IDR-Nusajaya – Another White Elephant Dooms to Failure?

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Feb 26 2007
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Tons of critics were being thrown at Malaysian Prime Minister, Abdullah Badawi, since he took over the baton from Mahathir Mohamad since 2003 over his lack of actions to bring the economic of the country to higher degree. Instead he was labeled as the premier who did the opposite – increases inflation with higher fuel price and toll hike, shows no clear direction in steering and growing the nation’s economy and worst still talks too much for too long when he should had produce results for everyone who has voted him for his promises during his last election campaign.

So when he finally announced his own created project a.k.a. Iskandar Development Region (IDR) which has Nusajaya as a key component, the news was taken with mixed-reaction. The IDR would be the biggest development cluster in South-East Asia – it was claimed. Nusajaya covers 9,712ha and would be developed over five decades. Earlier, Badawi has been trying unsuccessful in attracting Mickey Mouse and the fantasyland to Nusajaya. Two main factors formed the main obstacles – humid weather and the country’s ruling party’s to-be “Islamic Champion”. You do not wish to walk miles under such weather condition only to be able to take photograph of Mickey Mouse wearing black scarf from head to toe, do you?

To add more spices to the project, Badawi hand-picked some individuals to give an impression it garners the support of the world. The most prominent figure is non-other than multi-billionaire Robert Kuok, Malaysia’s richest man. Others are Andrew Sheng (Former chairman of the Hong Kong Securities and Futures Commission), Tun Musa Hitam (former deputy prime minister who served under Mahathir Mohamad), Kishu Tirathrai (a Malaysian businessman known for his textile business) and Samsudin Osman (former chief secretary to the government and chairman of the Employees Provident Fund).

Unless Robert Kuok is willing to pour half his fortune into this new first pet project of Badawi, I won’t blink twice thinking about the success rate of it. As comparison, Mahathir started the MSC (Multimedia Super Corridor) to leapfrog Malaysia into the information and knowledge age when Singapore was nowhere in sight to give a challenge. MSC started with a huge optimism of success only to ends with nothing more than an empty vessel with infrastructure minus the intellectual. It fails to the extent that Mahathir had to beg Bill Gates from Microsoft Corp. (Nasdaq: MSFT, stock) to invest and be part of IAP (International Advisory Panel) to give it some gases to move on. Today, MSC is nothing more than an area known for its’ support center to foreign major tech companies taking advantage of the incentives and good but cheap I.T. workers.

Again, Malaysian were being presented with a new project with potential in tourism, a financial centre, housing, medical facilities and education in an area the size of 2.5 times of Singapore which is able to compete with Dubai, Shenzhen, Hong Kong and Bangalore. You’re being promised a 20-year plan attracting 105 billion dollars. Badawi was right when he said the new project has to be competitive to draw investors but to be in the league with Dubai or Hong Kong, the prime minister has to solve the problem of transparency, corruption and crime together with abolishment of the never-ending New Economic Policy without which will only bring the cost of doing business sky-rocket and the lack of brain-talents.

I do believe the government is able to build whatever world-class infrastructure for this project as proven again and again by all the previous mega-projects. But to convince foreign investors that this is new Hong Kong in the making, the prime minister needs to do more than drumming his new pet-project with empty speeches on the front-page of newspaper on daily basis. I begin to see a yet another white-elephant being drafted on white-paper. Furthermore Robert Kuok has yet to spend a penny on this IDR-Nusajaya and excatly what values do other advisors are suppose to bring in?

Nevertheless there’re some winners in this project such as UEM World Berhad (KLSE: UEMWRLD, stock-code 1775) a construction firm linked to ruling UMNO party, which owns hundreds of thousands of hectares of lands within the project boundary and saw its’ stock price rises ever since. Other closely linked speculators also benefits from the run-up on the stock price of the company.

# TIP: It won’t do any harm if you promise BIG and very LONG-TERM project as you would be long gone before people can see the result of such project. Even if it fails, it’ll be your successors’ failure and not yours.

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