings Sdn Bhd for RM32 million for a gain of RM5.8 million.

"Our plans are to identify strategic locations and to re-locate our warehouse assets in fast growth areas such as the Iskandar Development Region in Johor as well as overseas," Mohamed Amin said.

Its first warehouse is in the Port of Tanjung Pelepas, providing 200,000 sq ft. It began operations this month and is fully tenanted to Geodis for five years.

"We will commence the construction of our second distribution hub in the area next month," he added.

Century Logistics will also consider setting up facilities in the East Coast Economic Region as well as Sabah and Sarawak, he said.

General Electric May Move Operations to Malaysia's Nusajaya

General Electric May Move Operations to Malaysia's Nusajaya
(Bloomberg) -- General Electric Co., the world's second-biggest company by value, may move some of its operations to a township being developed by UEM Land Sdn. in the southern Malaysian state of Johor.

The company is considering building manufacturing plants there, Chief Executive Officer Jeffrey Immelt told reporters in Kuala Lumpur today.

GE, UEM Land Sign Agreement for Malaysian Project

(Bloomberg) -- General Electric Co., the world's second-biggest company by value, signed an initial agreement with UEM Land Sdn. to develop infrastructure and security in Malaysia's largest property project.

General Electric International Inc. today signed the three- year memorandum of collaboration with UEM Land, a unit of UEM World Bhd., the Malaysian company said in a statement in Kuala Lumpur today.

GE will provide technology to improve safety and security in UEM's Nusajaya property development in the southern Malaysian state of Johor, UEM said. The two companies will work together on environmental projects including water treatment, energy, aviation and transport, UEM said.

``GE needs to go wherever there are opportunities,'' Kamarulzaman Hassan, an analyst at TA Securities Sdn. in Kuala Lumpur, said before the signing. ``Everyone is going global. I don't think they can be tied at home.''

OCBC Malaysia Hopes To Open More Branches In IDR

OCBC Malaysia Hopes To Open More Branches In IDR
Taken from Bernama

OCBC Bank (Malaysia) Bhd hopes to set up more branches within the Iskandar Development Region (IDR) in Johor, its director and chief executive officer Datuk Albert Yeoh said Friday.

He said the bank, which already has six branches in Johor, was confident of the state's rising prospects as an economic force, especially with the establishment of IDR.

"We have always had a strong presence in Johor, having established branches in Johor Baharu, Kluang, Segamat, Muar and Batu Pahat," Yeoh said.

"With the opening of our Taman Molek branch, we are poised to enhance our presence by contributing to the current and future financial needs of both individuals and businesses operating here, " he said.

Yeoh said this during the opening of OCBC's sixth branch in Johor at Taman Molek here.

The Taman Molek branch became the second after Bukit Damansara and the first in Johor to reflect the bank's regional branch transformation initiative aimed at offering customers enhanced levels of service, interaction and convenience.

On the bank's S$150 million regional branch transformation exercise, Yeoh said it involved OCBC's Singapore and Malaysia branches and was scheduled to be completed by the middle of next year.

"The redesign is an important part of OCBC Bank's continuous transformation process and a reflection of its desire to serve customers better and make their visits to the bank as enriching as possible," he said.

OCBC Bank's head of consumer financial services, Charles Sik, who was also present during the opening ceremony, said under the branch transformation initiative, new digital platforms enabled customers to interact freely with the bank without having to join the main queue for conventional counter services.

A LITTLE-KNOWN Malaysian businessman has pledged to take luxury living in Sentosa Cove to new heights with a collection of plush villas on Sandy Isle

A LITTLE-KNOWN Malaysian businessman has pledged to take luxury living in Sentosa Cove to new heights with a collection of plush villas on Sandy Island.

Dr Derek Wong is building 18 homes aimed at ‘ultra-high’ net worth buyers, including foreign celebrities. The homes will range in size from about 6,500 sq ft to 12,000 sq ft, with prices likely to start at around $12 million.

‘It will be an island oasis with a tropical setting,’ said Dr Wong, the managing director of Genesis-Alliance, which won a tender to acquire Sandy Island in March for $89.7 million.

Genesis-Alliance is a joint venture between Malaysian conglomerate YTL Corp and LP Worlds, of which Dr Wong is the major shareholder.

Dr Wong’s residential projects in Malaysia are mainly mass-market ones developed by his firm LP Worlds.

He also owns the master dealership for audio firm Bang & Olufsen in Malaysia and is developing the US$100 million (S$147.5 million) condo The Palazzio in Kuala Lumpur with Malaysian developer Sunway City.

Dr Wong, who owns homes in Singapore, Malaysia and Australia, clearly knows something about style.

The dapper 53-year-old, who has a PhD in business science, has designed some of his own shoes and clothes. He also holds a franchise for the Armani/Casa store at the Raffles Hotel arcade.

It is the first outlet in South-east Asia to sell furniture and home accessories designed by fashion designer Giorgio Armani.

For Sandy Island, Dr Wong has roped in Italian consultant Claudio Silverstrin as lead architect while the landscaping will be done by Australian Jamie Durie, who appears on The Oprah Winfrey Show.

Mr Silverstrin is the designer of Giorgio Armani stores around the world and his name would immediately ring a bell with Armani connoisseurs. As the villa project’s marketing manager, Mr Richard Leen, pointed out: ‘Our villas are aimed at those who have heard of Silverstrin.’

Each villa will be designed to offer plenty of privacy, with mature trees to be transplanted from other parts of Sentosa, and other vegetation lining the entrances and sides of the homes.

Each one will also have a berth for a boat and a pool. The bathrooms and kitchens will be custom-designed by Mr Silverstrin.

There will be a guard post at the Sandy Island entrance in the gated Sentosa Cove.

Unlike traditional homes, the Sandy Island villas, which will be launched early next year, will have a lean main door that opens out to the canal. And residents will be able to drive straight into the basement carpark - a rare feature for bungalows.

‘Nobody has gone through this trouble for a project,’ said Dr Wong.

He noted the timeliness of the project as Singapore’s upcoming integrated resorts have made the country more attractive to foreigners.

YTL and LP Worlds were in partnership to develop Lakefront Collection in Sentosa Cove. Acquired last September, this plot now comes under Genesis-Alliance and will be launched later next year.

Top grade Malaysian properties relatively more affordable

Top grade Malaysian properties relatively more affordable

WHAT? A 500 sq ft apartment priced at RM5mil?

Thankfully, it is still not what you have to pay in Malaysia but is what you have to pay for many properties in tiny Hong Kong.

In land scarce Hong Kong where tall apartments fight for space everywhere, property prices are astronomical even by Hong Kong standards. Yet, people are prepared to invest their hard-earned money to buy a home even if it is a “rabbit hutch”.

This is partly because they are so used to living on the island or in the New Territories and have nowhere to go. Although some have migrated to Australia, Canada and the United States, others choose to find their “pot of gold” in Hong Kong.

A Malaysian woman who has been living in Hong Kong for the past seven or eight years boasted: “I have several properties in Hong Kong including a nice apartment with a good view of the sea. It is one of the top 10 condos in Hong Kong. The 2,400 sq ft unit was priced just below HK$10,000 per square foot (psf) when I bought it several years ago. Today, it is worth about HK$13,000 psf.” (HK$100=RM45.3)

Why doesn't she sell it and buy a few high-end condominiums in Kuala Lumpur instead? Well, the woman who is married to a Hong Kong man, said she is used to her “interesting” lifestyle in Hong Kong but more importantly, she feels safe.

C. C. Pan (right) with guests and buyers at the BRDB exhibition cum first overseas customers' appreciation dinner held at the Mandarin Oriental Hong Kong on Sept 22.
However, in recent years with our property developers building more quality high-end residential properties, foreigners are snapping up local properties.

The main reason is that Malaysian properties are very affordable. Some consider it “dirt-cheap”.

They probably realise that they can buy several five-star condominiums in Malaysia for the price of a three-star condominium in Hong Kong.

According to Colliers International (Hong Kong) latest market review, the average luxury residential price rose 4.3%, quarter to quarter, to HK$10,333 psf as at the end of May 2007.

“With the limited supply situation and sustained market sentiment, the luxury residential price is expected to forge ahead 11% Y-on-Y (year-on-year) in the next 12 months while the luxury residential rental is forecast to grow upward 8% Y-on-Y,” it added.

The writer recently visited their Bel-Air No 8 (eight towers designed by Foster and Partners) and liked the nice designs and massive clubhouse facilities but was shocked by the high prices - HK$10,000 to HK$14,000 psf on the average!

Bel-Air No 8 is part of the US$2bil Cyberport project comprising four modern office buildings, a retail complex and a 173-room international hotel. Since the first launch of Bel-Air in February 2003, over 2,300 of its luxury residences have been sold, generating total revenue of close to US$3.7bil.

The completed Bel-Air at the Peak (by a different architect), looks more like medium cost apartments but their prices are in the millions of Hong Kong dollars.

It's just as expensive elsewhere in Hong Kong.

BRDB's high-end project, The Troika in the KLCC area.
A Branksome Crest penthouse with 7,088 sq ft and 2,800 sq ft roof garden including a private swimming pool is asking for HK300mil! A 3,639 sq ft condominium in the Central area is asking for HK$45mil while a 3,798 sq ft Tregunter Tower 3 unit is asking for HK$60mil!

Indeed, Malaysians are so lucky to be able to buy properties that are a fraction of the price in London, Singapore and Hong Kong.

Malaysian expatriates working in Hong Kong and those who have Hong Kong spouses have also bought some of the local properties.

