The BIG 9th Malaysia Plan!

[nazrey]

9MP goodies to boost small-cap stocks
By Adeline Paul Raj and Ho Siew Yee
April 3 2006





INVESTORS may want to buy shares of smaller firms in the construction, building material and water sectors which are seen as key Ninth Malaysia Plan (9MP) benefactors, analysts said.


These stocks could rise as their values are still attractive even after weeks of rallying before the plan was announced, Avenue Securities research head Noor Azwa Mohd Noor said.

Prime Minister Datuk Seri Abdullah Ahmad Badawi announced an 18 per cent rise in public development spending to RM200 billion for the 2006-2010 period from the previous five years. Another bulk of RM20 billion projects will be financed by non-government- controlled firms.

"The Government is focusing on the right areas in the 9MP, which is to increase the mindset of people as well as productivity. The plan will also ensure the country remains competitive.

"Given two to three months, the market might react reflectively towards the new plan," said Teoh Kok Lin, managing director of Singular Asset Management Sdn Bhd.

While research heads and fund managers agreed unanimously that the 9MP is indeed a good one, Noor Azwa said that the allocation, which was in line with most of the research houses' expectations, is unlikely to cause major ripples in the local bourse.

"The market had already anticipated it (the allocation). The small- cap construction, steel and water firms are the main beneficiaries, so it does not impact the big stocks much. Thus, there may not be much support for the market to go up without the blue-chips," he explained.

The benchmark index closed 0.34 point, or 0.04 per cent, lower to 926.63 points last Friday.

Some RM38.9 billion will be spent on infrastructure and utilities, including rural roads, rail development, highway extension, upgrading airports, construction of water supply as well as for flood mitigation projects.

Vincent Khoo, research head at Hwang-DBS Vickers, said the 9MP seemed more pragmatic, in that there were considerably fewer mega-projects and more of smaller ones. The mega-projects chosen to be implemented, he noted, were seen as being "needed and productive".

OSK Research is bullish over builders like Isyoda Corp Bhd, Prtasco Bhd, Ahmad Zaki Resources Bhd, MTD Capital Bhd and the UEM group while the bigger boys, such as Gamuda Bhd, IJM Corp Bhd and MMC Corp Bhd, will benefit from the bigger 8MP leftover projects, its research head Kenny Yee said.

Manufacturers like APL Industries Bhd as well as Sarawak players like Cahya Mata Sarawak Bhd and Naim Cendera Holdings Bhd will likely be in the limelight as well, Yee said.

"There's also a huge increase in allocation for water sector.

"This will benefit firms like Choo Bee Metal Industries Bhd, YLI Holdings Bhd, Hiap Teck Venture Bhd and Engtex Group Bhd," he added.

[Lastresorter]

Can Malaysia achieve 6% annual growth amidst competition from particularly China & India? What are the criterias do we need? What are the issues we need to look into in order to achieve the set target by 2010? Lets discuss.

I'm seeing that now the main focus no longer stays solely on the Central Corridor (Klang Valley), but also to the Northern Corridor (Penang+Kedah+Perak), Southern Corridor (Seremban+Melaka+Johor), Southern Johor Economic Region (JB), Eastern Corridor (Kelantan+Terengganu+Pahang), Sarawak & Sabah.

[globocentric]

Originally Posted by Lastresorter

Can Malaysia achieve 6% annual growth amidst competition from particularly China & India? What are the criterias do we need? What are the issues we need to look into in order to achieve the set target by 2010? Lets discuss.

I'm seeing that now the main focus no longer stays solely on the Central Corridor (Klang Valley), but also to the Northern Corridor (Penang+Kedah+Perak), Southern Corridor (Seremban+Melaka+Johor), Southern Johor Economic Region (JB), Eastern Corridor (Kelantan+Terengganu+Pahang), Sarawak & Sabah.

Malaysia has never been completely dependent on the central corridor. Just see what happens if the all the MNC's in Penang relocate. Penang has always been better at attracting hi tech factories compared to Selangor and KL. Just see what happens when all the MNC's in Penang relocate. The Malaysian GDP will plunge by at least 30% which is more than enough to trigger an economic crisis. Malaysia has yet to move into the post industrial stage unlike Singapore. Singapre can survive without factories due to the sheer number of financial institutions it attracts. KL is nowhere near Singapore in that area. Although KL has many high rise buildings, it still has one has the cheapest office rents in Asia.

