KUALA LUMPUR (Nov 2): The proposal to establish the world’s first airport Real Estate Investment Trust (REIT) in the country is in line with the government’s plan for higher private involvement in the field, said Transport Minister Datuk Anthony Loke.

“The government’s plan, as mentioned previously, is to bring in the private sector to invest to develop airports in the country,” Loke told reporters at the parliament.

More details will be shared by the finance ministry, he added.

Loke previously said in an interview in June that many airports in Malaysia are currently under-utilised.

“At least for the next few years, the government has no means to build new airports unless there are private initiatives,” he reportedly said.

Earlier, during the budget 2019 tabling, Finance Minister Lim Guan Eng proposed that an airport REIT be established, to monetise government asset. A 30% equity sale in the REIT is expected to raise RM4 billion.

"This REIT exercise will only be carried out after the new Regulated Asset Base and user fees structure has been negotiated and finalised.

"Going forward, the Airport REIT will have the opportunity to raise funds publicly either by issuing new REIT units or via borrowings in order to fund the improvement and expansion of airports, especially those facing over-capacity. This financial structure will significantly reduce the debt burden of the Government to fund all of these projects on its own, while maintaining MAHB as an asset light operator not bogged down by heavy capital investments and debt. Other projects could also benefit from similar funding and investment structures, such as hospitals, or rail infrastructure," Lim added.

Investors in the Airport REIT will receive income arising from user fees collected from Malaysia Airports Holdings Bhd (MAHB), which count Khazanah Nasional Bhd among its shareholders, which holds the concession holder for the management of 39 airports in the country.