Hence, it was not surprising to find a steady stream of people, including many Malaysian expatriates working in Hong Kong, visiting the recent Bandar Raya Developments Bhd property exhibition at the Mandarin Oriental Hong Kong. Nine units of The Troika and three units of the One Menerung were sold and more buyers are said to be signing up soon.

The Troika's average selling price is RM4.2mil and in terms of per square foot, is around RM1,800. One Menerung's average price for a 3,300 sq ft unit is RM2.9mil onwards or an average of RM950 psf.

A young couple who wished to be known only as Mr & Mrs Tan (husband is a Malaysian from Penang. He is the managing director of the hedge fund division of a renowned financial institution while his Hong Kong wife is vice-president of a financial institution), said they bought a 2,505 sq ft unit in The Troika at about RM1,000 psf when it was launched.

They were pleased when told that the unit has appreciated in value to RM1,800 psf.

“We bought it because of the BRDB and Foster and Partners names and its excellent location,” said Dr Tan, 36. The couple said they preferred not to buy properties that were “too cheap” and would always go for good quality products at market price.

“We're very happy with the waiving of the RPGT. We hope the stamp duty could be waived as well as we are considering buying another Troika unit,” said Mrs Tan, adding that many Hong Kong people were still unaware of Malaysian properties.

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Middle East Investors Get Started On RM4 Bln IDR City Project

Middle East Investors Get Started On RM4 Bln IDR City Project

The four Middle East companies which announced their intention to invest US$1.2 billion (RM4.1 billion) in the Iskandar Development Region (IDR) recently have appointed an architect and master planner to kick off the project, Datuk Seri Najib Tun Razak said today.

He was told this by the head of Mubadala Development Company, one of the four, in a telephone conversation two days ago, the Deputy Prime Minister said at a breaking of fast at the residence of Johor Menteri Besar Datuk Abdul Ghani Othman here.

Last Aug 29, Mubadala and Millennium International Company, a subsidiary of Saraya Holdings, and Kuwait Finance House (KFH) signed an agreement with the coordinator of IDR's development, South Johor Investment Corporation (SJIC), to invest in the special economic region.

Another Gulf firm, Aldar Properties PJSC, will manage the project, which will be IDR's first integrated international city, identified as Node I. This encompasses more than 892ha in Nusajaya, including the state government's new administrative centre and the Second Link to Singapore.

Mubadala, KFH and Millennium Development head their own consortiums and are collectively investing the US$1.2 billion for land cost and infrastructure work to develop three clusters under lifestyle and leisure, cultural and financial.

This is the largest single investment so far since the IDR was launched by Prime Minister Datuk Seri Abdullah Ahmad Badawi in November last year.

Najib, who is also Deputy Umno President and Defence Minister, welcomed the investment kick-off by the four companies, describing it as very good and positive.

He expressed confidence that IDR, which spans 2,217 sq km and is twice the size of Singapore, will draw even more investments from the Middle East.

He said the creation of the IDR offers a challenge to Umno, and Umno Johor, to ensure that its development is in line with the philosophy and spirit of Umno and the Malays.

Najib described Umno Johor as setting the direction for Umno in the other states and he wanted it continue to maintain this role.

More than 1,500 Umno members, including senior Umno Johor leaders, attended the function, at which there was also a group recital of the Quran.

Najib took part in Tarawih prayers before returning to Kuala Lumpur.

Huge potential for MMC’s RM16b JV

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.

Dubai World factor in IDR

Dubai World factor in IDR

MMC Corp Bhd group chief executive Feizal Ali tells StarBiz about the business proposition behind the RM16bil memorandum of understanding with Dubai World and how the project will create a new petrochemical and maritime industry in Johor

How did this partnership come about and please brief us about the project?

In the course of doing business in the Middle East, we developed relationships with various infrastructure groups, including Dubai World. Being an infrastructure and utilities group, we recognised potential synergies that can be drawn between MMC and Dubai World.

Dubai World’s subsidiary, DP World, is one of the largest global port operators and another subsidiary, Nakheel, has practically transformed Dubai into one of the most vibrant cities in the region, through the creation of unique projects, such as The Palm Islands and The World.

Dubai World also has a very strong track record in the development of logistics parks.

When executives from Dubai World visited South Johor during the last three months, they became aware of the tremendous potential of the Iskandar Development Region (IDR) and South Johor generally. They were very interested in our landbank of 2,255 acres at Tanjung Bin as well as the 500 acres next to the Port of Tanjung Pelepas (PTP), which had been earmarked for industrial development, and we had discussions on the possibility of working together to jointly develop these lands.

Our discussions led to the recent signing of an MoU with Dubai World, and we are now working on developing a maritime centre masterplan for our land, that will comprise oil terminal activities, drydocks, shipyards, conventional cargo handling facilities, logistic parks and real estate development.

We view this project as being in line with the call of Prime Minister Datuk Seri Abdullah Ahmad Badawi and Johor Menteri Besar Datuk Abdul Ghani Othman to develop the South Johor corridor.

This development will create a new petrochemical and maritime industry with an estimated gross development value of RM16bil, which we hope will become the next engine of growth for South Johor and at the same time complement IDR.

What is Dubai World’s role in this project?

We had developed our own masterplan for the development of this land. We recognised, however, that this is a greenfield project and working with a strong strategic partner would enable us to take this project to the next level.

In Dubai World, we found a company with proven project management experience, marketing strength and a global footprint that enable us to reach out to the international market.

Dubai World brings to the table a brand that has been very successful not only in Dubai but also in other parts of the world. We believe our partner brings strength and credibility to this project as well as the requisite expertise and experience to jointly develop this area to a level that is on par with other international endeavours.

From our perspective, the participation of a premier brand such as Dubai World reflects its trust in MMC’s ability to deliver world class projects and also underscores MMC’s position as an emerging global utilities and infrastructure group.

What equity stake will Dubai World take in this project?

We are in the midst of discussing our masterplan in detail with Dubai World. We will come to an agreement on the equity structure of this partnership once this masterplan has been agreed upon by both parties.

What do you think persuaded Dubai World to join MMC in this project?

Dubai World chairman Sultan Ahmed Bin Sulayem has said they see a bright future for this exciting multi-faceted development. He expressed the view that an integrated maritime centre will improve efficiency and Dubai World appeared very keen to capitalise on the opportunities within the region as well as in Malaysia’s vibrant and rapidly growing economy.

What is the timeline for the development?

Work on Tanjung Bin land will begin right after acceptance of the masterplan by both parties next year. We expect the project to be fully developed by 2012.

What is the value of the Tanjung Bin land?

The average offer that we have received, on an “as is where is” basis, is RM20 per sq ft on a 30-year lease. However, we do not wish to completely sell or lease all of the land in one go just to record one-off gains.

Instead, we want to plan this project well and maximise the use of the land by building supporting infrastructure and services to support the entire project, which will also allow us to generate recurring income.

In our initial study, the cost of developing the infrastructure and services required would be about RM2.5bil. This would include an industrial port, three oil jetties and supporting infrastructure. This proposal is, of course, subject to regulatory approvals from the Federal and state governments. Naturally, the value of the land will increase with these supporting facilities in place.

Are there any environmental concerns?

The area earmarked for development is outside the area identified as a wetland sanctuary under RAMSAR.

Expert opinion confirms that the proposed development is balanced and will not damage the RAMSAR site. As part of our corporate social responsibility, we will ensure that the development will not, in any way, compromise the environment.

In developing the masterplan, particular attention will continue to be given to preserve the RAMSAR site. We will have very stringent requirements to ensure that all emissions will be in full compliance with all environmental requirements.

In fact, we are already in dialogue with the Malaysian Nature Society and other NGOs on how we can work together. Our plans will also take into consideration the overall environment including the views of experts, professionals and NGOs to ensure that the goal of a balanced development is achieved. We will also pay serious attention to the wishes of the state government.

A good example of a balanced development is PTP. We built this world-class port while successfully preserving the surrounding environment. PTP works closely with the Fisheries Department on dugong programs to preserve the species.

Together with NGOs such as the SOS committee, PTP is also involved in monitoring the sea grass bed, which is the habitat for seahorses. Our experience shows it is entirely possible to preserve the environment while building a world-class facility and that continues to be our objective as a responsible corporate citizen.

RM80mil sales target for Larkin Residence

RM80mil sales target for Larkin Residence

JOHOR BARU: Niche Properties Sdn Bhd (NPSB) and Kelana Erat Sdn Bhd (KESB) are projecting RM80mil sales from Phase Two of the Larkin Residence project.

NPSB director Phan Chee Shong said response to Phase One of the project, launched in July 2003, was good and he was confident of getting similar response for the second phase.

He said the second phase comprised 320 apartments with 1,180 sq ft floor area and priced from RM208,000 to RM295,000 each.

Phase One comprising 280 apartments was sold out and the certificates of fitness issued early this year.

Phan Chee Seong (left) and Badrudin Mohamad at the show apartment of the second phase of Larkin Residence
“We are targeting foreigners, especially Japanese, Singaporeans and South Koreans, making up 40% of buyers for the second phase,” Phan told StarBiz at the launch last Saturday.

He said more foreigners were expected to work and live in Johor Baru with the development of the Iskandar Development Region.

The residential project is a joint venture development between the Selangor-based NPSB and the Johor-based KESB.

Larkin Residence is a gated low-density development, the first of its kind in Johor whereby all the units are corner units and each five-storey apartment is serviced by a lift.

The project is located on Jalan Datuk Onn Jaafar, about 5km to Johor Baru city centre and the causeway, and close to public amenities.

Phan said buyers of phase one were entirely Malaysian and most were first-time house owners, pensioners, young couples and singles.

