Just what happens to the highly marketed and the buzzling of IDR (Iskandar Development Region), the first mega-project initiated by Malaysia’s premier Badawi which is suppose to be another clone of Hong Kong or Dubai spanning over 20-year whileattracting 105 billion dollars?

Before anything has taken off in a scale which can instill confidence that IDR is not a fantasy but a real thing, the premier today ambitiously launched the Northern Corridor Economic Region (NCER) project which will see the transformation of Penang into a modern, vibrant city and a major logistics and transportation hub. The NCER is said to be the bullet to turn Penang into the “Gateway to the Northern Corridor”. Excuse me but aren’t Penang has been the “gateway” to the northern Malaysia all this while? Either this is another nice marketing strategy to further segregate projects to the ruling party’s linked companies (or cronies) or the Chief Minister of Penang has done a damn bad job in maintaining, not to mention developing, the status of Penang as the northern gateway.

Everyone knows the main company which benefits the most from IDR is the UEM World Berhad (KLSE: UEMWRLD, stock-code 1775), a construction firm linked to ruling UMNO party and the one which has huge lands located within IDR. So, you shouldn’t be surprise if the NCER is another way to give the other pieces of pie to Malaysian Rresources Corporation Berhad (KLSE: MRCB, stock-code 1651), another GLC (government-linked-company) and Equine Capital Berhad (a close business associate of Badawi). Did I hear someone said General Election is around the corner?

Anyway, compare to IDR, NCER seems to have a stronger and clearer blueprint, at least on the paper. To start the ball-rolling, at least a China company has been secured to finance and build the Penang second bridge. Among some of the sub-projects within the high-level blue-print for NCER are:

• Penang Sentral integrated transport hub – a RM2 billion modern transportation and logistics hub to transform Butterworth into a modern metropolitan area, covers 557,418 square metres. The hub will integrate rail, ferry, monorail and land transport modes – the came concept as KL Sentral. Winner – MRCB
• Penang Global City Centre – a RM18bil project to transform Penang Turf Club into a modern city center which will have international exhibition and conference centre, shopping complexes, two five-star hotels, commercial and residential properties, a state-of-the-art cultural centre and a 10.5ha park. Winner – Equine Capital Berhad (KLSE: EQUINE, stock-code 1147). Does this sound like KLCC to you, both also on the land of turf club with the same concept?
• Second Penang Bridge – a RM2.7 billion bridge connecting mainland and Penang which will be the South-East Asia’s longest bridge. Expected to be complete by 2011, it will be built under a joint-venture between UEM Builders Bhd and China Harbour Engineering Co Ltd.
• Pulau Jerejak premier medical tourism centre
• Penang-Butterworth fast ferry
• Penang Port expansion
• Bayan Lepas Airport expansion
• Penang 37km Monorail
• Swettenham Pier redevelopment
• Micro-Electronics Centre of Excellence
• Hospitality college
• Khazanah Nasional Bhd regional office

In June MRCB was awarded a contract by Pelaburan Hartanah to build houses and apartments with a combined gross development value (GDV) of RM500mil on three sites on Penang Island. Analysts expect MRCB to secure additional projects in the state such as the construction of the proposed monorail and Penang Outer Ring Road (PORR).

While MRCB might have proven itself with the KL Sentral project (though I’ll reserve the comment on the successfulness of it), it’s mind-boggling to note that Equine Capital Berhad was given the RM18 billion project considering it only registered RM131 million revenue for the financial year 2006 as compare to RM140 million in 2007. The net profit was a double-digit of RM17 million (2006) and RM31 million (2005) respectively. So can Equine take the risk of a project more than 10 times its’ annual revenue? But then the boss of Equine, Patrick Lim, probably carries more weight than anyone else – at least in the Malaysia’s political world if not corporate world.

Neverthless it’s definitely the people’s hope that all these billions of dollars would put to full good use and development to benefits everyone rather than another wasteful mega-project which only benefits a few cronies as accustomed to the Malaysia’s ruling party’s business policy.

Other Articles That May Interest You …

• Wealthy Malaysia Spending Like There’s No Tomorrow
• IDR-Nusajaya – Another White Elephant Dooms to Failure?
• Malaysia’s Policy – Now You See It, Now You Don’t

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August 1st, 2007 by financetwitter

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