[TYW]

Tuesday April 11, 2006



Smooth the way for 9th Plan by not delaying approvals

By K. PARKARAN and MANJIT KAUR



KANGAR: Whoever stands in the way of the 9th Malaysia Plan must go.

That is the Prime Minister’s stern warning to civil servants responsible for the implementation of the plan as he kicked off his nationwide tour to explain the 9MP to the rakyat.

If government officers cannot deliver, Datuk Seri Abdullah Ahmad Badawi said, they should take a rest.


SWEET SUCCESS: Datuk Seri Abdullah Ahmad Badawi tasting some grapes at the Perdana plantation in Bukit Bintang, Kangar, yesterday. With him is Perlis Mentri Besar Datuk Seri Shahidan Kassim (right). – Bernamapic

“In fact, they should take a permanent rest,” he suggested yesterday.

“We cannot entertain those who can’t work. We should not pity them when asking them to leave. We should pity the people who have been waiting for the approvals for so long.”

Abdullah said it was ridiculous that officers took two weeks to approve applications when it could be done in just three days.

”Besides the layers and layers of red tape, they also ask for ‘toll’ in some cases,” he said, in an apparent reference to corrupt practices.

“Facilitate, don’t frustrate when dealing with applications for approval,” he emphasised.

“Bureaucracy deters investors. Non-performers have to leave.

“The world is very competitive, and frustrated investors will look to other countries like China, India and Thailand.”

He said government officers should not be pointing fingers when something went wrong, but should look for ways to overcome the problem.

On the second link for Penang, the Prime Minister said: “I did not approve it (under the 9MP) just because I am from Penang.

“This project will spur development in the Northern Corridor where neighbouring states like Kedah, Perlis and Perak will also benefit.

“Coupled with the Penang International Airport, the region stands to gain.”

Abdullah said he would personally ensure that the 9MP was implemented effectively because that could “make or break” the nation’s march towards Vision 2020.

“Good ideas will go to waste if we don’t have good officers to implement them. Besides the ICU (Implementation Coordination Unit), we have also set up a special committee to monitor the implementation of the 9MP,” he said.

“I have even brought along two very senior officers of the Economic Planning Unit, including the D-G, with me this morning.

“That’s how serious we are.”

[johnsonooi]

I agree with you ::
Since Kedah is the neighbour of Penang, and Penang has the advantages to attract hi-tech industries, so Kedah takes the geographical advantages to establish Kulim Hi-tech Park in order to lure the foreign investors to invest in Northern Region since Kedah has plenty of lands. This will benefit the Northern Region, such as Perlis, Kedah Penang and Perak, by establishing a huge MSC status corridor indirectly (in the future...). For example, Intel has shifted its manufacturing factories to Kulim. The finishing products will be shipped to overseas by using Penang Port, exported to Thai through Perlis or Kedah bordertown and distributed to whole Malaysia by NSE. Just my 2 cents worth.

Originally Posted by globocentric

Malaysia has never been completely dependent on the central corridor. Just see what happens if the all the MNC's in Penang relocate. Penang has always been better at attracting hi tech factories compared to Selangor and KL. Just see what happens when all the MNC's in Penang relocate. The Malaysian GDP will plunge by at least 30% which is more than enough to trigger an economic crisis. Malaysia has yet to move into the post industrial stage unlike Singapore. Singapre can survive without factories due to the sheer number of financial institutions it attracts. KL is nowhere near Singapore in that area. Although KL has many high rise buildings, it still has one has the cheapest office rents in Asia.

[DW25]

For all i Know , if a country wish to accelerate growth within our states ; IT IS A MUST for us to equip ourselves with excellent transportation. i cite Singapore as an example: Their MRT position encourage human flow and spending ; THis produced a focus point , which helps shopping malls and commerical industry to cluster togather. It brings better cycle of coordination which explains Y Singapore CDB has been regarded as one of the best in the region.

I sincerely hope to see more Metro , LRT , monorail sprouting across nation-wide.

[Magician]

OH now... the Half Bridge to replace Johor-Singapore causeway has scrapped... at least I think this is the most rational decision...