“We expect professionals and Malaysians with experience living overseas as our main buyers for Phase Two,” he said.

Work on Phase Two involving apartments in 16 five-storey blocks has already started for completion within two years.

Phan said NPSB and KESB would be launching Phase Three within 18 months and targeting high-end buyers.

Residents of Larkin Residence would enjoy full condominium facilities with the completion of a RM3mil clubhouse recently, Phan said, adding that the companies also emphasised on preserving the greenery by minimising cutting down of trees that had been around for more than 50 years during construction.

KESB director and general manager Badrudin Mohamad said the company was in the midst of talking to several land owners in Johor Baru.

He said KESB and NPSB were looking to start new residential projects in Larkin.Badrudin said land was still available in Larkin, which was the most sought after address in Johor Baru due to its strategic location

Ranhill to benefit from Iskandar

Ranhill to benefit from Iskandar
Taken from the Business Times

TA SECURITIES says diversified Ranhill Bhd is on a stronger footing now due to its ability to recoup cost overrun in its construction jobs in Sudan.

This is, in addition to among others, to the fact that Ranhill’s water division is deemed a main beneficiary in the development of Johor’s Iskandar Development Region.

Moreover, Ranhill’s power division is also another steady recurrent-income source for the company which is expected to undertake more electricity-related jobs in Pakistan and India.

“Although we cannot deny that the energy division excites us, we believe the recent development that enables the construction division to recoup back its cost overrun in Sudan would be a further boost to Ranhill,” TA Securities said in a note.

TA is maintaining its “buy” call on Ranhill shares with a RM3.55 target price.

Ranhill shares gained 5 sen or 2 per cent to close at RM3.00 yesterday, valuing the company at RM1.79 billion. The stock has more than doubled (138 per cent) this year.

Dubai World bullish on US$5bil deal with MMC

Dubai World bullish on US$5bil deal with MMC

DUBAI: Dubai World chairman Sultan Ahmed Bin Sulayem said the company was “extremely optimistic” about the US$5bil maritime centre to be jointly developed with MMC Corp Bhd in Johor.

“Our combined experience and global network will enable us to deliver a project that will benefit maritime industry players and complement the Malaysian Government’s Iskandar Development Region initiative,” he said in a statement.

“We are also keen to enhance the port infrastructure in the area. Our subsidiary, DP World, is one of the largest global port operators and we also have a strong record in the development of logistics parks.”

The statement said the memorandum of understanding was signed in Dubai on Sept 24 to develop a maritime centre masterplan for areas in south Johor, including MMC’s 2,255-acre landbank in Tanjung Bin.

On its partnership with MMC, Sultan Ahmed said: “We have a strong partner in MMC, which is a key infrastructure player in Malaysia, especially in south Johor, through its ownership of two ports and 3,000-acre landbank in that strategic area.

“There are tremendous synergies between Dubai World and MMC and we look forward to working closely with MMC and jointly develop the project on a fast-track basis that will be on par with other world-class developments.”

Dubai World is a Dubai government-decree entity that has been the growth engine for the United Arab Emirates with over 50,000 employees and offerings in more than 100 locations.

Johor State Government Expands ICT Projects With Cisco and MysysNet

The Johor State Government today announced the launch of Johor Electronic Government Phase 2 (JEG2), which is designed to improve government efficiency, establish closer links with the people of Johor, and pave the way to sustainable economic growth through the use of information and communications technology (ICT). This ICT foundation was first put in place in April 2004 in the form of the RM20 million (US$6 million) Johor Electronic Government Phase 1 (JEG1) which connected 200 state government agencies over a network from Cisco® (NASDAQ: CSCO). This project was initiated and successfully implemented by MysysNet, a leading ICT systems integrator in Johor.

Building on the successful implementation of JEG1, the Johor State Government today signified the start of JEG2 with an initiative to connect the first five buildings in the Johor State New Administrative Centre (JSNAC) in Nusajaya, over a next-generation network from Cisco. Nusajaya is the Iskandar Development Region (IDR)'s key flagship economic zone.

The network deployment is part of the RM40 million (US$12 million) contract awarded by the Johor State Government to MysysNet, under JEG2. The network will include routers, switches, integrated network security and data center solution. The five buildings in the JSNAC are expected to be completed and operational by January 2008, with 14 more buildings scheduled to be built over the next few years.

"One of the goals of this project is to achieve better collaboration and consolidate processes between the state and federal governments, providing convenience for the people in Johor," said MysysNet managing director, Md. Sees Md. Ali. "This project is very strategic and we believe that MysysNet, together with Cisco Malaysia, can make a difference to the lives of the people of Johor."

"This project is a significant milestone for Cisco Malaysia as it demonstrates that the network is essential for all communications and that ICT is the platform for organizations to meet their goals. We are honoured to have this unique opportunity to be part of the very exciting developments taking place in Johor. Networking technologies are being used by individuals, businesses and governments around the world to create economic growth and we are glad to see this happening in Malaysia on such a large scale. The Johor State Government will be a benchmark for other state governments in the country," said Kumaran Singaram, managing director for Cisco Malaysia.

Md. Sees added that Cisco was selected as its partner for the JEG project because it was the only technology provider that had the breadth and depth of technologies, solutions, local expertise and experience to meet the goals of the Johor State Government to improve productivity through more effective communications and collaboration.

About MysysNet

MysysNet provides comprehensive technical solutions for the Internet World Wide Web, selling server, personal computers, and networking equipment. The company specialises in developing web-enabled mission critical business application, e-commerce capabilities, and database connectivity. MysysNet's services range from developing industrial strength websites to providing turnkey Internet solutions. The company's technical staff specialises in providing both custom clients and server side applications to push the limit and capabilities of the World Wide Web.

About Cisco

Cisco (NASDAQ: CSCO) is the worldwide leader in networking that transforms how people connect, communicate and collaborate. Information about Cisco can be found at For ongoing news, please go to Cisco products are supplied in Malaysia by Cisco Systems International, BV.

Cisco, the Cisco logo, and Cisco Systems are registered trademarks or trademarks of Cisco Systems, Inc. and/or its affiliates in the United States and certain other countries. All other trademarks mentioned in this document are the property of their respective owners. The use of the word partner does not imply a partnership relationship between Cisco and any other company. This document is Cisco Public Information.

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SP Setia inks RM190m deal with M’sian government

SP Setia inks RM190m deal with M’sian government

PETALING JAYA: SP Setia Bhd has inked a RM190.43 million deal with the government for the construction of the new Ministry of Home Affairs complex and quarters in Johor.

In a statement yesterday, SP Setia said the complex, proposed to be constructed within the central business district of its Setia Tropika Township, was expected to increase the value of the remaining undeveloped landbank within the 239ha township.

It said the project would also stimulate and accelerate the development timeline of the commercial hub.

It added that the contract was in line with its commitment to enhance the amenities and facilities of all its townships.

“The board envisages that the presence of the complex will significantly boost the vitality and traffic flow into the CBD, and is set to fast-track the development of the township located in the heart of the Iskandar Development Region,” SP Setia said.

Construction work for the complex is scheduled to be completed by Aug 5, 2010, it added.

Malaysia Offers More Incentives to Increase Investment in Johor

Malaysia Offers More Incentives to Increase Investment in Johor
Taken from Bloomberg

Malaysia will extend tax breaks and other incentives in Johor to developers in the so-called Iskandar Regional Development to attract 40 billion ringgit ($11.8 billion) in five years to develop the area.

Developers in the Iskandar region will be exempt from paying income tax until 2015 on earnings from land sales and until 2020 on income from the rental or sale of buildings, the Iskandar Regional Development Authority said in a release today.

``Since private investments will be the main catalyst of growth, there is a need to offer investors attractive fiscal and non-fiscal incentives,'' Prime Minister Abdullah Ahmad Badawi told reporters today in Putrajaya, outside Kuala Lumpur.

Abdullah is wooing foreign money with easier investment rules and tax breaks, aiming to attract 382 billion ringgit in two decades to redevelop Johor, 2 1/2 times the size of bordering Singapore, and turn the southern state into a global destination for business and leisure.

The government said in March some overseas companies setting up in Johor's so-called Iskandar Development Region won't need to comply with a rule requiring foreign-owned companies to have at least 30 percent ethnic Malay ownership. Those investments will also be exempt from income tax for 10 years.

IRDA Announces Qualifying Activities For Six Targeted Sectors

IRDA Announces Qualifying Activities For Six Targeted Sectors
Taken from Bernama

PUTRAJAYA,(Bernama) -- The Iskandar Regional Development Authority (IRDA) today announced the `qualifying activities' in the six targeted sectors that are eligible for its Incentive and Support Package for Iskandar Development Region (IDR).

In a statement here today, IRDA said for creative and related services sector, the qualifying activities included creative and design services, creative talent management services, film and television, games and animation and online and mobile content generation and advertising.

"Others include online and mobile content aggregation and enablers, creative research and development, distribution and marketing of creative content, integrated media and content services, and visual and performing arts," it said.

Under the educational services sector, the qualifying activities involved universities, colleges, skills training institutions, research and development (R&D) institutions and regional-based training centres.

For financial advisory and consulting services sector, the activities eligible are Islamic financial services, business process outsourcing/offshoring, corporate consultancy and advisory services.

For healthcare and related services sector, the activities covered hospitals and alternative medicine centres, integrated dental and orthodontic services, healthcare R&D and integrated laboratory services.

The qualifying activities under logistics services sector are integrated supply chain services and high value supply chain services and solutions.

