Joint projects on track despite uncertain global economy

PUTRAJAYA: Malaysia and Singapore are confident the uncertain global economic outlook will not affect joint venture projects between Khazanah Nasional Berhad and Temasek Holdings which are meant for long term development.

Prime Minister Datuk Seri Najib Tun Razak and his Singapore counterpart Lee Hsien Loong believe their respective countries’ projected economic growth would be sufficient to push the projects forward.

Najib said there were no signs that the overall development of Iskandar Malaysia was slowing down and that the investments were proceeding according to schedule.

“We believe the current economic situation in Malaysia and Singapore would continue at a level that will provide a basis for the private sector to continue to invest in Iskandar, barring something catastrophic,” he said at a joint press conference after the two leaders met at their retreat here yesterday.

Lee said investors in the Khazanah and Temasek projects were interested in the long-term outlook rather than quarter to quarter fluctuations.

He said Singapore, which recorded a growth of 4.3% last year, was expected to see between 1% and 3% growth for 2012, adding that while this was positive, it would also depend on the international scenario.

“The more difficult the external environment, the more important it is for Malaysia and Singapore to cooperate and work closely together,” Lee said.

The two Prime Ministers earlier witnessed the exchange of shareholders agreements between Khazanah and Temasek in relation to the joint investments in M+S Pte Ltd and Pulau Indah Ventures Sdn Bhd.

Owned 60-40 by Khazanah and Temasek respectively, M+S will develop land parcels in Marina South and Ophir-Rochor in Singapore while Pulau Indah, a 50-50 joint venture between Khazanah and Temasek, will develop projects in Iskandar Malaysia.

Khazanah and Temasek also reported to the Prime Ministers on progress made so far, including the appointment of architects and key consultants by M+S for the development of Marina South and Ophir-Rochor.

The two parties are also discussing with banks the financing for projects that have an estimated gross development value of S$11bil (RM27bil). The projects are expected to be completed over the next six years with construction starting in 2013.

Pulau Indah will develop the “Urban Wellness” project, a five-acre (2ha) site in Medini North and the “Resort Wellness” development on a 210-acre (84ha) site in Medini Central.

The gross development value of the projects, which include a wellness centre, serviced residence and a corporate training centre, is estimated at RM3bil.

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Pengerang power plant likely to supply electricity to S’pore

PETALING JAYA: There is a possibility that the sale of electricity to Singapore may come from a power plant to be built at Petroliam Nasional Bhd’s (Petronas) refinery and petrochemical integrated development (Rapid) complex in Pengerang, Johor.

While details on the sale were scarce at press time, sources told StarBizthat the electricity might come from Petronas’ planned power plant, which the state-owned oil firm’s executive vice-president for gas and power business Datuk Anuar Ahmad said last November was required for the Rapid project.

Prime Minister Datuk Seri Najib Tun Razak said following talks in Putrajaya with his Singaporean counterpart Lee Hsien Loong that Malaysian companies were prepared to sell electricity to Singapore.

The RM60bil Rapid project is expected to be commissioned by end-2016 and have multinational oil and gas companies as joint-venture partners.

Growth path: The electricity deal may be part of a strategy by Petronas to grow its gas and power business. Picture shows an aerial view of Petronas' gas processing plants (centre) in Kertih's Integrated Petrochemical Complex.

Besides the electricity sale, both leaders also announced that Malaysia and Singapore might construct an underground link as an expansion of the proposed rapid transit system between Johor Baru and Singapore.

Analysts believe the beneficiaries of an underground link project would beGamuda Bhd and MMC Corp Bhd, which were joint venture partners in the Stormwater Management and Road Tunnel or Smart project in downtown Kuala Lumpur.

Other areas of cooperation include the alignment of radio frequency spectrum plans for digital broadcast and mobile broadband services, the formation of a new work group on industrial cooperation to promote Iskandar Malaysia and Singapore.

Also in the pipeline are cooperation in aviation services between the Senai International Airport and Changi as well as education services. The electricity deal might be part of a strategy by Petronas to grow its gas and power business after acquiring a 30% stake in GMR Energy Singapore Pte Ltd in late September at an undisclosed price as well as investments in the Kimanis and Lahad Datu power plants in Sabah.

GMR is developing an 800MW combined cycle gas turbine power plant on Jurong island, Singapore while the Kimanis plant would be jointly developed by Petronas Gas Bhd in partnership with Yayasan Sabah through NRG Consortium (Sabah) Sdn Bhd.

The Lahad Datu plant would be built by a Tenaga Nasional Bhd-led consortium together with Petronas and a Sabah state entity.

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Undersea tunnel mulled

PUTRAJAYA: Malaysia and Singapore are looking at the possibility of constructing an underground tunnel to connect the two countries.

Datuk Seri Najib Tun Razak, who met his Singapore counterpart Lee Hsien Loong at their retreat here, said the two governments had commissioned a study on a viable option to improve connectivity.

The Prime Minister told a joint press conference: “We have also agreed to expand the study to include the possibility of an underground road connection between the two countries.”

The two leaders came out from their meeting yesterday smiling for the cameras with ties between the two countries, long hindered by the issue ofKTM Bhd land in Singapore, now at a satisfactory level for new areas of cooperation.

Lee said Singapore was also interested in buying electricity from Malaysia if the terms are right.

“Singapore is in the process of working out a framework to manage the import of electricity. Once it is ready, we welcome Malaysian companies to bid to supply electricity to Singapore. We hope some will succeed,” he added.

Najib said the sale of electricity would be a private sector initiative.

Towards better ties: Najib and Lee sharing a light moment during a press conference at Perdana Putra in Putrajaya yesterday.

“I believe the private sector of both sides will be in a position to determine the right price level when the time comes. I don’t see major difficulties,” he added.

The underground connection suggested is apart from the Malaysian proposed ferry service between Tuas and Puteri Harbour and comes under other means of transportation that the two countries are considering.

Najib said these modes of connectivity are in addition to the five new cross-border bus services launched in September 2010 and the Rapid Transit System link between Singapore and Johor Baru, scheduled for operation by 2018.

Lee also proposed that the two countries explore industrial cooperation in Iskandar Malaysia during the meeting, and the two leaders agreed that a new working group be formed under the Joint Ministerial Committee to promote mutually beneficial twinning of economic activities.

Lee said Singapore was a manufacturing country facing constraints of space and manpower, both of which Malaysia has, including in Iskandar.

He said Iskandar could provide industrial facilities and infrastructure that would allow Singapore companies and other investors to operate partly in the republic and Iskandar.

“The benefits are not just industrial (growth) but also spinoffs in terms of logistics, employment, residents, schools and services.

“Najib said this makes a lot of sense and this is something we want to work together,” Lee added.

Lee also called on the private sector to participate and invest in Iskandar as bilateral relations were good.

Other areas of collaboration discussed included cooperation in aviation and airport services between Senai International Airport and Changi International Airport.

The leaders encouraged the respective airport corporations to explore commerciallTy viable cooperation for synergy between the two airports, spilling over to business enterprises in Malaysia and Singapore.

Both leaders also welcomed Singapore-based private academic institutions to explore investment opportunities in education, including setting up campuses in Iskandar and Pagoh.

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