Kedah rejects DRB-Hicom’s bid to change Langkawi land’s status

KUALA LUMPUR (Aug 24): After a six-year wait, DRB-Hicom Bhd’s application to change the status of 333 acres (134.76ha) of land in Pulau Rebak Besar, Langkawi from Malay reserve to non-Malay reserve has been rejected by the Kedah government.

The rejection has affected DRB-Hicom’s plan to develop a boutique luxury mixed development project on the island to replicate the success of Thailand’s Phuket and Koh Samui and Indonesia’s Bali to cater for the high-net-worth individuals’ tourism appetite.

“Approval from the Kedah state authority for the proposed land status swap exercise was not obtained despite several mutual extensions to the approval period while the change in the land status is crucial for the development of the Rebak land,” said DRB-Hicom in a filing with Bursa Malaysia.

The proposed boutique project, reportedly worth some RM400 million in gross development value, was to consist of villas and waterfront bungalow lots, commercial retail outlets and other amenities.

Following the Kedah government’s decision, DRB-Hicom said its wholly-owned unit Rebak Island Marina Bhd (RIM), which owns the 333 acres on the island, has mutually terminated the land status swap agreement (LSSA) that it inked with Northern Gateway Free Zone Sdn Bhd (NGFZ) on Dec 21, 2011.

This, said DRB-Hicom, was formalised after RIM inked a termination agreement with NGFZ yesterday.

As a result of the mutual termination of the agreement, DRB-Hicom said it will refund the cash deposit of RM76 million to NGFZ, which is the subsidiary of privately held investment holding firm Northern Gateway Sdn Bhd, whose shareholders are 50 individuals.

“By undertaking the LSSA termination, Rebak would then be able to explore any other possible land status swaps with other parties in its pursuit to develop the Rebak land,” DRB-Hicom added.

In December 2011, DRB-Hicom said it had signed a pact with NFGZ to convert the status of the 333 acres of land in Pulau Rebak Besar from Malay reserve to non-Malay reserve — by swapping it with 350 acres of freehold agricultural land in Bandar Kota Perdana, Kedah.

The conversion will facilitate DRB-Hicom’s plan to develop a high-end “boutique” luxury mixed development “which is targeted mainly at high-net-worth individuals being foreigners and Malaysians of all races as the targeted potential investors,” DRB-Hicom had said in a 2011 bourse filing.

The Rebak land is on a 60-year leasehold period, which will be expiring on May 8, 2054. As at Dec 2011, the 333 acres of land were last valued by Messrs Hakimi & Associates at RM47.8 million.

Shares in DRB-Hicom dropped four sen or 2.39% to close at RM1.63 yesterday, with a market capitalisation of RM3.15 billion.

This article first appeared in The Edge Financial Daily, on Aug 24, 2017.

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