ST : Remaking KL

Oct 16, 2010

Remaking KL

Plans to turn Malaysian capital into a top city spark cheer as well as worry

By Leslie Lopez

KUALA LUMPUR: Malaysia is making sweeping plans to turn Kuala Lumpur into a world-class financial hub by 2020 via a slew of multibillion-dollar land privatisation deals, stirring both excitement and concern.

The remaking of Kuala Lumpur - a central plank of Prime Minister Najib Razak's ambitious 10-year Economic Transformation Programme (ETP) - will involve the redevelopment of large swathes of real estate, including a military airbase on the fringe of the capital and the construction of an underground mass rail transit (MRT) network.

A major part of the plans is relocating the 196ha Sungei Besi airbase, located in the capital's southern district, to pave the way for a RM26 billion (S$11 billion) Kuala Lumpur International Financial District led by sovereign wealth fund 1Malaysia Development Berhad (1MDB), which has signed a memorandum of understanding with Abu Dhabi's Mubadala Group to develop the project.

Also on the cards is the redevelopment of Kampung Baru, a Malay enclave near the landmark Petronas Towers. It has been a symbol of ethnic Malay pride but also a nagging boil to pro-development politicians, like former premier Mahathir Mohamad, who have long wanted the wood and concrete kampung houses to make way for more upscale development.

To alleviate public transport woes, a RM40 billion MRT project has been announced. Set to emerge as the single-largest infrastructure undertaking in Malaysia, the rail network will comprise three networks running over a stretch of 141km.

A 100-storey building is also being planned, set to be completed in 2015.

The sprawling city and proposed economic hub will include 10 municipalities and encompass an area of 279,327ha - which is four times that of Singapore.

The plans will transform the city into one of the top 20 in city economic growth and put it among the global top 20 most liveable cities by 2020, said Federal Territories and Urban Well-being Minister Raja Nong Chik Raja Zainal Abidin.

They are also the latest in a series of initiatives over the last 15 years which have changed Kuala Lumpur's skyline dramatically. Landmark projects such as the Petronas Towers, once ranked as the world's tallest structures, have been completed, and lifestyle hubs such as those in suburbs like Mont Kiara and Bandar Utama have sprouted.

Despite this, Kuala Lumpur faces fierce competition from regional cities in its push to attract talent and multinational corporations.

It lags behind many other Asian cities because of bureaucratic corruption, red tape in securing work permits and concerns over crime. Also, transportation infrastructure has not kept pace with rapid development.

To kick-start the ambitious new initiatives, the government has tapped several state-owned corporations, including 1MDB and the state pension agency, the Employees Provident Fund, to take the lead in joint ventures with foreign groups.

The plans have triggered a stampede among politically well-connected business groups eager for a piece of the action. They include businessman Syed Mokhtar Al-Bukhary, who wants to secure rights to develop 1,200ha of land in a north-west suburb of Kuala Lumpur, and low-key businessman Desmond Lim, a close confidant of Datuk Seri Najib, who is eyeing a stake in the Sungei Besi airbase redevelopment.

But while a significant amount of interest has been generated, there has also been unease.

For a start, bankers and private economists wonder how this mammoth undertaking will be financed.

Government economic planners are hoping that the private sector, including foreign investors, will fund up to 90 per cent of Kuala Lumpur's makeover and the entire national ETP, which is estimated to cost US$443 billion (S$574 billion).

Property consultants, stunned by the gargantuan dimensions of the redevelopment, also worry that Malaysia's already sluggish property sector could face an overhang of new office and residential properties that would take decades for the market to absorb.

The ETP is also drawing heat from opposition and government politicians who are demanding greater transparency in the privatisation of the land deals.

They want the government to adopt public auctions as practised in Hong Kong and Singapore, where land is sold under a public bidding exercise and funds derived from the sale are directed towards infrastructure development.

'Land is a very sensitive topic among Malays and the opposition parties are now claiming that the government is selling strategic land to foreigners and non-Malay cronies,' said a senior Umno official, referring to the military airbase. 'We need to be ready to counter these claims.'

ljlopez@sph.com.sg


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Big plans in store

· Sungei Besi airbase will be relocated for the RM26 billion (S$11 billion) Kuala Lumpur International Financial District.

· Sungei Buloh, with about 1,200ha of land in KL's north-west, will be redeveloped as one of the green belts. Estimated cost: RM10 billion.

· A 100-storey building will be finished in 2015. Estimated cost: RM5 billion.

· A three-network MRT will include two rail lines running through the main economic clusters. A circular rail network linking the inner city is also planned. Estimated cost: RM40 billion.