A Chinese Chauvinists agenda to kill another Malay corporate player

The recent announcement of the new RM 628 million Matrade Exhibition and Convention Centre (MECC) off Jalan Duta by Ministry of International Trade and Industry (MITI) was taken on a political node by non other than DAP. DAP MPs demanded that the privatisation deal be scrutinised.

Malaysian Insider has the story:

DAP wants government to probe ‘free’ Matrade centre

The DAP wants the Matrade project suspended, says Pua. — File pic

By Asrul Hadi Abdullah Sani

KUALA LUMPUR, Nov 26 — The DAP wants Prime Minister Datuk Seri Najib Razak to launch a thorough investigation into the proposed Matrade expo centre in Jalan Duta after the controversial RM628 million project was given to Naza TTDI in a building-for-land deal.

Yesterday, International Trade and Industry Minister Datuk Mustapa Mohamed claimed that the government was getting the expo centre for free and explained that building-for-land deal is good value for the Malaysian External Trade Development Corporation (Matrade).

DAP Petaling Jaya Utara MP Tony Pua however pointed out that Naza TTDI was being paid with 62.5 acres of land for the expo centre in a building-for-land deal.

“The usually composed and competent minister, fondly known as Tok Pa, must have had a moment of madness if the government will get Malaysia’s largest convention and exhibition centre ‘for free’ from Naza TTDI when the latter is being paid with 62.5 acres of prime land,” he said in a press statement.

The mammoth expo centre, being built on a 13.1-acre site in Jalan Duta here, is to be developed by Naza TTDI, a unit of the Naza Group, in exchange for 62.5 acres of state land at RM226 per square foot although the market value of the land could reach RM1.5 billion. The entire project will have a gross development value of RM15 billion.

The Matrade centre is estimated to be 90,000sq-m and set to be completed in 2013.

Mustapa explained in Parliament yesterday that government was saving money because Matrade is getting an expo centre worth RM628 million in exchange for the 62.5 acres of land valued at RM197 million.

Pua questioned why a reputable company would want to build a RM628 million centre for only RM197 million.

“The reply still leaves Malaysians completely flabbergasted as the minister expects us to believe that Naza TTDI, a private company belonging to the Naza Group which has milked billions from approved permits to import luxury cars via MITI, is so charitable as to build a RM628 million convention and exhibition centre at the price of RM197 million. If what the minister had said is true and accurate, Naza TTDI is in fact ‘donating’ RM431 million to the Malaysian government, and we should all be eternally indebted to Naza for its immeasurable generosity.

“However, the minister’s reply only raises more questions, for there must be a catch somewhere in the entire exercise. At RM197 million for the 62.5 acres of land means it is valued at only RM72 per square feet, which is unbelievably low for prime land between Mont Kiara and Jalan Duta,” he explained.

Hall Chadwick Asia chairman Kumar Tharmalingam recently revealed that the total gross development value (GDV) of all the projects on the 65 acres could reach to RM15 billion and therefore the market value of that commercial land of 65 acres is RM1.5 billion.

Pua argued that the government is actually paying more than RM197 million for the RM628 million centre.

“Hence, even by taking the conservative estimate of RM350 per square feet by the experts, which works out to a valuation of RM970 million for the land paid to Naza TTDI, the government is in fact paying RM342 million more than the stated RM628 million cost of building the Matrade Convention and Exhibition Centre! And if we take the higher estimate of RM500 per square feet, then the government is in fact paying in excess of RM870 million! Under such circumstances, it will not be wrong to say that it is Naza TTDI which has received land from MITI ‘for free’,” he said.

He also criticized Mustapa’s response that there was no open tender because Naza TTDI was the first company to propose the project.

“Instead of reassuring the public, this reply has cemented the fact that the Barisan Nasional government is addicted to cronyism for the Naza Group had intimate links with MITI having received hundreds of thousands of APs from the ministry. It is now clear that due to the connections of Naza, they were able to table the convention and exhibition centre proposal to the powers-that-be at MITI and, as a result, ensure that they will have exclusive rights to the project,” he said.

Pua stressed that the government must immediately launch an investigation and suspend the project until the findings are disclosed publicly to ensure transparency.

“Datuk Seri Najib Razak must immediately conduct a probe into the irregularities surrounding the project and make immediate rectification to ensure that the income for all its existing assets are maximised.

“He must suspend the project pending the investigations, and its outcome must be disclosed publicly to ensure that the final decision of the government is able to withstand scrutiny,” he said.

The DAP has been urging Najib to hold an open tender for the proposed Matrade expo centre.

Its leader, Lim Kit Siang, said the government should declassify all ministerial papers relating to the project and table them in Parliament to show that necessary due diligence has been done to ensure costs and profits were not inflated if it persists with Naza TTDI as the contractor.

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The fact is that, DAP is politicising this ambitious but courageous RM 15 billion project new KL Metropolis Project which NAZA-TTDI has embarked upon. The facts that have been presented by DAP MPs in their argument for the Federal Government to scrutinise the land deal has been manipulated.

