KUALA LUMPUR -- Malaysia has wooed China in signing up to a 30 billion ringgit ($7.34 billion) national project to reclaim lands for real estate development, deepening their mutual ties.
As the master developer, local group KAJ Development will hold a 51% stake in the Melaka Gateway project, according to state media outlet Bernama. Powerchina International will lead the investment, bringing in investors as well as constructing Melaka Gateway. The development is slated to be completed by 2025.
Melaka Gateway is a mixed development off the coast from Malacca City, the capital of the state to the south of Kuala Lumpur, and will feature three reclaimed and one natural islands, covering an area of 5.52 sq. km. The first three islands will be developed by KAJD and Powerchina for tourism, commercial, property and maritime developments.
The fourth island, Pulau Melaka, has been earmarked to become a maritime activities center with a container and bulk terminal, shipbuilding and ship repair services, and maritime industrial park to be developed by KAJD alongside China's Guangdong state government and Chief Minister Incorporated (CMI), an entity wholly-owned by Malacca state.
"Within the past five years, there has been a big increase in trade investment ties between Malaysia and China. We have Chinese investments in many parts of Malaysia including infrastructure, power, railway, manufacturing, and now in tourism and services," Minister of International Trade and Industry Mustapa Mohamed said at the signing ceremony. "We believe China's participation in Malaysia's economy will be a win-win situation."
Malacca is about two hours' drive from Kuala Lumpur. It is a state reliant on tourism and manufacturing and also home to one of two Unesco-listed heritage sites in Malaysia.
"One sixth of the land reclaimed by Melaka Gateway will be given back to the Malaccan government," Malacca chief minister Idris Haron said. He added that about 2.83 sq. km of land reclaimed from the fourth island will be done in partnership between CMI and KAJD, declining to reveal the breakdown of the shareholding, which is still under negotiation.
The ambitious national project, launched in 2014 by the Malaysian Prime Minister Najib Razak, might also take over the abandoned Arab City project announced in 2009 and supposed to have been completed by 2012. It was a development project worth more than 200 million ringgit on the reclaimed Pulau Melaka island, an estimated 16,800 sq. meter site. The Malaccan government, under the previous chief minister, had a 10% stake in the project via CMI.
"The Arab City is a development that takes up less than four acres of land. It's not even a city, it's a shopping mall. In fact, we are thinking of acquiring the abandoned Arab City development ... because there has been no movement for the past two and a half years," Idris said.
Melaka Gateway follows other recent major deals including a 1.01 billion ringgit work package sealed in late August between listed Malaysian engineering firm George Kent and state-owned China Communications Construction Company to build of a portion of the mass rapid transit to connect Kuala Lumpur and its outskirts.
There is also the 200 billion ringgit Bandar Malaysia, a mixed development project jointly developed with state-owned China Railway Engineering Corporation which was cemented in June, and Forest City, a development on four reclaimed islands off the coast of Johor, next to Singapore, by Chinese developer Country Garden.
One other major project that is being keenly watched by Chinese, Japanese and Korean investors is the 350km high-speed railway to link the Malaysian capital to Singapore. The project was finally confirmed in July and is expected to be ready by 2026. It is now in the process of tendering for developers. Ayer Keroh in Malacca will be one of the eight stations included in the high-speed rail project.