The tourism sector activities cover hotels, theme parks, amusement and family entertainment centres and cultural centres, conference centres and exhibition centres, and regional operation of hotel and leisure services.

IRDA said the list of qualifying activities, however, was not exhaustive and may be reviewed and revised from time to time.

Malaysians Are Welcomed To Invest In IDR, Says Abdullah

Locals Are Welcomed To Invest In IDR, Says Abdullah
Taken from Bernama

PUTRAJAYA, Oct 9 (Bernama) -- The Iskandar Development Region (IDR) is not meant only for the foreigners, and local investors should take the opportunity to invest in the development region, Prime Minister Datuk Seri Abdullah Ahmad Badawi said today.

"This corridor is (also) for local investors. They should also participate. We also accept proposals from local investors," he told reporters after chairing a meeting on the progress of the IDR, the development project mooted by the government in the southern region of Peninsular Malaysia.

Abdullah, who is chairman of the Iskandar Development Region Authority (IDRA), said this in response to a question if locals were welcome to invest in the region.

"We welcome local investors. There are questions being asked that we are not keen on welcoming local investors for IDR.

"This is not true. We want them to come. We have raised this matter specifically at our meeting just now."

The prime minister also said that there had been reports of local investors saying that the government was exclusively targetting foreign investors.

The government's investment arm, Khazanah Nasional Bhd, is spearheading the development in the region, and the IDRA was established to ensure the success of the project.

The IDR covers a 2,217-sq km area in southern Johor and is expected to be not only a regional but global hub for the services sector namely the creative, educational, healthcare, financial, tourism and logistics industries.

When asked whether there had been any proposals from the local investors to invest in IDR, he said: "Not specifically..., but some local investors felt that we are (only) luring foreign investors.

"This is not what it is. We are not just concentrating on foreign investors, we need local investors too," he explained.

Abdullah said the government expected the entire IDR project to come to RM40 billion.

He said the government would be coming up with RM4.2 billion and the rest will be from investments.

The government hopes to get many investors, he said, adding that many parties had shown interest to develop the Node 1 or phase one of the IDR.

Abdullah said that a number of investors had also started discussions on the investments.

IDRA would also continue to promote IDR to attract more investors, he added.

Malaysia Government extends IDR incentives for qualifying activities

Govt extends IDR incentives for qualifying activities

PUTRAJAYA: The government yesterday announced qualifying activities that will enjoy additional incentives accorded by the Iskandar Region Development Authority (IRDA) that were earlier provided for investments in six targeted service sectors.

Under the incentive and support package (ISP) unveiled by Prime Minister Datuk Seri Abdullah Ahmad Badawi yesterday, several fiscal and non-fiscal incentives packaged by IRDA were extended to include approved developers and approved development managers, on top of those granted to IDR-status companies and foreign knowledge workers originally last March.

Initially, the six areas in the services sector comprising creative, education, financial advisory and consulting, healthcare, logistics and tourism were identified as the key economic drivers in the IDR when the corridor was first launched but the scope of activities has been widened.

The ISP is now extended to qualifying activities including film and television production, online and mobile content generation and advertising, creative research and development under the creative services; universities, colleges and skills training centres under educational services; and hotels, theme parks and conference centres for tourism services.

Qualifying activities in the financial advisory and consulting services include Islamic financial services, business process outsourcing, and corporate consultancy and advisory services; hospitals, healthcare research and development, and integrated laboratory services under healthcare while activities like integrated supply chain services and solutions in logistics would also enjoy the ISP.

IRDA officials said the list was not exhaustive and would be reviewed periodically.

The latest ISP also includes a 10-year income tax exemption for certain qualifying activities.

Speaking to reporters yesterday, Abdullah said the government also wanted greater local investor participation in the activities at the IDR as the corridor was not exclusive to foreign investors.

“We welcome local investors. There is a question that’s being asked that we are not keen on welcoming local investors for IDR. This is not true.

“We raised this matter at our meeting as there was a report that local investors were questioning whether they were exclusively targeting foreign investors.

“The answer is no. Local investors are also welcome,” he said.

Abdullah said local investors with activities in the six areas would qualify for and enjoy the benefits of the ISP, similar to foreign investors.

He said the government was targeting RM40 billion in total investments for Node 1 of the IDR, of which RM4 billion would come from the government.

Asked if the investments for IDR were on track as planned, Abdullah said: “We want to get as many as possible. Datuk Azman Mokhtar (of Khazanah Nasional Bhd) has already indicated to me the number of investors with whom he has already started discussions with on very specific investments that they would like to undertake.”

He said certain investors would receive customised incentive packages, adding that it was possible to address specific needs.

Abdullah, who is also chairman of the IRDA, said: “Since private investments will be the main catalyst of growth, there is a need to offer investors attractive fiscal and non-fiscal incentives like the ones being announced by the IRDA yesterday.”

He said the ISP had been designed to set in motion catalyst developments as well as encourage early investments in the region, and reinforced the government’s commitment to making the region a global success.

The IDR has started attracting investments, including a US$1.2 billion (RM4.08 billion) investment in land and infrastructure by three consortiums led by Mubadala Development Company, Kuwait Finance House and Millenium Development International Company.

General Electric Co has also entered into an arrangement with UEM Land Sdn Bhd to design a safety and security blueprint for the whole of Nusajaya, located in the IDR.

Malaysia Bares Investment Incentives For Iskandar Development Region Investors

Malaysia Bares Investment Incentives For Iskandar Development Region Investors
Taken from AHN

23 Oct 07

Vittorio Hernandez - AHN News Writer

Putrajaya, Malaysia (AHN) - Four major fiscal and non-fiscal incentives await local and foreign investors pouring money in Malaysia's Iskandar Development Region. Formerly known as South Johor, the IDR seeks to attract 40 billion ringgit ($11.8 billion) in investments over the next five years.

Malaysia Prime Minister Abdullah Ahmad Badawi, after chairing on Tuesday the IRD Authority board meeting and advisory council meeting in Malaysia's administrative capital, bared the four-point incentive, emphasizing local investors are welcome.

"It is not true we are not keen on local investors. The corridor is not only for foreign investors....we hope they (local investors) will participate in the development plan of the IDR," The Star quoted the prime minister.

Among the incentives for IDR investors are income tax exemption until 2015, tax exemption until 2020 on earnings from rental or sale of buildings, tax exemption on payments to non-residents for services, interest and royalties until 2015 and tax exemption for management, supervisory and marketing services until 2020.

The IDR - projected to become the new growth engine for Malaysia - so far has attracted only a tenth of the needed money to fully develop the 2,217 square kilometer area. Iskandar Development Region, officially launched in November 4, 2006, covers a triangular area bound by the Senai Airport on the north, the Port of Tanjung Pelepas on the southwest and the Johor Port in Pasir Gudang on the southeast.

MGO for Tradewinds group not attractive, say research firms

MGO for Tradewinds group not attractive, say research firms

KUALA LUMPUR: Shareholders of Tradewinds Corporation Bhd and its two listed subsidiaries have been urged to reject the mandatory general offer (MGO) made by its major shareholder Perspective Lane (M) Sdn Bhd as the offers were not attractive, according to research houses.

The two subsidiaries are Tradewinds Plantation Bhd (TWP) and Tradewinds (M) Bhd (TWP). Perspective Lane is making an offer for Tradewinds Corp shares and ICULs at RM1.36 each, TWP shares and ICULS at RM2.73 and RM1.71 a unit respectively, and TWM at RM3.80 a share.

Aseambankers Malaysia Equity Research said that it did not believe the offer prices for TWP was a good reflection of its fair values and that the amount of cash required to privatise the entire group by Tan Sri Syed Mokhtar Al-Bukhary the owner of Perspective Lane could prove too burdensome for now.

It believed the offer price should be higher as the RM2.73 offer price was a slight discount over its current price of RM2.74 while the ICULS offer price of RM1.71 represented a 5.6% premium over its latest market price.

We believe that the offer price could have been higher as Tradewinds Plantation is presently undergoing major internal restructuring which should lead to a strong turnaround in terms of performance over the next 12 months supported by high crude palm oil prices of more than RM2,400 per metric tonne,¡¨ said the research house, adding that it reiterate its trading buy call on TWP at RM2.74 with a target price of RM4.40.

The research house believed that the MGO was merely a formality¡¨, and was not the intention of Syed Mokhtar to privatise the group at this point, as the offer was priced near its recent share price.

Kenanga Research, in its report, called on TWM shareholders not to accept the offer as it is lower than its net tangible assets of RM3.90 per share and real net asset value of RM4.98 each. Tradewinds shareholder, it said, should also not accept the offer of RM1.36 a share.

However, the research house advised TWP shareholders to accept the offer for the shares as the deep discount to its peers, which are trading in the 15-20 times price earning ratio (PER) band, was justified due to its high crude palm oil cost.

Kenanga also advised investors not to accept the RM1.71 offer price for TWP ICULS as it implied an extremely cheap FY08E PER of only 7 times and there was no cash payment required to convert the ICULS into ordinary shares.

Besides the MGO, Tradewinds Corp also announced yesterday its proposal to divest its 53.02% stake in TWP at RM3.80 a share to shareholders to reposition itself as a significant property player in the Iskandar Development Region in Johor.

It also planned to acquire three companies which own about 367.1ha piece of land in Nusajaya, Johor for RM145 million. The company will undertake a m ed development project with a gross development value of RM2.1 billion.

Quality of life in Johor improves

Quality of life in Johor improves
Taken from The Star

16 Oct 07


JOHOR BARU: The quality of life in Johor has shown signs of stability and improvement in the last five years, according to Mentri Besar Datuk Abdul Ghani Othman.