[hetfield85]

- EDITED -

[nazrey]

Ninth Plan seen a fillip to property mart in Johor, Penang

business times news
April 15 2006


THE property market in Johor and Penang is due to get a boost from the Government's plan to improve infrastructure in the two states under the Ninth Malaysia Plan (9MP), said Citigroup Global Markets Malaysia.

The research house said several developments in the recently-announced 9MP could spur the property market in the two states.

The developments include the South Johor Economic Region, Bandar Nusajaya, a logistic and education hub in Johor, an outer ring road and a second bridge for Penang.

Besides the 9MP, Singapore's plan to set up two integrated resorts in its country is also a potential long-term driver for Johor's property market, which has the second highest unsold residential units as at March last year.

The Singapore Government estimates that the two integrated resorts could create 35,000 jobs.

"We expect the employment opportunities created here to be a driver for stronger housing demand in Johor," Citigroup Global Markets Malaysia analyst Andrew Chow said.

The research house selected SP Setia Bhd its top pick among property stocks should the Johor and Penang property markets recover.

The group has 594ha of development land in Johor and 45ha in Penang with total gross development value of more than RM4 billion.

It is also present in the Klang Valley via Setia Alam development of 1,572ha, the land value of which is expected to increase when the construction of the link road to the North Klang Valley Expressway (NKVE) is completed.

"We reiterate our buy rating as we believe Setia's prospects and valuations look compelling.

"We expect a three-year earnings per share (EPS) compounded annual growth rate (CAGR) of 15 per cent. The shares are trading at a 29 per cent discount to our restated net asset value (RNAV) estimate of RM5.41 per share.

Citigroup has set a target price of RM4.90 for SP Setia. The stock closed 2 sen higher to RM3.86 yesterday.

[travellator]

Govt announces RM15b worth of projects

The government called tenders on July 18 for up to RM15 billion or US$4.1 billion, worth of government projects under the five-year Ninth Malaysia Plan.

The 880 projects cover more than 450 schools, as well as plans for water supply and road networks, Prime Minister Datuk Seri Abdullah Ahmad Badawi's office said in a statement posted on its website.

Shares of companies considered likely to snare some of the work have surged after Abdullah announced the US$54 billion (RM200 billion) plan in March. He did not give much detail on specific projects at that time.

Attention has focussed on construction companies such as state-controlled UEM World, which has seen its share price almost double since mid-March, to stand at RM1.68 ringgit by July 18's close of trade.

Also popular with investors are MMC Corp, which has risen 34% since mid-March, with its shares up 3.9% at RM3.22 by July 18's close, and UEM Builders, up 40% since mid-March, to stand at RM1.23 by close of play on July 18, or a gain of 3.4%. -- Reuters

[travellator]

880 Projects Worth RM15 Bln To Be Tendered Out Under 9MP
Business
July 18, 2006 18:39 PM
KUALA LUMPUR, July 18 (Bernama) -- Prime Minister Datuk Seri Abdullah Ahmad Badawi on Tuesday announced that 880 new development projects worth RM15 billion under the Ninth Malaysia Plan would be tendered out soon.

The initial list of projects include the construction of 450 primary and secondary schools, roads, bridges, projects to increase water supply and the building of the integrated transportation terminal at Gombak in Selangor, he said in a statement issued from the Finance Ministry at Putrajaya.

Abdullah, who is also Finance Minister, said the road project is from Padang Besar to Kayu Hitam, the bridge would be between Semporna and Pulau Bum Bum in Sabah and the water project in Terengganu.

He said the government was aggressively pursuing programs and projects under the 9MP just a month after the plan was approved by Parliament.

While the list of projects announced was the initial list, he said the government would announce additional lists from time to time, after having obtained the required information from the respective ministries.

He said all ministries and agencies together with the Works Ministry have been directed to act quickly to come out with the project design and tender document so that projects could be implemented as soon as possible.

At the same time, "I want the entire government machinery to ensure that all other development projects approved under the 9MP are implemented quickly so that the people can benefit as desired by the government," said Abdullah.

The details of the tenders would be advertised in the local papers as well as on the government's website (www.gov.my), Works Ministry's website (www.kkr.gov.my) and the website of the Construction Industry Development Board Malaysia or CIDB (www.cidb.gov.my).

