Newsbreak: 1MDB’s land in Pulau Indah up for sale

This article first appeared in The Edge Malaysia Weekly, on May 20, 2019 - May 26, 2019.
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THE government is inviting bids for a 318-acre (13.85 million sq ft) tract in Pulau Indah in Klang, Selangor — owned by 1Malaysia Development Bhd (1MDB) — which has been designated as a free trade zone (FTZ), and sources say it may be able to get as much as RM416 million for it.

The tract is located adjacent to the Port Klang Free Zone (PKFZ) and next to the proposed Westports extension (see map).

It is learnt that the bidding exercise will be conducted in two stages. Stage 1 is an expression of interest (EOI), whereby interested parties can register their interest. The deadline for this stage is noon on June 21.

For Stage 2, parties shortlisted in Stage 1 will be invited to submit tenders. Unlike an EOI, a tender is binding.

The sources say no reserve price has been set but the government is looking at getting more than RM30 psf for the tract. At RM30 psf, this works out to RM415.56 million.

The land, which has an industrial title, has been given FTZ status and will be granted a fresh 99-year lease. It is understood that its current lease expires in 2096.

Land in Pulau Indah Industrial Park — where Swedish furniture retailer IKEA is building its regional distribution and supply chain centre — which is infrastructure ready, is reported to be going for about RM70 psf.

A marketing document obtained by The Edge reveals that real estate agent CBRE | WTW has been appointed as the exclusive marketing agent for the sale. When contacted, CBRE | WTW managing director Foo Gee Jen confirms the appointment of his firm but declines to disclose further details.

Recall that in his Budget 2019 speech, Finance Minister Lim Guan Eng said the government planned to convert the 381 acres into an FTZ to support and catalyse shipping and logistics activities in Port Klang. “The new FTZ will serve as a natural extension to the PKFZ. The land will be developed through a joint venture or solely by the private sector,” he added.

Although Lim had said the government is open to developing the land on a joint-venture basis, a source tells The Edge that the preference is for an outright sale. It is learnt that the government has already received enquiries from local and international players, signalling that the bidding will be competitive.

This is not the first time an attempt has been made to sell the tract. In September 2015, 1MDB had invited potential buyers to register their interest as part of its rationalisation plan. However, there was no progress.

The land is registered under Tadmax Power Sdn Bhd. Ivory Merge Sdn Bhd, a 1MDB unit, bought Tadmax Power from Tadmax Resources Bhd in 2014 for RM294.38 million. 1MDB is reported to have acquired two other land parcels in the area via direct negotiations with the government.

It is noteworthy that last September, Westports Holdings Bhd bought a 381-acre leasehold tract off Pulau Indah from Perbadanan Kemajuan Negeri Selangor for RM116.19 million. Excluding reclamation cost, the price works out to RM7 psf. The purpose of purchase was to expand the port operator’s container terminals. The lease on the tract expires in 2101.

 

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