17.6.08

REIT option for Malay reserve land in ECER

by Sharon Tan
theedgedaily.com


KUALA TERENGGANU: The development council for the East Coast Economic Region (ECER) is mulling the setting up of a real-estate investment trust (REIT) for Malay reserve land in the development corridor.

Under the proposed REIT, all the Malay reserve land would be parked under an umbrella fund with the land leased out and the owners receiving dividends, or equity, or both.

The chief executive officer of the newly launched ECER development council (ECERDC), Datuk Jebasingam Issace John, said there was a mix of land types in the region.

“But for the Malay reserve land, we are looking at the setting up of a real-estate trust. The mechanisms and details are being worked out now. The state will be involved in it,” he told The Edge Financial Daily in an exclusive interview.

The REIT option is being considered to realise value for the Malay reserve land, the bulk of which is unutilised at present.

A total of RM112 billion has been targeted as total investments in the ECER by 2020. John said an initial investment of RM18 billion was expected to flow into the region by 2010.

Apart from domestic investors, he said the ECERDC hopes to draw investments from the Middle East, Japan, China and Taiwan. For now, there are local commitments in the plastics and kenaf industries.

It is learnt that some Australian parties have expressed interest in fisheries while several European firms are keen on the tourism industry. Announcements on some of these ventures are expected by year-end.

The ECERDC, formed to take charge of the development of the ECER, can now begin its marketing and promotion work although the Ministry of International Trade and Industry and the Malaysian Industrial Development Authority have been marketing the region since its launch last year.

The setting up of the council was announced by Prime Minister Datuk Seri Abdullah Ahmad Badawi last Saturday.

Abdullah, who is also the chairman of the council, also announced location-based incentive packages for investors, the first of their kind in the country.

Investors in sectors such as tourism, petrochemical, manufacturing and agriculture can enjoy up to 10 years of income tax exemption from the first year of profit, or investment tax allowance amounting to 100% of capital expenditure for five years.

“We should be able to draw investors not only through incentives but incentives supported by infrastructure,” said John.

He said focus would be given to industrial parks such as the Gebeng Industrial Complex in Pahang which comes with port facilities, Teluk Kalong Heavy Industry Park in Kemaman, which is linked to Kemaman Port, and the petrochemical complex in Kerteh, which includes the Kerteh Plastics Park.

“Infrastructure work at the Kerteh plastics park is almost completed and there are already three investors in place with RM50 million investments,” said John.

“The other three parks are already ongoing. We only need to strengthen the infrastructure and do marketing and promotion to bring the investors here. With the incentive package that we have now, we should be able to draw the investors,” said John, adding that halal parks would be developed in Gambang, Pahang and Pasir Mas, Kelantan.

ECER would also be well linked to the Kuantan-Kuala Terengganu Highway currently under construction.

John also said a feasibility study was being undertaken for the extension of the highway to Kota Bahru. He hoped to see work on this stretch take off under the 9th Malaysia Plan period, or the 10th Plan. Also, the connection between Ipoh and Kuala Berang was expcted to be ready next year.

To expedite work, the ECERDC would appoint an Implementation Coordination Committee (ICC) in each state to fast-track approvals and implementation.

John said the ECER’s agropolitan projects are targeted at the 30,000 hardcore-poor households in the region.

“The target is to eliminate hardcore poverty by 2010. The agropolitan projects are integrated rural development projects. They would have as their main crops rubber and oil palm.”

John said the farmer’s dependents would not be left out. “We want to create other agro-based job opportunities such as poultry farming and cocoa cultivation,” he said, adding that although it was a tall order to provide jobs for the family members, it had to be done.

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