He said that since 2002, the quality of life composite index had risen from 0.65 to 0.69 points in 2006.

Among the indicating factors used to monitor quality of life in the state included economic, social, community, physical and environmental development.

"For instance, the three indicators chosen for the economic development component is the poverty rate, average household income and the inflation rate," said Abdul Ghani.

He also said that the social components covered areas like education, health, safety and housing.

That included indicators such as the student to teacher ratio in primary and secondary schools and population ratio to the rate of every criminal act, road accident, and fire.

"If economic development is given a greater emphasis of about 40%, then the quality of life index rises even higher from 0.67 in 2002 to 0.73 in 2006," he said.

He said that the figures were based on the state Economic/Social Report as well as the state Quality of Life Index 2006 reports published by the state government through the Economic Planning Unit.

Goodies for IDR But do they meet expectations?

Goodies for IDR But do they meet expectations?
Taken From The Star

16 Oct 07


WE'VE waited with bated breath for months now for the government to unveil the slew of incentive packages that would propel investors to clamour to invest their money in the Iskandar Development Region or IDR.

Yet, last week's unveiling of the goodies was perceived to be a little bit of a downer (as per most instances when expectations run high) and more so, for those whose forte isn't property development.

Truth is, the emphasis on the IDR is still very much on the hardware or the area's physical infrastructure. But what about the incentives to woo the types of companies the government would like to attract to the area?

Understandably, and given the scale of the mammoth project, there exists pessimism about the ambitious nature of the plan that aims to create a new metropolis in South Johor to rival the likes of Hong Kong and Singapore. It is no doubt, a plan that requires much foresight as it involves an interminable length of time, and lots of money, to come to fruition.

Some even opine that IDR should widen the net on its current focus on the services sector. The sub-sectors that are being emphasised include: tourism; healthcare; creative industries; education; financial advisory and consulting; and logistics.

The argument is that it is the manufacturing sector that will drive interest in IDR and help create the critical mass in terms of population and industries that are required to scale up the higher-value add sectors.

There is also a persistent concern over Malaysia's thirst for mega projects, hence the worry that the IDR may turn out to be a white elephant.

The region's success does not hinge on the world-class infrastructure that has been planned for the new metropolis. Rather, its success would depend solely on the IDR's ability to attract the critical mass that is essential for the area, encompassing 2,217 sq km, to generate lasting economic value.

This can prove to be challenging considering the fact that most of the foreign direct investments we are targeting have taken flight to Shenzen, Hangchou, Mumbai, Bangalore and more recently Vietnam.

Also, it was assumed that the first batch of incentive packages to be announced would have focused more on attracting the types of projects the Government would like to see set up in the area, rather than just more boosters in the form of income tax exemptions for property developers. For example, there were no sweeteners to attract companies to play a part in the aspirations to turn the area into a hub of core activities such as bio-tech, education and medicine.

The success rates of Cyberjaya, E-Village and BioValley should be enough to teach us that the hardware aspects do not generate economic activity.

Cyberjaya was meant to serve as a special economic zone dedicated to hi-tech-related activities, while BioValley and E-Village were dedicated to biotechnology and multimedia content creation, respectively.

Millions of ringgit have been invested in the construction and property development aspects of these projects. Yet, the fate of these projects today has everything to do with the lack of properly thought-out strategies for the actual projects that were initially envisioned for these areas.

It has been argued that it is important for the private sector to take the lead in ensuring the IDR's success. The government's role is more about setting a platform for private sector initiatives.

It's true that groups of Middle East investors have shown a keen interest in the project and recently committed to invest huge sums of money in parts of the mammoth project. This is surely an endorsement by foreign investors in the IDR.

But it's worth remembering that Mid-East investors are flush with liquidity and the avenues for investing their funds are limited.

But where there is gold, people will come.

The IDR has an even chance of success because, whatever the naysayers may say, the idea behind the region is certainly workable.

Moreover, it's heartening that these initiatives are being planned for areas in the country that are under-developed and under-populated.

Still, what people want to see is a series of milestones or real investments over and above those related to infrastructure.

More thought needs to be put into how the region should be marketed and what really are the kinds of incentives that will draw the right kinds of investors to South Johor in droves.

After all, isn't the masterplan all about creating a conducive money-making environment for investments to thrive?

Dominant to maintain 15% annual growth

Dominant to maintain 15% annual growth
Taken from The Star

16 Oct 07


PETALING JAYA: Dominant Enterprise Bhd is confident of maintaining its revenue growth at some 15% yearly, backed by its foray into Vietnam, local expansion plans and an increase in customer traction.

Executive director Danny Owee said in the past five years since its listing on the Bursa Malaysia second board, the company had been registering about 15% growth in revenue annually.

For financial years (FY) ending March 31 and beyond, we are looking to sustain this ¡V an annual growth of about 15% to 20% on the back of our expansion plans, he told StarBiz.

The company, which transferred to the main board in October 2005, would spend close to RM15mil over the next year to set up a plant in Vietnam and another in Skudai.

We will also be relocating our head office to that area (Skudai).

Johor-based Dominant has 10 subsidiaries which are involved in among others, the manufacturing of environmental-friendly engineered wood mouldings and laminated wood panel products.

It is also involved in the distribution and export of wood-based products globally.

The Vietnam and Skudai factories, expected to begin operations by 2009 and 2010 respectively, are expected to boost the company¡ s production capacity by at least 60%.

Currently running at about 80% production capacity, its three local factories produce about 5,400 cu m of wood products monthly.

We have existing customers in Vietnam, many of which are local furniture companies that have relocated there, so it is easier for us to penetrate the market and move fast, Owee said.

He said Dominant had a representative office in Vietnam for the past two years. We think that it is time to go full-scale in the market which is experiencing a boom in its property and construction sectors, he said.

Overseas earnings were expected to contribute about 20% to total revenue by FY09 and more beyond that, compared with 15% now.

Dominant also has five warehouses in Australia and representative offices in China and Singapore.

To diversify its earnings, Dominant had in 2005 purchased an 8ha site that now sits in the Iskandar Development Region.

Owee said 2ha would be used for its factory and the balance developed into industrial properties that would be leased for rental income.

For its FY07, it posted a net profit of RM13.4mil on revenue of RM275.2mil against a net profit of RM6.6mil on RM223.9mil sales in FY06.

Malaysians Remain Bullish On Investment Outlook

Malaysians Remain Bullish On Investment Outlook
Taken from Bernama

17 Oct 07

Despite fears that the U.S subprime crisis will spread to wider global economy, 60 percent of Malaysians have a positive investment outlook and investor sentiment remains robust in most Asian countries, according to a study by ING Asia Pacific.

The ING Investor Sentiment Tracking Study which surveyed 13 markets across Asia with a total 1,308 mass affluent respondents, showed investors in the two `hottest' Asian economies - China and India - are the most bullish, with over 70 percent respondents there believing the economic situation in their home country will improve in the next three months.

Malaysia followed closely behind at 60 percent, with a majority of Malaysians believing government policies will favour investment growth, making them the second most confident in their government market in the region, after India.

"Malaysian investors are very optimistic in their investment outlook which can be partly explained by an expectation of Gross Domestic Product (GDP) growth of more than five percent for 2007.

"The government's development plans, including the five-year Ninth Malaysia Plan and the Iskandar Development Region, could also be contributing factors to the high level of investor confidence," said ING Funds chief executive officer Steve Ong in a statement, here Tuesday.

Research firm TNS conducted the study in July and August this year through online and face-to-face interviews with investors in Malaysia, Australia, China, Hong Kong, India, Indonesia, Japan, Korea, New Zealand, the Philippines, Singapore, Taiwan and Thailand.

While local stocks emerged as the most popular choice of investment in Asia as chosen by more than half of the countries surveyed, the study revealed that 81 percent of Malaysian investors chose cash/deposits as their most preferred investment tools.

The study also revealed that Malaysians generally invest more for wealth accumulation (41 percent), followed by retirement (23 percent), capital preservation (19 percent) and education (16 percent).

Japanese investors were found the least optimistic amongst the 13 markets, with only 26 percent respondents believing their economic will improve in the next three months, which may be reflecting the country's political changes.

Daiman lines up more launches in Kota Tinggi

Daiman lines up more launches in Kota Tinggi
Taken from The Star

18 Oct 07

Story By : Yeow Pooi Ling

PETALING JAYA: Daiman Development Bhd plans to launch 60 more shophouses and 120 single-storey houses in Kota Tinggi by the financial year ending June 30, 2008 (FY08).

In an e-mail reply to StarBiz, the company said that 43 double-storey homes were launched in Kota Tinggi earlier this year.

The developer posted stronger results for its fourth quarter ended June 30 with net profit improving to RM29.8mil compared with a loss of RM2.2mil in the previous corresponding period. Sales in the fourth quarter rose to RM44.4mil from RM25.4mil previously.

The firm attributed the improvement to new property sales and clearance of existing completed units.

Daiman has some 35 years' experience in the property sector in Johor. It also had a strong balance sheet with net cash of some RM190mil at the end of FY07.

With its financial strength, it was seeking opportunities to enlarge its land-bank in Johor Baru as well as venture into the Klang Valley, Daiman said, adding that it was also on the lookout for overseas investments.

Its two flagship projects, Taman Gaya and Taman Daiman Jaya, and its industrial park, Taman Perindustrian Murni Senai, were anticipated to benefit from the multiplier effect from the Iskandar Development Region and the development of Singapore's two integrated resorts, the company added.

SJ Securities in a CMDF report has an ¡§overweight¡¨ call on the stock with a target price of RM2.26. It expects the Government's commitment to the development of south Johor to bode well for Daiman.