The list of projects can be obtained from the website of the Prime Minister's Office (www.pmo.gov.my), Ministry of Finance (www.treasury.gov.my) and Economic Planning Unit (www.epu.jpm.my).

He said a Programme and Project Management (PPM) methodology would be used by the Implementation Coordination Unit and the National Implementation Directorate to monitor the projects concerned.

The main feature of the PPM methodology would incorporate the best practices and process for the planning and implementation of these projects.

This includes ensuring that projects would be completed within reasonable costs and a fixed timeframe.

PPM would also develop a proven method to assess the effects and outcome accurately to ensure the programmes and projects implemented achieve their objectives.

"As the chairman of the National Implementation Action Body, I will monitor the implementation of these projects," the Prime Minister said.
----------------------------------------------------------------------------------------

anyone have details about the above projects...integrated transport terminal-Gombak! bridge between Semporna & P Bum Bum!

[nazrey]

9MP details announced by PM: RM15b construction projects up for tender
Source : NewStraitTimes
19 Jul 2006

[nazrey]

Govt announces RM15b worth of projects
18 Jul 2006 6:45 PM


The government called tenders on July 18 for up to RM15 billion or US$4.1 billion, worth of government projects under the five-year Ninth Malaysia Plan.

The 880 projects cover more than 450 schools, as well as plans for water supply and road networks, Prime Minister Datuk Seri Abdullah Ahmad Badawi's office said in a statement posted on its website.

Shares of companies considered likely to snare some of the work have surged after Abdullah announced the US$54 billion (RM200 billion) plan in March. He did not give much detail on specific projects at that time.

Attention has focussed on construction companies such as state-controlled UEM World, which has seen its share price almost double since mid-March, to stand at RM1.68 ringgit by July 18's close of trade.

Also popular with investors are MMC Corp, which has risen 34% since mid-March, with its shares up 3.9% at RM3.22 by July 18's close, and UEM Builders, up 40% since mid-March, to stand at RM1.23 by close of play on July 18, or a gain of 3.4%. -- Reuters

[travellator]

Tenders For 9MP Projects To Be Out In Three Months
Business
July 19, 2006 19:47 PM
PUTRAJAYA, July 19 (Bernama) -- Prime Minister Datuk Seri Abdullah Ahmad Badawi said tenders for projects under the Ninth Malaysia Plan (9MP) will be out in three months time.

The tenders will be put out by the respective departments, he told a press conference here Wednesday.

Tuesday, Abdullah who is also the Finance Minister, had announced that 880 construction projects worth RM15 billion would be tendered out soon.

Of the total projects, 455 would be implemented through government tenders while 425 projects would be funded by private finance initiative (PFI).

However, Abdullah pointed out that not all the projects would be implemented simultaneously this year as the 9MP was a five-year development plan.

He said the variety of projects under the 9MP would give opportunities to contractors.

On the priority of projects to be implemented, Abdullah said they were decided based on their location, urgency and ease of implementation.

Asked on the PFI projects, he said the government has decided to establish a RM5 billion Facilitation Fund, an allocation to assist the implementation of the projects.

He said the government has decided on the PFI projects but if there were any suggestions from the private sector to implement certain projects, they should fork out their own funding.

An example, he said, was the KL-South fast train project which was not in the PFI planning because of its high cost.

However, if the private sector feels that the project can meet the demand and be accepted by the public, it can be considered but they would have to come out with their own funding, he said.

"This is because the government has no plans to implement or provide an allocation but the government understands that it is very useful to the people," he said.

The prime minister said the private sector concerned should build the project and upon completion, they should also manage, operate, fix the ticket pricing and make it their property.

He said there was no necessity for the government to own a fast train company but what the government could do would be to help simplify the process of land acquisition.

Furthermore, Abdullah said there was no need to have a second fast train project to compete with the present one.

Asked whether the proposed fast train project has been accepted, he said the government was waiting for suggestions from other companies. YTL has made some suggestions.

Abdullah also said there were projects under the 9MP that the government had decided upon but it could be implemented as PFI projects.

He cited the housing project for police personnel as an example.

The project needs to be completed fast and does not depend on the allocation for a particular year.

As such, the government will ask the Employees' Providend Fund (EPF) to set aside an allocation for the implementation of the project.

The houses would be rented out and EPF would get better returns from the investment compared with returns from fixed deposit, he said.