The 75.5 acres land which belong to Matrade has been privatised by the seasoned and successful property development corporation. In the deal, NAZA-TTDI was to built the RM 628 million MECC (not including the RM 100 million infrastruture works  will be requird for the complex) on the 13 acre site pro-bono and in return they get to develop the remaining 62.45 acres leasehold land at their cost. Of course, the development of the 62.45 acres KL Metropolis comes with a huge risk, financed totally via commercial intruments and exposure.

For MITI to fork out RM 628 million to provide the MECC Complex facility would be taxing on the taxpayers. The money is best spent on other development projects, especially social and economic development in nature. As such, this privatisation deal benefits the Federal Government more as NAZA-TTDI has to take a huge risk and fork out upfront a large borrowings to provide the MECC Complex.

The RM 628 million (plus an extra infrastructure cost of RM 100 million) for the MECC complex is an investment and financing that NAZA-TTDI has to fork out, manage and take the risk upfront, way before they could get their hand on the remaining 62.45 acres earmarked as KL Metropolis. To meet the specialised demand, the MECC complex will be constructed to specifications that would allow the ground floor to sustain a 5 tonnes/sq. metre load. On top that, NACA-TTDI  is making the exhibition hall column-free to accomodate flexible utilities often demanded by trade exhibitors and the net lettable area is 86,000 sq. metres. These features are by far making Kuala Lumpur a far more attractive exhibitors destination within the region.

As argued by blog Outsyed-the-Box, NAZA-TTDI is taking a huge risk to fully finance the MECC Complex and KL Metropolis Projects. The DAP claim of the 75 acres leasehold land is valued at RM 1.5 billion is simply outrageous and suspiciously, it is another precursor to more theaterics. The RM 728 million ‘land acquisition’ cost (the amount that the developer had to fork out upfront to build the MECC) for the 62.45 acres 99 year leasehold land earmarked for the KL Metropolis Project would be calculated at a gross cost of RM 267.61 per sq. ft. If the net buildable area is taken at 50% (which the remaining is often providing for infratsructure such as roads, ancillaries and services, lay-bies and green areas), then the land acquisition cost would be at RM 535.23 per sq. ft. This is a very pricey sum as the area currently is valued as per Kg. Segambut Dalam’s current market prices.

How did DAP calculate that the remaining 62.45 acres leasehold land  valued at RM 1.5 billion is baffling, which translate to a gross calculation of  RM 551.40 per sq. ft. or net at RM 1,102.81 per sq. ft.? Especially when the adjacent area is Kg. Segambut Dalam? DAP should the very least produce evidence of a land parcel of similar size within a 5km radius being transacted at the value of RM 551.40 per sq. ft.

Time and again, DAP has shown their true Chinese Chauvinism and politicising this ambitious and courageous MCEC Complex and KL Metropolis Project with manipulated facts. This privatisation is raised in a political tone mainly because the developer is a highly successful Malay corporation which benefitted from New Economic Policy, progressed from a trader-to-assembler, diversified into hospitality and services industry  and now into premium property development, a sector which is almost monopolised by Chinese corporations such as YTL, IOI, Hong Leong, IGB Corporation and Country Heights.

For the record, NAZA tookover once successful housing developer TTDI from receivership of Danaharta 7 years ago and took the  resructured corporation further. NAZA-TTDI acquired the premium land in KLCC and now developing the prized Platinum Park project.

When completed within 15 years time, KL Metropolis would create jobs and workplace for 60-80,000 people. 3 hotels are planned for the KL Metropolis. The master-plan of this project include a thorough traffic dispersal and public transportation program, which include tapping onto the Damansara Ulu Kelang Expressway (DUKE), STAR LRT and KTM Commuter systems. In a simple analysis, a projected GDV of RM 15 billion for a build up area of 2 million sq. ft. for the KL Metropolis Project within the next 15 years comes up to a mere RM 750 per sq. ft., which is failrly reasonable for a development project of that quality and utility.

We here at BigDogDotCom challenge for DAP to live up to its ‘Malaysian, Malaysia’ call, take the constructive effort of playing the ‘check and blance’ role to ensure that NAZA-TTDI deliver the MECC Complex within the specific time and quality. For the record, stated in the privatisation deal agreement if ever the developer incur more than the RM 628 million construction cost for the MECC Complex, then they have fully absorb it at their own cost. NACA-TTDI has to also provide a RM 628 million project bond inacse of non delivery withing the stipulated time frame. As is, the developer is absorbing the RM 100 million infrastructure cost, which include the re-site of an existing school in the 62.45 acres area.

If all, Malaysia be it the Federal Government, GLCs, corporations and NGOs should live up to once workable formula of ‘Malaysia Incorporated’ and support these ambitious and courageous MECC Complex and KL Metropolis Projects. It will add another progressive and productive commercial development with Malaysian characteristics and colour the skyline of beautiful Kuala Lumpur, a modern commercial and cultural hub in the region.

Published in: on December 5, 2009 at 18:48  Comments (18)