27. Mideast Funds to IDR
Investors from the Middle East are expected to ink an agreement today to commit billions of ringgit into the Iskandar Development Region, making them the pioneer investors.
Iskandar project is an ambitious plan to develop a large swathe of south Johor into a global city.
Malaysia’s reputation as a destination for foreign investment will certainly be burnished with the news that these Middle Eastern investors would be making a significant investment in the project.
Government officials are tight-lipped about the matter but several analysts believe that the initial investment could be more than 3 billion ringgit (US$861.2 million). This investment will kick-start the project.
Prime Minister Datuk Seri Abdullah Ahmad Badawi and other Cabinet Ministers are expected to witness the signing ceremony involving the pioneer investors for IDR in Putrajaya.
Last year, Malaysia attracted more than 20 billion ringgit ($5.74 billion) in foreign investments in the manufacturing sector-–the largest amount in recent years-–and the inflow for the first six months of the year suggests that the 20 billion ringgit benchmark will be breached easily.
The Iskandar Development Region-–a brainchild of the Prime Minister-–was launched late last year and is being designed as a new growth centre for the country. When completed in 20 years, it will become a landmark development with top-class lifestyle and leisure enclaves and is expected to create some 800,000 new jobs.
The IDR, covering 2,217 sq km, is nearly three times the size of Singapore. It is an ambitious plan aimed at making the region bigger than China’s Shenzhen, which has greatly benefited from Hong Kong.
For a start, Johor has allocated about 1 billion ringgit ($287.06 billion) to clean up and rehabilitate three of its most polluted rivers ahead of plans to build Danga Bay, a massive waterfront project with residential, commercial, recreational and social amenities.
It is understood that a long list of local and foreign investors have shown a willingness to pour their funds into this project but Khazanah Nasional has been mindful to consider only investors who share the vision of turning the IDR into a global masterpiece.
Government officials declined to talk about the proposed investment from the Middle East or to name the interested parties.
However, it is learnt that the investors are likely to be from the Gulf Cooperation Council countries and have a strong track record in developing green field projects.
It has been speculated that the investors are likely to turn a segment of the IDR into a financial and lifestyle centre, possibly even an Arab enclave in south Johor.
This proposed investment comes at a time when the world has been spooked by the sub-prime mortgage crisis in the United States.
In recent months, there has been strong interest in Malaysia and Malaysian companies by individuals and companies from the Middle East. Saudi Telecom bought a 25 per cent stake in Binariang GSM while more recently, a consortium led by prominent personalities in Abu Dhabi and Kuwait moved to take over construction company Putrajaya Perdana.
Last week, StarBiz reported that over the next two to three weeks, major announcements are expected from some of the biggest funds in the world that are holding billions of dollars of oil money.
Among these funds, the Abu Dhabi Investment Agency alone has investment assets exceeding $500 billion. The agency is jointly owned by Abu Dhabi Investment Council and the National Bank of Abu Dhabi.
The sectors that these investors are eyeing include infrastructure, banking, property, logistics, construction, engineering, tourism, hotels, theme parks and convention centres - Wong Chun Wai, The Star.
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