Asia Sentinel

Stamp: Ministry of Transport (Malaysia)

Letter sent on 11/10/2005

Agreed and signed by Abdullah Badawi on 20/10/2005

Received by Timbalan Ketua Setiausaha (deputy head secretary) (operation) (stamp) – 27/10/2005

 

PKFZ development project

Port Klang Board

 

(i)              Proposed plan to upgrade entry roads/junction to the PKFZ

(ii)             Proposed plan for electrical infrastructure works

(iii)           Proposed building plan for a business class hotel

 

 

I would like to bring to your (YAB Dato Seri) attention:

 

2. As you are well aware, Dato Seri, that the PKFZ development project is underway and development works have started since June 2004 and this project is expected to be completed and operational by the end of 2006.Physical progress of the PKFZ development project up to 30/06/2005 is 53% and according to schedule.

 

3. The success of a project depends very much on the infrastructure provided. The concept “ready for use” is the basic concept used in the marketing work of the PKFZ project to attract investors so that they only need a little time to begin their businesses in the PKFZ. Discussions were also carried with the management of Jebel Ali Free Zone International (JAFZI) yang who are the managers for the PKFZ project and their advice is also taken into consideration in this project. This project is expected to generate an estimated income of RM350mil a year when it is fully operational.

 

4. Attention should be given to the following three component of the project:

 

(i)              The entry to the PKFZ project is not conducive – vehicles leaving PKFZ cannot proceed to Klang/KL directly. Likewise for vehicles coming from West Port cannot enter PKFZ. To address this problem, Kuala Dimensi Sdn Bhd (KDSB), the project developer for PKFZ made an offer to the government to upgrade the entry roads to PKFZ based on a deferred payment basis. The cost of the project including maintenance cost, design and building, is RM285.38mil, with a 4 year repayment period – from September 2005-2009. The LPK Board has decided that this project is critical and must be carried out soon by the government.

(ii)             Electrical infrastructure facilities to the industrial lots must be provided parallel with the project development. In normal circumstances, the Energy Board (TNB) will provide the electrical infrastructure according to the estimated usage and this would be upgraded from time to time. This process would take a long time and would jeopardize PKFZ marketing efforts to attract investors. The project developer has suggested the ‘turnkey' method because it can speed up the process of providing electrical infrastructure as infrastructure works need to be done immediately to meet the deadline of the project, which is end of 2008. The cost of the project is RM135.0 mil, where this cost includes maintenance cost, design and building with a 2 year repayment period – from December 2006-2007.

(iii)           An exhibition centre sized 32 sq meter with the purpose of attracting investors who wish to exhibit their products in PKFZ. As places for accommodation is quite a distance from the PKFZ, JAFZI has suggested that a business class hotel be built next to the proposed Exhibition Centre. The proposed cost for building the hotel is RM90mil – period of building 18 months and repayment period 3 years, from December 2006-2008.

(iv)           Based on the 3 components above, KDSB has appealed to the Ministry to impose a 6% yearly interest to cover the rising cost of materials due to the increase of price of petrol, cement and iron. However, the Ministry is prepared to consider the interest of 5% yearly, which seems more reasonable.

 

5. The Transport Ministry is of the opinion that the offer is a good alternative and this is inline with the Government's to see more involvement of the private sector in the development of the country. Following this concept, the cost of the project will be advanced by KDSB and the Government, through the allocation in LPK, can repay the cost according to the negotatiated interest, amount and repayment period time.

 

6. This proposal is forwarded to the PM for consideration and approval as the success of PKFZ depends very much on a good and efficient infrastructure.

 

7. Your consideration and approval of Section 4 is very much appreciated and I thank you in advance.

 

Sincerely.

 

Dato' Sri Chan Kong Choy

Transport Minister.