Abdul Ghani Confident More Investments Will Pour Into IDR

Abdul Ghani Confident More Investments Will Pour Into IDR
Taken from Bernama

18 Oct 07

Story By : Mohd Haikal Mohd Isa

JOHOR BAHARU, Oct 17 (Bernama) -- After successfully attracting investments of RM4.1 billion from four companies from the Gulf States in August, efforts are being continued by the Iskandar Regional Development Authority (IRDA) to attract more investors into the area.

Menteri Besar Johor Datuk Abdul Ghani Othman said the investment move by the four companies was proof of Iskandar Development Region's attraction as a major investment destination for multinational companies.

Abdul Ghani, who is co-chairman of the IDRA, the body entrusted with the development of the region, also expressed confidence that several ongoing negotiations with foreign investors will bring about more investors to the region.

Prime Minister Datuk Seri Abdullah Ahmad Badawi is the chairman of the IDRA.

"Negotiations are being carried out with several parties from Europe, US and Middle East on the possible investments in IDR. We would have to wait until end of this year or early next year for the conclusions.

"We are upbeat about the negotiations judging from the interest shown," Abdul Ghani nevertheless told Bernama in a recent interview.

On the investment amount being negotiated, he said it was significant and would complete the initial investment for IDR.

In August this year, Mubadala, Millennium International Company, a subsidiary company of Saraya Holdings, and Kuwait Finance House (KFH), all companies from the Gulf States signed an agreement with the coordinator of IDR, South Johor Investment Corporation Bhd (SJIC) to invest in the special economic development zone.

Another company from the Gulf States, Aldar Properties PJSC, will meanwhile manage the development of the IDR's first intergrated international city to be known as Node I.

Node 1 will encompass an area covering more than 892 hectares in Nusajaya.

Mubadala, KFH and Millennium, each representing their respective consortiums, have collectively invested more than US$1.2 billion on land and infrastructure for three development clusters covering a financial centre, lifestyle and entertainment zone and cultural zone in Node I.

The total of RM4.1 billion investment from the four Gulf State companies is the biggest single investment received by the IDR since it was launched in November last year. Of the invested amount, part would go for the development of infrastructure and another part to land acquisitions.

On September 24, MMC Corporation Bhd (MMC) meanwhile announced that it has signed a memorandum of understanding with Dubai World to explore the possibility of jointly developing the maritime centre.

The estimated cost for the project is RM16 bilion, which will include the petroleum zone and maritime industrial zone expected to cost RM9 billion while investments in the logistics, dry wharfs, and relevant real estate development will cost RM7 billion.

Abdul Ghani said among the incentives and support accorded to the areas to be developed include flexibility in tax for 10 years, flexibility in the conditions for equity ownership and foreign skilled workers.

He said all development plans under the investment are expected to be implemented in the next five years.

"We expect to see a diversity of investments in the various services sectors including hotels, restaurants, financial or logistics.

On Mubadala's investment in the IDR, Abdul Ghani said the company had wide experience in development projects in West Asia and Europe with its investment in the IDR being its only investment in South East Asia.

Mubadala, which is owned by the Abu Dhabi government, is involvd in various development projects in Abu Dhabi, the capital of United Arab Emirates (UAE).

When visiting Johor earlier this month, Deputy Prime MInister Datuk Seri Najib Tun Razak said the chief of Mubadala had informed him that the company had already selected an architect and chief planner to start off its project in the IDR.

Market Indications In the first half of 2007

Kuala Lumpur Condominium Market

Market Indications
In the first half of 2007, the high-end condominium market experienced a significant improvement in the number of units sold. Greater take-up was noted following the relaxation of rules for foreigners to purchase residential property as well as obtain end financing since the end of 2006 and the waiver of real property gains tax commencing 1st April 2007.

Increasing demand from foreign purchasers was noted for high-end condominiums, especially in the KLCC area. The renewed interest from both locals and foreigners has led to upward price revisions by developers of 25% for high-end condominiums since the second half of 2006.

Supply & Demand
The first half of 2007 saw encouraging take-up for high-end condominiums, an en bloc transaction and a full sales rate achieved for a few projects in Kuala Lumpur. Local high net-worth and foreign property investors remained the main sources of demand with the latter in the lead.

A few notable projects in the KLCC vicinity have reported a full sales rate in the first half of the year, including Pavilion Residences, Hampshire Residences and 2 Hampshire. This is due to improved confidence in the market caused by positive changes in policies by the government.

In Bangsar, Bangsar Suria an older condominium development was sold to Kuala Lumpur City Corporation Bhd (KLCCB) for RM34.5 million. KLCCB, which owns Sucasa Serviced Apartments, plans to turn Bangsar Suria into serviced apartments for business travellers and expatriate communities in Bangsar.

Icon KL, the proposed luxury condominium project in Kuala Lumpur City by Mezzon Development Sdn Bhd that was initially planned to be launched to the public, has instead been sold to E&O Property Development Sdn Bhd. E&O plans to redesign and launch the development later.

Notable launches in the city in the first half of 2007 include Ampersand@Kia Peng near KLCC and Iringan Hijau in Ampang Hilir, competitively priced at RM720 per sq ft to RM920 per sq ft and RM800 to RM900 per sq ft respectively.

No new launches were noted in the Bangsar locality but there were three launches in the Mont’ Kiara area. An encouraging response for Lumina Kiara was noted with the mixed residential development reported to have achieved a 52% sales rate after its pre-launch in April.

Matahari Desa Sri Hartamas, a high-end condominium in Desa Sri Hartamas launched in April has sold approximately 63 units within two months despite its higher price tag at about RM700 to RM800 per sq ft.

The second half of 2007 is expected to be exciting with an anticipated 14 new launches. Apart from that, the second half will see the completion of Marc Residences, Binjai Residency, CapSquare Residences, 2 Hampshire, The Binjai, Madge Residences, The Madge and Seri Hening Residence which will add another 1,303 units to the total supply of high-end condominiums in the city centre.

Ampang Hilir will see a new high-end condominium project entering the market this coming July known as Seri Hening Residence. This is the first project by Great Eastern Life Assurance (Malaysia) Bhd which is being completed and made available solely for leasing. With typical built-ups ranging from 1,860 sq ft to 3,400 sq ft, the rental rate starts from RM8,500 per month.

Damansara Heights will soon see two new high-end condominium/ serviced apartment projects offering a total supply of 426 units, namely Clearwater Residences and a serviced apartment project by Panareno Sdn Bhd, a company formed by Lion Group, AIG and Singapore developers Heeton and Koh Brothers. Tight inventory levels in Damansara Heights are expected to help encourage sales of upcoming projects.

Sunway Palazzio, an upmarket condominium development located in the boundary of Sri Hartamas and Damansara Heights was well received during its launch in Singapore at a new benchmark pricing of RM840 per sq ft. Mont’ Kiara will soon see the launch of MK 11 and Seni Mont’ Kiara, with a total supply of 924 units. Both projects are expected to follow the higher pricing levels in Mont’ Kiara, at more than RM600 per sq ft.

Prices & Rentals
During the review period, prices and rentals for existing condominiums were stable despite the rising price levels of new launches. The average gross yields range between 6.5% and 7.5% for high-end condominiums in Kuala Lumpur with downward pressure prevailing.

The limited existing supply in Damansara Heights and Kenny Hills has pushed the capital values of existing condominiums in these areas to a higher rate of around RM500 to RM700 per sq ft.

The recent amendments to the Foreign Investment Guidelines and the seemingly low pricing of Kuala Lumpur condominiums compared to its neighbour Singapore have enticed more foreign investors to this market segment.

The completion of 1,303 units in the second half of 2007 will see competition to lure tenants, especially expatriates. This will ease rental levels and drive yields downwards. Prices of existing condominiums will move up in tandem with the increased prices of new launches.

New launches of condominiums are expected to receive favourable response from both foreigners and local investors.

Kuala Lumpur Office Market

Market Indications
Kuala Lumpur office market is robust, experiencing increasing demand for prime offices with the expansion of the services sector particularly in oil & gas, information technology and financial services.

With the market poised to improve in terms of rents and capital values, investment in this sector is strong with funds from countries such as Singapore, Australia and Hong Kong looking to invest in prime offices while some are even participating in office developments around Kuala Lumpur City through partnership with local developers.

The newly launched office projects in prime locations with green technologies for energy saving and modern architecture are raising industry standards to meet international expectations.

Supply & Demand
Total supply of office space in Kuala Lumpur City stands at 39 million sq ft with no major new offices completed in the first half of 2007. In the Central Business District, CapSquare’s signature offices are waiting to receive their Certificate of Fitness for Occupation. The signature offices comprise four blocks of low–rise offices totalling over 150,000 sq ft of net space.

Continued demand for offices in Decentralised KL has encouraged an increase in supply of nearly 10% to about 10 million sq ft in the first half of 2007. New supply includes 1 Sentral Tower (350,000 sq ft) in KL Sentral, UOA Pantai, Off Jalan Pantai (160,000 sq ft), Centrepoint-South Tower (230,000 sq ft) in Mid Valley City and Menara TSH (125,000 sq ft) in Damansara Heights.

Growing interest in office space from local and multinational firms in Decentralised KL will add to the growth of these areas, further supported by better accessibility with SPRINT and the LDP Highway connecting Petaling Jaya to Kuala Lumpur.

The second half of the year will see more new offices entering the market in Decentralised KL such as Plaza Cygal in Pantai (Tower 2), Centrepoint-North Tower in Mid Valley City, UOA Damansara 2 in Damansara Heights and Menara UAC in Damansara Perdana. In Kuala Lumpur City, Lot 170 along Jalan Perak, a prime A office building is anticipated to be completed.

