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RM2b purchase doubles BNM’s real estate assets

Bank Negara Malaysia

KUALA LUMPUR (April 2): Bank Negara Malaysia’s (BNM) (pictured) RM2 billion land purchase from the government doubled its land assets last year, its 2017 annual report show.

“During the year, the bank acquired a parcel of freehold land costing RM2.066 billion. The land valuation was mutually agreed on between the bank and the government of Malaysia based on the valuation process conducted by an appointed independent private sector valuer.

“The acquisition cost of the land is subject to a final survey of the land involved,” notes accompanying its financial statement as at Dec 31, 2017 read.

That 55.79-acre (22.58ha) freehold land, which is contiguous to the central bank’s Sasana Kijang complex, lifted the value of freehold land carried at cost in its books to RM3.316 billion as at end-2017 from RM1.25 billion as at end-2016. Including leasehold and revalued land, the value of land assets carried on its books jumped to RM4.18 billion in 2017 from RM2.114 billion in 2016, BNM’s statement of financial position show.

When announcing its land purchase early this year, BNM had said the land, combined with its existing assets, will be designated and integrated as a world-class education hub for financial services.

“The hub is envisioned to be a focal point for international learning and research that will nurture a sustainable pool of local talents to support the development of the domestic financial industry,” BNM said in its statement dated Jan 4.

The land will be utilised for the relocation of the Global Islamic Finance University and the International Shari’ah Research Academy for Islamic Finance. The land will also be used for future development of education and training facilities that will focus on enhancing the technical capabilities of the talents in the financial services industry.

Central bank governor Tan Sri Muhammad Ibrahim weighed in on the development of the financial education hub when releasing BNM’s 2017 annual report last Wednesday, telling reporters that the financial education hub is being established to meet three criteria — centrally located in Kuala Lumpur, close to Sasana Kijang and accessible to the financial industry; have sufficient space to accommodate residential facilities and future expansion for long-term growth; and a conducive environment for a city campus.

Sasana Kijang, which is equipped with conference and state-of-the-art training facilities, houses international organisations such as the World Bank, South East Asian Central Banks Research and Training Centre and the Alliance for Financial Inclusion. It is also near the new Asia School of Business (a collaboration with the Massachusetts Institute of Technology) complex and the financial industry’s Financial Industry Training Centre, which is being constructed.

The governor went on to say that the collocation of related institutions “offer operational synergies from shared infrastructure services and learning assets, such as libraries and expert resources”.

The potential benefit of collocation is clearly articulated. What remains puzzling is the fact that BNM had to pay commercial prices for land to be used for the development of talent for the industry and the country’s economy.

The doubling of BNM’s land assets (at cost) in 2017 confirms the RM2 billion land purchase is its single largest transaction to date.

This article first appeared in The Edge Financial Daily, on April 2, 2018.

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