Najib eyes lift from Johor deals

JOHOR'S economy is set to receive a boost this week with the signing of several property deals. This includes a plan by developer Tan Sri Lim Kang Hoo to pursue a joint development on the Johor Baru waterfront with one of China's largest property developers, Country Garden Holdings, and a project in Bandar Nusajaya by tycoon Robert Kuok.

The deals, which will be signed during Prime Minister Datuk Seri Najib Razak's visit to the state, highlight the growing international confidence in Iskandar Malaysia, particularly from groups that have been cold towards Malaysia, say government officials.

There is also a political dimension. The Najib administration is hoping the new ventures will help alter domestic perception, particularly among the Chinese community, about the government ahead of the 2013 general election that is widely expected after the Chinese New Year.

Iskandar Waterfront, a corporate vehicle controlled by Johor-based businessman Lim, is spearheading the development of the waterfront along Johor Baru and the central business district. Its joint venture with Country Garden Properties (M) Sdn Bhd, a unit of Country Garden Holdings, will represent the first injection of foreign capital into the Danga Bay waterfront development that covers more than 4,000 acres.

But analysts say it is the return of tycoon Kuok to his home state of Johor that will grab public attention because it will give the development at the southern tip of the peninsular a stamp of approval as it seeks to position itself as a cheaper alternative to Singapore.

"It marks the first time Kuok group is carrying out such an initiative in Bandar Nusajaya. It has minor investments, such as the Traders Hotel, but this signing will be an endorsement of a significant property development," says an executive close to UEM Land Holdings Bhd.

In Malaysia, the Kuok group has done more divestments than investments in the past few years. It is completely out of the sugar refinery business and has taken private the company involved in processing flour.

It exited the sugar refinery business in 2009 when it sold Malayan Sugar Manufacturing Company (MSM) to Felda Global Ventures Holdings Bhd. The sale of MSM came together with the disposal of its 50% stake in Kilang Gula Felda Perlis and 5,797ha of land, concluded for RM1.29 billion.

"At the time, there were several suitors for the sugar refinery business, particularly from a group controlled by Tan Sri Syed Mokhtar Al-Bukhary. But Kuok was only prepared to sell it to the Felda group," says an executive close to Felda.

Incidentally, Felda was the brainchild of Najib's father, the late Tun Abdul Razak Hussein, to alleviate the twin problems of employment and housing faced by the rural poor.

"Kuok group has expressed support for the Iskandar Malaysia initiative since the administration of former Prime Minister Tun Abdullah Ahmad Badawi. However, they have not signed anything yet," says an executive close to the group.

The executive points out that they are working on a project with Khazanah Nasional Bhd in Langkawi to develop a six-star hotel in Datai that would come under the Shangri-la Hotels franchise.

Shangri-La Hotels Bhd is one of the two prominent companies under Kuok group that is listed on Bursa Malaysia. The other is PPB Group Bhd, which is involved in plantations and the production and distribution of flour. PPB Group has a significant block in Wilmar International Ltd, which is listed in Singapore and managed by one of Kuok's nephews — Kuok Khoon Hong.

"The size of the investments by the Kuok group may be small. But it's the brand name that counts as Najib goes to the polls," says an official.

This story first appeared in The Edge weekly edition of Dec 3-9, 2012.