Wednesday 16 December 2015

This article first appeared in The Edge Financial Daily, on December 8, 2015.

KUALA LUMPUR: The successful implementation of the RM27 billion Penang Transport Master Plan (PTMP), of whichGamuda-led SRS Consortium Bhd is the project delivery partner (PDP), hinges on the support of the residents there.

Gamuda group managing director Datuk Lin Yun Ling said the support from Penang residents is crucial, and the implementation of the project is riding on the outcome of a due process exercise, which will take six months to complete.

“For now, the [PTMP] is just a plan. The next step in [implementing it] is the due process, which involves impact studies on the environmental and social aspects of the plan, and this has already commenced by an independent consultant appointed by the Penang state government,” he told reporters after Gamuda’s annual and extraordinary general meetings yesterday.

“If there is no overwhelming support for the PTMP from the people of Penang, then we should not go ahead [with it],” he added.
However, Lin declined to comment on the magnitude of the percentage that would constitute overwhelming support.

“I wouldn’t want to go into that, that’s an open ended debate,” he said.
Lin, however, noted that there are some grouses from the people of Penang on the Penang government’s land reclamation process.

“They are not unhappy about reclamation per se, [but] their perception is that the state is reclaiming in too many places, and the due process [for the reclamation process] is not transparent, and this needs to be cleared up,” said Lin.

“The results from the detailed impact studies conducted will be shared with the key stakeholders and the general public, and it will outline the advantages and disadvantages of the PTMP [among others],” he added.

On its part, Gamuda will undertake its responsibility as PDP in ensuring that all the requirements in terms of data gathering, as well the selection of appropriate consultants for the implementation of the PTMP are undertaken in a transparent manner.
Penang-based Loh Phoy Yen Holdings Sdn Bhd and Ideal Property Development Sdn Bhd are the two other parties of the Gamuda-SRS Consortium, with a 20% stake each in the venture.

On the payment method of the PDP, which could be in the form of land swaps or land reclamation rights, Lin said it is too soon to say.
“I think it will be jumping the gun [to talk about the payment method] now; the focus at present should be on the public’s perception of the PTMP, and this is where the due process comes in,” he said.

On Gamuda’s outlook for 2016, Lin said it is still positive about the construction industry.
“The government is embarking on a lot of railway projects, so it is a good time for capital investments in infrastructure projects.

“For Gamuda, in 2015 we have spent about RM4.5 billion on our property development and related infrastructure projects in Malaysia, Vietnam, Singapore and Melbourne, Australia, and for 2016 we will probably invest another RM3 billion in capital expenditure (capex), which will bring our total capex [for the two years] to RM7.5 billion,” he said.

As for the status of the sale of its 40%-owned water asset Syarikat Pengeluar Air Selangor Holdings Sdn Bhd (Splash)to the Selangor state government, Lin said the appropriate price for the sale would be at the book value of the asset.

“We are expecting an offer for the asset at its book value, which at present is RM3 billion, based on previous news report published. I believe the state government has appointed an independent valuer to perform a valuation of Splash, and what we would like is for that report to be shared with us, and the public as well,” said Lin.

Gamuda (fundamental: 1.3; valuation: 1.4) shares closed up 13 sen, or 2.84%, to RM4.70 yesterday, bringing a market capitalisation of RM11.28 billion.


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