According to a statement issued at the press conference, EPF would give out loans to a SPV (special purpose vehicle) and the contractor for the project would be picked through tenders.

The SPV would then pay the contractor and own the project while the government would pay rental to the SPV before the facility is handed over to the government.

It said EPF would get back the principal amount and returns from the rentals received from the government.

[travellator]

9MP will have forceful impact in medium term, says CIMB Securities

CIMB Securities Sdn Bhd said the projects under the Ninth Malaysia Plan (9MP) would make a forceful impact on the country’s economic growth over the near to medium term, while some of the fast track and smaller scale projects will support domestic growth in the short-term.

“We maintain that economic growth would remain relatively flat at between 5% to 5.3% in second quarter (2Q) and 3Q, before improving to 5.5% in 4Q," it said in a research note on July 19.

The research house expects real gross domestic production (GDP) to sustain at 5.6% in 2007 compared with the estimated 5.3% this year, largely driven by the acceleration of public spending.

The research house said other contributing factors would be decent expansion in private sector expenditure, although exports would be slower.

CIMB Securities identified the construction, manufacturing (mainly construction-related materials) and services sectors as the main beneficiaries of the 9MP.

The assessment follows Prime Minister Datuk Seri Abdullah Ahmad Badawi's announcement on July 18 that an initial 880 new development projects worth RM15 billion would be tendered out under the 9MP.

CIMB Securities said that as the bulk of the expenditure was for smaller scale projects, it is expected to have high multiplier effects and linkages to a broader segment of the economy.

“We expect the impact to be felt more in 2007. It is estimated that public investment is expected to contribute at least 1.5 to 2 percentage points to real GDP growth in 2007."

It said private investment was expected to contribute 1.5 percentage points, benefitting from the implementation of 9MP under the private finance initiatives as well as the continued inflow of foreign direct investment.

[travellator]

Wednesday July 26, 2006

Government to ask for PFI project proposals

By Loong Tse Min

tsemin@thestar.com.my

PETALING JAYA: The Government will soon call for requests for proposals (RFPs) for private financing initiatives (PFI) projects, sources said.

The RFPs, to be called possibly next month, were expected to include broad parameters for packaged criteria such as the project cost, model and design, the sources told StarBiz.

It is believed the Government is likely to view the proposed projects in terms of the best possible scheme, and the amount put up and sum to be funded by the private sector.

KTM projects worth about RM2.4bil are among the PFI jobs set to be rolled out as part of the Ninth Malaysia Plan
Avenue Securities analyst Kamarulzaman Hassan said that big construction players such as Gamuda Bhd, Road Builder (M) Holdings Bhd, IJM Corporation Bhd, Ranhill Bhd and Sunway Holdings Incorporated Bhd were likely to gain most from the PFI scheme.

“The PFIs would certainly stretch Malaysian contractors' balance sheets. A decent-sized PFI project of RM1bil could easily push big contractors' gearing to more than 100%,” he added.

The head of research at a local brokerage believes the Government would be “very selective in terms of the use of available funds in the country, both from the Employees Provident Fund and other pension funds, as well as from private banks''.

“Clearly, they (the proposals) would have to be for the designated areas in the northern, southern and eastern corridors.

“Anything outside the scope of the Government's development plan would not be viewed that positively,” the head of research said.

The research head concurred with Avenue's Kamarulzaman that the bigger contractors who had the capital clout and expertise stood to gain from such projects.

Hwang-DBS Vickers Research said about half the projects already announced under the Ninth Malaysia Plan (9MP) fell under the PFI scheme, of which almost all were building projects.

According to Hwang's report, 357 of the PFI projects are for the Education Ministry, 24 for the Internal Security Ministry, 17 for the Defence Ministry, and a smaller number for the Home Affairs Ministry, Information Ministry, Human Resources Ministry; Culture, Arts and Heritage ministry; Transport Ministry, Works Ministry, Natural Resources and Environment Ministry, Agriculture and Agro-based Industries Ministry, Plantation Industries and Commodities Ministry, the Treasury and the Prime Minister's Department.

TSR Capital Bhd is one company to have recently announced its participation in a PFI project.

“We are certainly keen to participate in PFI projects,” TSR Capital managing director Tengku Datuk Mustapha Tengku Mohamed said when contacted by StarBiz.

