The Star Global Malaysian Forum
The Star Business - Wednesday November 7, 2007
Construction assets draw foreign interest - Infrastructure and development projects a boon to sector
PETALING JAYA: Local construction assets seem to be attracting the interest of foreign investors of late.
Last month, Putrajaya Perdana Bhd saw the entry of a new controlling shareholder, Swan Symphony Sdn Bhd, which bought over Eastern & Oriental Bhd¡¦s stake in the former. Swan Symphony is jointly owned by Abu Dhabi-Kuwait-Malaysia Investment Corp (ADKM) and Autron Investment. With the support of the new shareholders, Putrajaya Perdana is anticipated to expand its presence to the Middle East.
Meanwhile, PJBumi Bhd told Bursa Malaysia on Monday that its substantial shareholder, PJS Industries Sdn Bhd, planned to sell a 10.2% stake to Al-Saudia for RM3.1mil. This was on top of the 25% that PJS disposed of to Metro Utilities Sdn Bhd in September. PJBumi, which is trying to return to profitability, is involved in the design, trading, installation and maintenance of fibre-reinforced plastic, reinforced concrete sewage treatment plants and underground petrol cum storage tanks.
It also manages wastewater treatment, solid waste and garbage collection.
The Government¡¦s efforts to improve the quality of water in the country by rolling out various projects look set to benefit PJBumi. Another company that is going to see a new shareholder is low-profile water player Loh & Loh Corp Bhd. The shares, which are usually thinly traded, seemed to have sprung to life, having appreciated more than 30% over the one week period. The counter was last traded at RM4.12 before being suspended in afternoon trade yesterday.
Loh & Loh told the exchange that its substantial shareholder, Vital Achievement Sdn Bhd, intended to dispose of its shares. An analyst at AmResearch said Loh & Loh was well known as a dam builder in the water sector, having completed several jobs as a sub-contractor for Gamuda Bhd. The company also has experience in bulk earthworks and rail track construction, having built bridges for the Ipoh-Rawang double-track project.
Aseambankers in a report said the domestic construction scene could be seeing another boom, given that at least RM165bil worth of infrastructure and development projects identified by the Government and the private sector were likely to kick off by the turn of the decade. Government spending should pick up since it had to date only spent 25.4% of the RM200bil in development allocation under the Ninth Malaysia Plan, it said.
¡§We foresee high impact and chunkier projects in the rail, water, and oil and gas sectors, and the government¡¦s regional development efforts, to be the key drivers,¡¨ the brokerage added.
---------------------------------
The way I see it this is a good tonic for the local construction industry. Of course, this has something to do with IDR, ECER, NCER just being launched, It is also related to the relatively competitive project management costs that Malaysia has to offer. With various crisis happening almost everywhere in the world, Malaysia is drawing construction FDI interests and possibly JV, smart partnership, strategic alliance and even merging possibilities would be happening. Despite my worries about uncontrolled construction materials cost; come to think of it; the FDI may help the local construction firms in terms of long term financing - thus may help in the long run to ensure the construction industry sustains.
There are somehow other concerns:
a. Shareholding in terms of JV or smart partnerships? Will our construction firms be too strict and not embarking on a 'win-win' situation?
b. Is the local construction firms ready with
i) all the necessary expertise,
ii) possible mixed work cultures influence,
iii) more than enough 'quality' services to provide - in terms of system/process/workmanship, the necessary infrastructures/machinery/ICT capabilities, corporate governance good practices etc.?
c) Will (more and more) our financial institutions be willing to cooperate - help out the local construction industry or just hope that the foreign construction firms come out with majority of financial backups and in the end, we promise them a big amount of concessions, contra with finished properties, or share the future profit reaped from the finished projects? etc? in order to cover the financial backups that are rendered by the foreign construction firms? (via foreign financial institutions e.g. soft loan or long terms bonds or any other financial instruments)
Thus, while we are happy almost seeing big money coming in, I think the local construction firms should also think of what I've said herein. Based on history (and my experience working with the local JV partners) many mega projects management appear to love doing things 'last minute' - I hope this is not the example we're going to show them.
Let's welcome construction FDI with wide hands..WELCOME..but please...let's local construction firms be ready to show a very professional ethics in terms of our personal traits, business, technical, system etc.
No comments:
Post a Comment