US$2 billion (RM8 billion) from CREC into Bandar Malaysia

Many months back, when I was driving past the Bandar Malaysia site together with a few friends, they asked ‘will this happen or not? 1MDB is in so much issues.’ (Actual words are more crude but the message is something like that). Let’s focus on Bandar Malaysia this time. Well, according to a news report from Xinhua online news, China Railway Group (CREC) has announced it plans to open a US$2 billion regional centre in Kuala Lumpur. This new regional centre is expected to give it an edge over rivals over the high speed rail (HSR) between Kuala Lumpur and Singapore. Bandar Malaysia is the terminus station for HSR. A bit about HSR, read here: Singapore Transport Ministry about HSR

This new RM8 billion development would be for its regional headquarters for which CREC general manager added, “Our regional centre is here, not our competitors. We find resources together with our local developer in infrastructure…I cannot find (anyone) who can match us.” This plan tolocate its regional hub came about just three months after CREC, together with its local partner Iskandar Waterfront Holdings acquired a 60 percent stake in Bandar Malaysia from 1MCB for RM7.41 billion. Its rivals for the HSR project includes parties from Japan, Europe and South Korea. They stated their ambitions clearly too. Cai said, “We are an infrastructure contractor. We are interested. We are waiting for the governments of Malaysia and Singapore to call for tender.”

I think I wrote about this earlier. I would prefer an Asian company winning this tender instead. I think it’s time ASIA thinks a little more as ASIA since these economic groupings in many parts of the world has always been extremely strong. In case anyone is still wondering why I say so, well, if a relative is competing with an outsider for the same job and both were able to perform at the same levels, which one would you choose? Please do not answer me, everyone has their own personal opinions. The party able to provide the most benefits, economically should be chosen. Efficiency is everything and this is why when times are bad, companies have to restructure. Changing trends not necessarily bad, we must change with them At the same time, do google and read about what the Australian government is doing in choosing the best party to build their new submarines and you would get the idea.

According to the report, the open tender is expected to happen at the end of 2016. Yes, I think it’s very clear that getting it ready to run for the first time is thus at least 5 years later. CREC was 71 last year in the US business magazine Fortune 500 world’s largest companies in terms of turnover. Long time ago, I mean when I first started working, there were hardly any FDIs from China into Malaysia. They were still building up internally. Today, China is by itself bigger than the European Union when it comes to Malaysia’s largest few trading partners. In fact according to one line from Malaysia’s PM Najib, China’s investment in the manufacturing sector grew from $47 million in 2009 to $1.4 billion in 2014. This new CREC initiative will easily top that. Happy investing.

written on 23 Mar 2016

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  1. St koo avatar
    St koo

    Hi, pls write some things on pro & con of freehold vs lease hold resident property.What happen to the property when approach end of least? Will it be extended? With additional payment? Rgds

    1. Hi Koo, I may not have written it in the format you wanted. If you google for ‘Freehold vs leasehold malaysia” you will find lots of resources which are comprehensively written. It will answer all your questions above. In brief, my personal opinion is that as long as the leasehold property is substantially cheaper and is in a good location, I would prefer it over a freehold anytime. The leasehold would most likely be extended. For example, in a high-rise of 500 units and the leasehold expires, we are talking about a potential 2,000 residents there. I believe the government of the day would prefer to keep them happy. 🙂 Yes, if need to extend, there’ll be a certain amount of premium to be paid. No worries, this premium is by far lower than buying a new home 80 years later if your lease will expire 80 years later from today….. Cheers.

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