In a filing with Bursa Malaysia last week, TSR Capital said it had received a letter from Universiti Teknologi MARA (UiTM), which had agreed in principle on the development of a proposed 660-acre Medical City in Sepang funded through PFI.

Avenue's Kamarulzaman said some of the projects to be rolled out as part of the Government's 9MP allocation of RM50bil that might fall under PFIs included the Penang Monorail estimated to be worth RM1.1bil, KTM projects worth RM2.4bil, New North Klang Valley Expressway (RM1bil) and KL-Johor Bullet Train (RM8bil).

[nazrey]

Gamuda rises on hope of 9MP projects
By Chong Pooi Koon
August 5 2006


A STRING of positive news had investors convinced that the Government is set to roll out more big-ticket projects that will benefit larger contractors like Gamuda Bhd, pushing shares of the company up 7 per cent on heavy volume yesterday.

Things have been moving fast in the local construction scene after the South Johor Corridor development plan was announced by the Government recently.

Up north, the Cabinet on Wednesday gave Penang folks reason to smile when it approved the construction of a multi-billion-ringgit second bridge and the RM1.2 billion monorail system, cheering construction players along the way.

In addition, the Government is evaluating the bullet train project proposed by the YTL group, which links Kuala Lumpur to Singapore.

Analysts now see the recent string of positive news as the precursor towards more Ninth Malaysia Plan (9MP) projects, which will benefit larger contractors and government-linked companies.

"Should this happen, we expect a re-rating of larger construction companies such as IJM Corp, Road Builder, Gamuda, WCT Engineering, Hock Seng Lee, Naim Cendera Holdings, Tronoh Consolidated and Ranhill," AmResearch Sdn Bhd said in a recent note.

The positive sentiments have sent stock prices of key construction firms up.

On Bursa Malaysia yesterday, IJM rose 5 sen, or 0.9 per cent, to RM5.75. WCT Engineering gained 12 sen, or 3.7 per cent, to RM3.36.

UEM World Bhd, which is building the second bridge in Penang, was one of the most actively traded stocks yesterday. The shares ended 3 sen, or 1.9 per cent lower, at RM1.59.

Comparatively, Gamuda's gain yesterday was sharper. The stock at one stage rose as much as 9 per cent to RM3.82, before settling down to close at RM3.76, up 26 sen, or 7.4 per cent, from the previous day.

Volume was heavy with some 11 million shares changing hands, almost six times the average trading volume in the past 15 days.

"Gamuda just bagged the bridge project in Bahrain days ago and there could be some follow-through buying," an analyst said of the stock performance.

Moreover, the announcement of Penang's bridge and monorail projects also shows that the Government is committed to rolling out more big projects, which will definitely benefit big players like Gamuda, the analyst said.

Speculation was also swirling that Gamuda may have won more contracts in the Middle East, but a company official dismissed such talk when contacted.

"There's nothing new besides the Bahrain job that we have announced, but in the next three months nobody can predict," the official said.

The company is bidding for projects worth a total of RM10 billion in the Middle East.

[TYW]

Corporate: Niggling questions over 9MP mega projects
By Nadia S Hassan and Malar Velaigam

