Published August 21, 2008

KL firm, state fund in RM4.2b project

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(KUALA LUMPUR) A subsidiary of developer Malaysia Pacific Corp and an investment fund backed by the Malaysian finance ministry will develop a RM4.2 billion (S$1.8 billion) industrial and tourism zone, aimed at attracting foreign companies.

The development, in Malaysia's southern Johor state which neighbours Singapore, has been billed as the country's answer to development zones in China, which have attracted billions of dollars of foreign investment. Malaysia Pacific said in a statement to Bursa Malaysia yesterday that it would set up a special purpose vehicle to develop the project and that Amanahraya Development, a finance ministry company, would invest RM99 million.

In exchange, the finance ministry fund will get rights and a put option over 22 per cent of the special vehicle, to be called Oriental Pearl City Properties, which Malaysia Pacific said could list on the Bursa Malaysia in three to four years. The plan for the Iskander Development Region (IDR) was announced in November 2006 to harness mostly private capital to turn 2,200 square kilometres of the southern state of Johor into an industrial and tourist zone.

The plan envisages raising capital globally and hiring foreign workers, with hopes of drawing investment of US$105 billion over 20 years. -- Reuters