Thursday, October 6, 2011

Putrajaya ditches Chinese US$1b Pudu Jail plan for local developers

October 05, 2011
KUALA LUMPUR, Oct 5 — The Najib administration has dropped a mainland Chinese developer’s US$1 billion (RM3.2 billion) redevelopment plan for Pudu Jail in favour of splitting the eight-hectare prime land into parcels to be developed by mainly Bumiputera companies, sources say.
The Malaysian Insider understands that Pudu Jail land owner, UDA Holdings Bhd, has been instructed by its shareholder, the Ministry of Finance (MOF), to set up a special purpose vehicle (SPV) to oversee the redevelopment and carve up the land with two parcels to be given to Bumiputera companies and one to a non-Bumiputera firm.
“UDA Holdings received a letter from the MOF in July rejecting the Chinese bid despite a majority board decision to recommend their plan,” a source told The Malaysian Insider, referring to China’s Everbright International Construction Ltd’s bid.
A source said the eight-hectare piece of prime land will be split into three parcels under different developers. — pic
UDA Holdings chairman Datuk Nur Jazlan Mohamed confirmed the MOF directive but declined further comment. Prime Minister Datuk Seri Najib Razak is also the Finance Minister with Datuk Ahmad Husni Hanadzlah as the Second Finance Minister.
It is understood that the Pulai MP chaired an UDA Holdings board meeting yesterday to work out the terms of reference for companies interested in redeveloping the site, which became Kuala Lumpur’s main prison from 1895 until its formal closure in 1996.
“The board is working out the terms for the new bids and it will take some time,” another source told The Malaysian Insider, adding the requirements were set by the MOF.
UDA Holdings had recommended Everbright as its partner for the redevelopment after a shortlisting process had been completed with Everbright’s bid providing an integrated commercial and transport hub worth RM2 billion, three times the value of the land. The other bids from local companies were not impressive or gave similar returns, a source said.
The board had planned an integrated commercial and transport hub as the site is near the proposed 100-storey Warisan Merdeka tower, the Jalan Shaw Light Rail Transit (LRT) station, the planned Klang Valley Mass Rapid Transit (MRT) and UDA’s own Pudu Sentral bus terminal.
The MRT and the Warisan Merdeka project, together with UDA’s proposed Pudu Jail plans, is part of Najib’s Economic Transformation Programme (ETP) under his New Economic Model (NEM) to turn Klang Valley into the Greater Kuala Lumpur economic district and Malaysia into a high-income nation by 2020.
However, the MOF directive to split the land into three parcels under different developers could jeopardise UDA’s contribution to Najib’s plans, a source said.
He repeated that the government is facing pressure and lobbying from politically-connected local companies who were keen on taking part in the deal, citing the need to keep the iconic redevelopment in the hands of the majority Bumiputera business community.
The MOF had in July rejected UDA’s sale of 3.56 acres of prime land in downtown Kuala Lumpur to 54 per cent Bumiputera-owned Nadayu Properties Bhd, formerly known as Mutiara Goodyear Development Bhd, for not having sufficient Bumiputera holding.
While touting the ideals of meritocracy and the need to bring in more foreign direct investment (FDI) into the country under the NEM, Najib has also taken great pains to assure the politically-dominant Bumiputeras that they will continue to have a major share of the economy.
He recently announced that 43 per cent, or RM8 billion, of civil engineering works in the MRT would be given to Bumiputera contractors after complaints that they were shut out of the pre-qualifying tenders by project operator Syarikat Prasarana Negara Bhd (Prasarana). Prasarana was the project owner until the Cabinet announced in August that an MOF company, MRT Co, will be the SPV owning the project.
UDA came under fire recently from Malay hardliners in Umno, Perkasa and Utusan Malaysiafor allegedly abandoning the Bumiputera agenda by not appointing Bumiputera joint-venture turnkey investors for the proposed Bukit Bintang City Centre (BBCC) on the Pudu Jail site.
Nur Jazlan has denied these accusations, saying UDA has no choice but to be competitive as it no longer received any direct assistance from the government.
UDA, whose assets are estimated to be worth RM2 billion, is over RM900 million in debt. It also holds just RM90 million in cash with an outstanding RM104 million land premium for the Pudu site due last month.

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