The construction sector received a shot in the arm last week when several big-ticket projects under the Ninth Malaysia Plan were announced. As expected, the construction stocks ran ahead in anticipation of more goodies to come in the next few weeks.
But beneath the optimism, the niggling question being asked is when will the projects take off.
Last week, the government announced the development plan for the South Johor Economic Region (SJER) and approved two mega projects in Penang — the second bridge and the monorail. The government intends to spend RM5 billion on infrastructure in the SJER project. The two Penang mega projects are expected to be collectively worth RM3.9 billion. So far, they are the biggest projects to be announced.
Construction stocks such as UEM Builders Bhd, Gamuda Bhd, IJM Corp Bhd, Road Builder (M) Holdings Bhd, WCT Engineering Bhd, Hock Seng Lee Bhd and related stocks such as Melewar Industrial Group Bhd and Cement Industries of Malaysia Bhd, have seen their share prices run up as a result of the news.
Whilst the stocks are predictably garnering interest, fundamental questions are still on the tongues of sceptics. When will the tender period open? When will the projects start? Based on past experience, if tender periods are open for three to six months, it normally means the projects would only come on stream in the third quarter next year.
It is this lack of concrete time frame for the implementation of these projects that has analysts treading cautiously, calling the movement in share prices a knee-jerk reaction.
"Allowing for the time lag needed to co-ordinate and evaluate the projects, we think these projects are only likely to kick off next year," says a report by AmResearch.
A report by Hwang-DBS states that the research house is still neutral on the construction sector as details and the initial cash-flow impact of all 9MP projects are still months away.
It is a well-known fact that large projects are notoriously difficult to get off the ground, given the complexity of the agreements involved. Also, it would be worthy to note that some of the projects are not new.
Take the Second Penang Bridge for example, an idea that has been mooted for some time now. The government has said that it will award the project to UEM Builders who holds the concession for the existing Penang Bridge.
Yet on closer inspection, there is no mention of any agreement being signed despite the company having completed the groundwork. Likewise, the idea of building a monorail in both Penang and Johor has been around for the past five years.
Similarly with the SJER, the exact details of how the government will spend the RM5 billion have yet to surface. The masterplan is being prepared by Khazanah Nasional Bhd and will be out by year-end.
As a result, it becomes almost impossible to predict the impact of these projects on earnings for the awarded companies. Investors who are looking for quick returns will also be disappointed.
A case in point is UEM World Bhd's development of Nusajaya, Johor's version of Putrajaya. According to reports, the development is expected to take six to 10 years to complete. So, despite the fact that the project is expected to generate returns of RM1 billion in sales, the returns will only start to flow slowly.
AmResearch, however, is expecting implementation of the projects to be relatively speedy.
"This is given the government's official construction gross domestic product [GDP] growth forecast of 3% for 2006, and 3.5% over the 9MP period," states the report.
Although the dust has not yet settled after the Prime Minister's announcements, many are already placing bets on the next round of awards. According to AmResearch's report, the recently announced Johor and Penang projects may just prove to be precursors of larger 9MP projects.
Among the projects expected to be announced soon is the Penang Outer Ring Road worth RM1.1 billion. The concession for the project has, in fact, already been awarded to Peninsula Metro Works Sdn Bhd, although no formal announcement has been made.
As for the Penang monorail, the government is currently waiting for bids from qualified companies. Analysts are citing UEM Builders, Melewar Industrial Group Bhd, Gamuda Bhd and IJM Corp Bhd as prospective bidders. However, many were surprised by a bid from Penang Port Sdn Bhd, whose chairman Datuk Latif Abdullah also helms Realmild Sdn Bhd, the investment arm of Umno.
The government has also announced that it will start feasibility studies on the KL-Singapore bullet train project mooted by the YTL group, worth a possible RM8 billion.
Other large projects that have yet to be awarded include the West Coast Highway, the East Coast Expressway II, the Pahang-Selangor water transfer, the greater Kuching water supply project, New Langat II and the Klang Valley LRT extension. Many of these projects have been in the pipeline for more than four years.

[skyscraperboy]

waaa!!!!! to many text laa.... i cant read it all. by the way, 9th Malaysia Plan
is quite good than previous one....

[nazrey]

BizFocus:
Property sector builds up hopes of good times again
By Chong Jin Hun
January 4 2007
BusinessTimes


The Ninth Malaysia Plan and the recently launched Iskandar Development Region in Johor are expected to help boost the industry and reverse the dismal showing of last year, during which sales declined and profit margins were slimmer

MALAYSIA'S real estate sector is set for a better showing this year against the backdrop of planned large-scale development initiatives and accommodative policies, industry experts say.

The Ninth Malaysia Plan (9MP), from 2006 to 2010, and the recently launched Iskandar Development Region (IDR) in Johor are seen as catalysts to push forward the property sector this year.

Both schemes, property developers said, will favourably impact the real estate sector, the performance of which is widely linked to overall economic health.

"Barring any unforeseen circumstances, the property market is in for a positive reversal of fortunes this year," said Tan Sri Liew Kee Sin, group managing director and chief executive of SP Setia Bhd, Malaysia's largest property developer in terms of sales.

"The spin-off benefits from the rollout of these projects will filter down to the property industry, given that the performance of the real estate sector is dictated by the state of the overall economy," Liew added.