Projects to commence construction this year include Glomac Tower and Menara Waqaf both within the vicinity of the KLCC and an unnamed office development project along Jalan Dungun in Damansara Heights. Island & Peninsular Bhd (I&P) plans to develop two office buildings in Damansara Heights, Kuala Lumpur by end of the year.

Glomac Tower, a 40-storey prime A office block with 500,000 sq ft in net lettable space will be sited opposite the Mandarin Oriental Hotel while Menara Waqaf along Jalan Perak will be a 34-storey office development with net floor area of 10,000 sq ft per floor.

One Mont’ Kiara which commenced construction this year is an integrated development by Ireka Land Sdn Bhd partnering CapitaLand Commercial. It comprises a 4-storey retail podium and 2 blocks of offices totalling 579,000 sq ft net.

The Quill group will design and build a 24-storey prime A office building to be leased to HSBC next to its current headquarters in Leboh Ampang with a net lettable area of 175,000 sq ft. Construction is expected to start in June for completion by the first quarter of 2010.

Favourable economic climate has encouraged a healthy demand for offices in good locations and modern facilities. The average occupancy for offices in the Golden Triangle Kuala Lumpur City is at 91% while the Central Business District recorded a lower 80%. The highest of 92% was in Damansara Heights.

Rentals & Capital Values
In the first half of the year, four transactions for offices in KL City have registered capital values between RM407 per sq ft to RM536 per sq ft, while an office building to be completed in KL Sentral has been sold at RM525 per sq ft.

AmanahRaya REIT, the first REIT sponsored by a government public trustee, injected two office buildings namely Wisma Amanah Raya along Jalan Ampang and Wisma Amanah Raya Bhd in Damansara Heights to their portfolio of properties.

The proposed Tower B in Lot J, KL Sentral being developed by Malaysian Resources Corp Berhad, was sold to Malaysian Industrial Development Authority (MIDA). Works started in December 2006 and are due for completion in mid 2009.

Quill Capita REIT is injecting Wisma Technip into its trust. The capital values for prime A office buildings in the KLCC vicinity is in excess of RM650 per sq ft net supported by better rents and lower yield expectations. The price divide between prime and secondary offices is widening.

Rental rates are generally increasing with offices in the Golden Triangle achieving an average of RM5.80 per sq ft, marked an increase of around 5% increase from last year. Rents in the Central Business District rose more slowly, with an increase of 4% from last year, taking average rents to RM3.40 per sq ft.

Damansara Heights performed well with an average of RM3.80 per sq ft, due to prime A offices commanding better rents.

The rental market for prime offices in Kuala Lumpur City and Damansara Heights is healthy, which is reflected by prime A offices in the Golden Triangle achieving RM5.50 to RM8.00 per sq ft while Decentralised KL prime office rentals are at RM5.00 per sq ft.

Further positive absorption is anticipated in the second half of the year and increasing demand for good quality offices will push capital prices to break new ground. Investment demand will push yields down in anticipation of capital appreciation. The continued growth of the services sector will fuel occupational demand for office space.

Klang Valley Retail Market

Market Indications
Retail sales in Klang Valley improved in the first half of the year underpinned by the growth in tourist arrivals from both inbound and domestic tourism. As of 10th May 2007, tourist arrivals in Malaysia reached 8.9 million, approximately 40% growth compared to the tourist arrivals in the same period in 2006. In addition, the increases in employment and salaries in the service sectors and recent pay rise for government servants together pushed up retail sales which are therefore poised to expand by 8% in the year to reach an estimated RM64 billion.

The leasing of several prominent centres in Kuala Lumpur City have received favourable response from retailers, especially from some notable foreign brands such as EQ.IQ, Bebe, and Massimo Dutti in Pavilion KL, Robinsons in The Gardens and Ted Baker in Bangsar Village II.

Retail malls in Malaysia have evolved and developers are now placing greater emphasis on food, beverages and entertainment, attributing this to the change in lifestyle of the younger generation. Apart from the larger shopping centres to be completed this year such as Pavilion KL, Sunway Pyramid extension and The Gardens, this year has also seen the construction of a few smaller lifestyle malls, eg Sooka Sentral, CapSquare and One Mont’ Kiara. These lifestyle malls focus on food, beverages, entertainment and niche retail stores that denote contemporary lifestyle.

Supply & Demand
The first half of the year saw the entry of Bangsar Village Phase II, where about 80% of the stores have opened since January. The second half of 2007 will see at least 3.1 million sq ft of retail space added to the market including Pavilion Kuala Lumpur, The Gardens and Sunway Pyramid extension, all scheduled to be ready in September. Most of these centres have reported good take-up with leasing rates of more than 90%.

The younger working population in Malaysia has contributed to the growth of lifestyle malls with a number of developments coming on stream, namely a 4-storey retail centre in CapSquare, Sooka Sentral in KL Sentral, One Mont’ Kiara in Mont’ Kiara and Giza in Sunway Damansara. Together they will supply in total about 935,200 sq ft net of rental space.

CapSquare, which is slated for opening in September 2007, will feature a 300-metre retail street with Golden Screen Cinema as its anchor tenant. The lifestyle retail centre houses fashion, beauty and health stores with its ground floor to be occupied by food & beverage outlets.

Before the launch of the main 840,000 sq ft shopping centre in KL Sentral, the integrated development will see an upcoming lifestyle mall located next to Stesen Sentral, known as Sooka Sentral.

Construction works started early this year for completion this coming November to complement the demand which mainly come from its transportation hub and Bangsar. The lifestyle mall will house three levels of food & beverage outlets whilst another three floors will be anchored by beauty and fitness shops.

Tourist shoppers will remain a force in the retail market place, particularly the high spending Middle East tourists with average retail spending of RM2,400 per person. Continued growth of tourism receipts should provide support to the retail market in the next half of the year.

Prices & Rentals
The first half of 2007 saw the transaction of the 25-year old Atria shopping complex in Damansara Jaya to OSK Property Holdings Bhd. The shopping centre with net lettable area of 208,401 sq ft was sold for RM75 million (RM360 per sq ft). The centre is to be renovated, extended and repositioned as another neighbourhood lifestyle mall.

Capital values for shopping centres are likely to go up with more developers planning to unlock their assets by injecting shopping malls into real estate investment trusts (REITs). For instance, Sunway City is in the midst of setting up their REIT which includes the injection of its retail properties, Sunway Pyramid and Sunway Carnival Mall by early 2008. The Employees Provident Fund (EPF) will also join in with the proposed REIT that contains the EPF-owned Giant hypermarkets.

Capital values of en bloc prime centres in Bukit Bintang are in excess of RM1,800 per sq ft. This is expected to further improve as yields are being driven lower due to anticipation in capital appreciation and potential asset enhancement possibilities.

Good retail sales, were most notable in the prime centres, have encouraged rental increases of 5% to 15% as more foreign retail brands show interest. Rentals for secondary centres withstood downward pressure also due to encouraging sales attributed to higher spending power by the low- to mid-income group, especially government servants.

The retail sector is poised to remain robust with the completion of at least 3.1 million sq ft of retail space in the Klang Valley by year-end. The buoyant stock market and a range of initiatives undertaken by the government to encourage tourist arrivals will further boost household and tourist spending.

Kuala Lumpur Hotel Market

Market Indications
The hotel industry in Kuala Lumpur City has experienced consistent growth since 2003 reflected by strong occupancy and competitive room rates recovering from a series of events such as SARS, terrorist alarm and the tsunami scare. There were 17.5 million tourist arrivals in 2006 compared to 16.4 million in 2005, contributing to higher hotel occupancies throughout the year. Malaysia has been voted the ‘Best Destination for 2006’ and the most affordable country compared to other Asian cities such as Tokyo, Hong Kong and Singapore. This year, 2007 as Visit Malaysia Year (VMY), comes in conjunction with the Malaysia’s 50th anniversary of independence and the government campaign is aimed at drawing tourists from Asean, East Asian, European and North American countries. The Malaysia Association of Hotel Owners (MAHO) has projected that average hotel occupancies will hit the 75% mark in 2007 and hotels located within the prime shopping belts of Bukit Bintang and KLCC will enjoy even higher occupancies.

The Kuala Lumpur Convention Centre (KLCC) has also been a catalyst to the growth of the hotel industry as the number of international world-class events held at the state-of-art facility has contributed to demand for hotel rooms in the vicinity. Hoteliers are optimistic that occupancy and room rates will be more consistent throughout the year if more international events are hosted here. Refurbishment and renovations are being carried out in several Kuala Lumpur City hotels to maintain market share as well as to keep up with current trends and demand.

Between January 2006 and May 2007, six hotels in the Klang Valley namely The Millennium, Istana Hotel, Sheraton Imperial, Park Royal, Holiday Inn Glenmarie and The Saujana have undergone renovation and refurbishment works at a total cost of RM308 million. The Millennium KL officially opened for business in September 2007 to replace The Regent. This newly re-branded hotel underwent refurbishment works which commenced in January this year at a cost of RM120 million. In February 2007, Istana Hotel completed its RM15 million refurbishment exercise with traditional Malay architecture as its unique selling point. The Holiday Inn Glenmarie started its RM11 million refurbishment programme in October 2006 showing its commitment to meet quality global standards and changing needs.

Supply & Demand
The current supply of 4-star and 5-star hotel rooms in the Kuala Lumpur City stands at 6,752 and 9,092 respectively, mostly along the prime streets of Jalan Sultan Ismail, Jalan Ampang, Jalan Bukit Bintang and in the KLCC locality.

