Real Estate & Construction

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The Role of PPPs

Since the introduction of the 1981 Malaysian Incorporated concept, which set out a new approach to national development based on the notion of joint ownership of the country by the public and private sectors, the country has seen a steady rise in the number of public-private partnership (PPP) projects.

The government’s commitment to pushing forward a PPP agenda was reinforced under the 9th Malaysia Plan, which set out the key principles on the procurement and realization of PPPs. The subsequent 10th Malaysia Plan announced further development projects to be implemented using the PPP scheme, including the Economic Transformation Programme (ETP). Introduced in 2010, this is perhaps one of the most ambitious public-private collaborations to date. The private sector is expected to provide $307 billion (equivalent to 92% of the total funding) for the implementation of the 131 entry point projects (EPPs) identified under the ETP. This is expected to generate around 3.3 million job opportunities as the country moves toward the achievement of its 2020 vision to become a developed nation. “Through PPPs, we can extract the expertise of the private sector, which consists of companies that are experienced and efficient in these areas,” explains Dato’ Ahmad Husni Bin Hussain, Director General of the Public Private Partnership Unit (UKAS), an agency under the Prime Minister’s Department.

In the last few decades, public-private collaborations have shaped the country’s transport infrastructure, with the most successful project being the PLUS expressways, spanning a length of 973km across Peninsular Malaysia. Other projects include a joint venture between MMC Corp and Gamuda, which is responsible for the Stormwater Management and Road Tunnel (SMART), an initiative under the Malaysian Highway Authority and Department of Irrigation and Drainage Malaysia to address flash floods in Kuala Lumpur and alleviate traffic. The KLIA Ekspres high-speed rail link, which was completed in 2002, has become one of the most convenient ways of reaching Kuala Lumpur International Airport.

Currently, the $9.1 billion Klang Valley Mass Rapid Transit (MRT) project is being undertaken by a joint venture between utilities and infrastructure group MMC Corp and property developer Gamuda, which has been appointed the project delivery partner (PDP) in the implementation of the first two MRT lines. Phase I of the MRT Line 1 is due to be completed in December 2016 and full completion of the project is anticipated by July 2017. Another high-impact transport project is the $9.1 billion Kuala Lumpur-Singapore High Speed Rail (HSR) project announced in 2013. The HSR link will connect the two cities in 90 minutes when completed in 2020. Japan and China have both expressed an interest in participating in the international open tender, with the former recently becoming the first country to be involved in talks with the Malaysian government. “We realize that providing the economy with an environment for investment also means being open and conducive to foreign investment and participation in our projects,” explained Dato’ Ahmad Husni Bin Hussain.
Ongoing PPPs continue to drive developments not only in transport and infrastructure, but also in education and real estate, the $94 million International Islamic University Malaysia Teaching Hospital being an example as the result of an agreement between Peninsular Medical, the Ministry of Higher Education (MOHE), and International Islamic University of Malaysia (IIUM). Five Universiti Teknologi MARA (UiTM) branch campuses as well as the Perdana University are being built under the PPP scheme. In terms of strategic mixed developments projects, the 495-acre Bandar Malaysia is set to contribute to placing Kuala Lumpur among the world’s top 20 most liveable cities by 2020. About 3km away, the 70-acre Tun Razak Exchange (TRX) project is set to become the capital’s new financial and business district when it is completed in 2027.

Moving forward, the government will continue its efforts to enhance private sector involvement in infrastructure projects and consequently in the country’s economic development. In 2014, the government allocated $616 million to facilitate PPPs in Malaysia and the figure for 2015 is expected to be even higher. This will not only contribute to maintaining momentum in the country’s construction sector, which is expected to continue experiencing double-digit growth, but also strengthen bilateral ties with international partners involved in these megaprojects and thus raise the country’s importance on the global stage.

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