The 9MP and the IDR, therefore, are crucial in reversing the dismal showing by the real estate sector in 2006, a year which saw declining sales and slimmer profit margins.

Fragile consumer sentiments, volatile oil prices, higher costs and interest rates, and intense competition resulted in a tough business environment for industry players last year.

Nevertheless, they stressed that the phenomenon should not be seen as having a blanket effect on the entire sector as certain segments, such as the middle-level and upmarket properties, continued to thrive.

Furthermore, Malaysia's growing young working population is a source of optimism that demand for real estate in the country will remain resilient.

As Johor Land Bhd managing director Shafiqul Hafiz puts it: property ownership in Malaysia reflects personal achievement; hence, such sentiments should spur people to buy houses regardless of what the nation's economic climate may be.

"In Malaysia, owning a property is essential and portrays overwhelming achievement. This could override the above economic factors," Shafiqul said.

The sector could still see a pick-up in sales, especially for the higher range of properties in selected niche areas.

The Government's actions and efforts in the real estate scene are expected to result in improvements, he added.

The Government plans to spend up to RM200 billion on public development under the 9MP. Of that amount, RM46.5 billion has been earmarked for this year.

The multi-billion-ringgit IDR, which is nearly three times the size of Singapore, will be transformed into a dynamic international metropolis.

Some 800,000 jobs are expected to be created over the next 20 years at the IDR, which will be turned into a logistics hub and a centre for the development of services industries like medical, financial and educational.

"Exciting times are in store for Johor's property market with the impetus from the IDR, which entails the creation of a global investment and economic hub.

"We believe migration of people from other states to Johor Baru in search of job opportunities will significantly boost residential demand in Johor Baru," SP Setia's Liew said.

Meanwhile, Mah Sing Group Bhd group managing director Datuk Leong Hoy Kum said the commercial real estate market, which has been consolidating, is expected to strengthen.

According to Leong, rentals for prime office and retail outlets, besides the occupancy and average room rates for hotels, are on an upward trend.

"We have a positive outlook on the property sector, spurred by the implementation of the 9MP which will have a multiplier effect on the whole economy.

"We also see stronger growth in the commercial property sector, after a long consolidation period. With the encouraging economic growth, there could also be a shortage of newer commercial buildings," he said.

The Klang Valley, Johor Baru and Penang remain Malaysia's property hotspots by virtue of their significance to the nation's economy.

As such, urban migration to these areas will fuel demand for real estate in these locations, Leong added.

MIDF Sisma Securities analyst Asnul Badrisyah, however, does not expect an across-the-board handsome increase in residential property sales in the country this year.

He said property developers have to contend with the fact that buyers will be spoilt for choice amid an abundant supply of homes. As such, it would be survival of the fittest for the developers.

"I am not expecting a significant jump in sales, but developers with good image, projects in good locations, should be able to see good sales.

"It is a buyers' market," he said.

MIDF Sisma expects local interest rates to fall this year to boost consumer spending in response to an expected slowdown in the nation's economy. Lower interest rates will mean cheaper bank loans for home purchases.

The Government has kept the Overnight Policy Rate (OPR), which determines bank lending rates, at 3.5 per cent. The OPR has been raised thrice since November 2005 to the current level.

Petroleum prices, which dictate the cost of construction materials like cement and steel, are anticipated to stabilise at existing levels in line with an expected drop in world oil demand, MIDF Sisma added.

World oil prices stood at around US$61 (RM214) a barrel as at December 13, down from a high of about US$70 (RM246) last April.

"Even if Opec (Organisation of Petroleum Exporting Countries) lowers oil production, we still expect the global economy to slow down, hence, reducing oil demand," the research house said.

Going forward, foreign demand, especially for upmarket homes in Malaysia, will add zest to the nation's real estate scene together with the country's efforts to boost tourism.

The "Malaysia My Second Home Programme", for instance, is a government initiative allowing foreigners to live in the country on a social visit pass with a multiple- entry visa.

They can now own or invest in houses costing more than RM250,000 each in Malaysia without having to secure the Foreign Investment Committee's approval.

"It is this kind of programme which will possibly give us a brighter spot in the years ahead. It must be something more integrated involving education, health and tourism," real estate developer MK Land Holdings Bhd executive director Datuk P. Kasi said at its shareholder meeting in Petaling Jaya recently.