It is anticipated that another 650 rooms will enter the market from two 5-star hotel projects which are currently under planning and expected to commence construction this year. These projects will set a benchmark in room pricing for 5-star hotels due to their strategic location and high standards set by their international hotel operators.

The annual average occupancy rates for both 4-star and 5-star hotels in Kuala Lumpur City were stable at 70% in 2005 and 2006. Up to May 2007, statistics so far show a recorded average occupancy rate of 66% and according to the MAHO, the rate is projected to reach 75% for the full year of 2007 attributed to higher tourist arrivals during the second half of VMY 2007.

Average Room Rates & Capital Values
Most of the luxury hotels have gradually increased their daily room rates reporting an average increase of 3% to 4% in the first half of 2007. Average Room Rate (ARR) for 5-star and 4-star hotels recorded in May 2007 were about RM290 and RM180 respectively. Both ARRs and occupancy are projected to grow steadily.

Recorded sales of 4-star hotels show capital values of above RM400,000 per room and up to RM1 million per room for the 5-star Westin nestled at the prime area of Jalan Bukit Bintang.

Tourist arrivals are projected to breach the 20 million mark with tourism receipts expected to grow to RM44.5 billion in 2007. The hotel market is set to continue enjoying healthy occupancies and increasing room rates.

Penang Property Market

Market Indications
The Government’s upcoming initiative to designate Penang as the hub of the new northern development region encompassing Perlis, Kedah and Perak coupled with the extensive infrastructure projects will have a big impact on the real estate sector of the State.

• With the entry of more Klang Valley based developers into the State, the greater competition among the big players will see the creation of higher quality developments with new lifestyle concepts and better designed homes.

• With affluent Penangites’ preference for landed housing, many developers have responded to this with the launching of several schemes such as E&O’s Seri Tanjung Pinang; Hunza’s Alila; SP Setia’s Setia Pearl Island and Mah Sing Group’s Southbay Villas.

• The relaxation of rules on purchases of residential units by foreigners has helped boost the high-end condominium sector of both new and completed projects as many foreigners have bought homes here under the Malaysia My Second Home (MM2H) programme.

• The waiver from Real Property Gains Tax with effect from 1st April 2007 has also contributed to higher activity in the residential sector.

• It was announced that construction work on the second bridge will commence in early 2008 with assistance from Export Import Bank of China (Exim Bank).

High-End Condominium

• The completion of The View and Bayswater Condominium in the south west of the island contributed an additional 560 units during the first half of 2007.

• Supply will be further increased when projects like The Cove, The Mayfair, Putra Marine are completed by the end of the year.

• The developer of the latest two high-end condominium projects, the “Infinity” and “Gurney Paragon” has reported good take-up by foreigners who reportedly purchased a third of the 10% sold during their soft launches.

• The “Infinity” is for sale from RM383 per sq ft and RM405 per sq ft for 3,700 sq ft and 4,700 sq ft units respectively whilst sale prices for Gurney Paragon start from RM400 per sq ft for 4,600 sq ft units and from RM460 per sq ft for 2,800 sq ft units.

• Prices of new projects within the sought after areas of Pulau Tikus and Tanjung Bungah range from RM350 to RM500 per sq ft.

• In Pulau Tikus, monthly rentals for fully furnished units range from RM4,000 to RM10,000 where sizes range from 1,800 sq ft to 5,000 sq ft.


• The supply of office space increased by 80,000 sq ft with Menara Great Eastern completed in the first half of 2007.

• In the south west district within close proximity to the Bayan Lepas Industrial Park and Penang International Airport, three new buildings namely Suntech, The CEO and IJM’s new corporate office are currently under various stages of construction.

• Occupancy rates of the better grade office buildings average 72%.

• No en bloc sales of office buildings were recorded in the first half of 2007.

• Capital values of prime office space generally remained unchanged from the second half of 2006 level of RM220 to RM260 per sq ft whilst those of secondary offices range from RM110 to RM150 per sq ft.

• With supply in excess of demand, market rentals of prime office buildings generally remained unchanged at RM2.20 to RM2.70 per sq ft gross whilst secondary buildings average RM1.50 to RM2.00 per sq ft per month.


• The retail industry is set to grow with the anticipation of more tourist arrivals projected by the government in which Penang enjoys a 33.8% of the market share.

• The supply of retail space increased by another 610,000 sq ft in the first half of 2007 with the recent opening of Sunway Carnival (NLA of 500,000 sq ft) in Seberang Jaya on the mainland and the neigbourhood Pan Palace Plaza (110,000 sq ft) in Sg Dua on the island, bringing the total to 5.422 million sq ft.

• Future supply will be further increased when the following three projects are completed:

• Occupancy rates of the prime shopping malls range from 85% to 95% whilst those of secondary complexes average 55% to 70%.

• Modern shopping malls are in demand from investors as evidenced by the sale of Island Plaza (320,000 sq ft net lettable area) to Asia Mall Private Ltd, a company formed under a US based insurance group.

• Gross rentals of ground floor retail space in prime centres generally remain unchanged from the second half of 2006 levels, ranging from RM15 to RM27 per sq ft per month depending on the location and size of the units.

The overall outlook is good as the impending infrastructural works and relaxation of rules will have a positive impact on the property sector. The general residential sector is expected to remain strong although the sales performance of high end condominiums may taper off a little due to the increasing supply. The office market is not expected to change much whilst the retail sector will be increasingly competitive as more centres are completed.

Johor Bahru Property Market

Market Indications

• Over the first half of 2007, little has progressed from the drawing board to implementation for the pump priming initiatives by the Government to improve the Johor economy. However, sentiments remain positive towards the concerted effort by the Government through its proposed expenditures on infrastructure projects under the 9th Malaysian Plan (9MP).

• Interest and enquiries by foreign investors continue to gain momentum on the Iskandar Development Region (IDR), as more information on the development as well as the region and its governing structure are crystalised and revealed to the public.

• At this initial stage, the government is fulfilling the role of the main driver and promoter of IDR. The enthusiastic interactions between the governments of Malaysia and Singapore on IDR is particularly encouraging.

• Keen interest has also been expressed by foreign investors from the Middle East and China. The government is expected to capitalise on these optimistic prospects and by securing firm commitments from investors.

• One notable project that has been added to the market recently is the RM1.4 billion Asia Petroleum Hub (APH) on a 40 hectares reclaimed island off Tanjung Bin Petrochemical Area. The APH, to be completed by 2009, provides integrated bunkering services to ships and forms part of the petroleum trading network and bulk-gateway to regional and domestic markets.


• Transaction levels on conventional properties such as terraced and semi-detached units have not experienced significant movements.

• Sales of some of the completed double-storey terraces (with Certificate of Fitness for Occupation) at Tebrau Development Corridor have improved upon a reduction in pricing, from about RM280,000 to RM250,000 per unit.

• Some of the high end properties located within the IDR at Nusajaya have been doing well. Bungalow lots at Leisure Farm have achieved higher pricing at around RM38 and above per sq ft, an increase of RM3 and above over 2006 prices.

• The pricing of bungalow lots in Ledang Heights has increased from RM36 per sq ft in 2006 to RM39 per sq ft. The prices of other bungalow lots located nearer to Johor Bahru have also experienced some upward movement after satisfactory sales in 2006.

• Prices of bungalow lots in Taman Impian Emas have increased from RM55 per sq ft to RM65 per sq ft.

• Taman Ponderosa sold its bungalow lots at between RM60 per sq ft to RM80 per sq ft in 2006, current pricing is at RM80 per sq ft.

• For high-rise exclusive residential properties, CintaAyu Resort Apartments at Pulai Springs Resort have been successful with a sale and leaseback scheme, offering 7% guaranteed rental return for 3 years. An estimated 65% of the 313 units have been sold, mostly to foreign investors from Singapore, prices ranging between RM595 per sq ft and RM658 per sq ft, for built-up areas from 434 sq ft to 2,037 sq ft.

• Demand and supply of purpose-built office space in Johor Bahru have remained stagnant compared to second half of 2006. The same status quo applies in respect of occupancy and rental rates.

• The average occupancy rate hovers around 64% for the 5.9 million sq ft available in the market.

• Prime space is let at an average of RM2.30 per sq ft gross per month whilst offices at secondary locations average RM1.20 per sq ft gross per month.


• There has been no substantial change in the retail sector with regards to demand and supply in the retail sector. Total supply of retail space is estimated at 8.2 million sq ft and approximately 65% is occupied.

• Prime gross rents of shoping centres which are doing well (with occupancy rates in excess of 85%) range from RM15 to RM25 per sq ft per month.

• The trend of decentralisation of mid-size shopping centres from the city centre and its periphery to larger suburban regional malls has been given a boost by the sale of a 37.78 acres of commercial land at Taman Bukit Indah in the IDR. Sold by SP Setia Bhd to Raion Capital Bhd in February at a record high of RM65 per sq ft (compared to the Aeon’s Tebrau City’s 30-acre site which sold for RM30 per sq ft in 2003), the purchaser will build a shopping mall to be leased to Aeon Co (M) Bhd for fifteen years, with Jusco as the anchor tenant.

• Other new hypermarkets proposed around Johor Bahru include Tesco stores at Taman Bukit Indah (proposed) and Desa Tebrau (under construction) and a Carrefour store at Taman Sutera Utama.

The outlook for the property market in Johor Bahru is positive, buoyed by the optimistic expectations on the economic benefits to be reaped from IDR. The markets for conventional residential properties, offices and shopping centres will remain competitive.

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