Monetising land bank assets a good move

Tuesday November 3, 2009
Monetising land bank assets a good move
Commodities Talk- By Hanim Adnan



ARE prime land bank assets in the Klang Valley still “hard” commodities to come by these days?

Perhaps not, given the Government’s green light for its agencies to monetise their fixed assets as a new source of revenue and to maximise earnings.

Fixed assets include land, infrastructure and buildings, intellectual property, live assets and moveable assets, such as goods and inventory.

Among the candidates are plantation-related government agencies like the Malaysian Rubber Board (MRB), Risda, Felcra and Felda, which are large owners of land given the diversified nature of their respective crops they own or help manage for local smallholders under various schemes.

Even the headquarters of these agencies are nestled in Kuala Lumpur’s prime Golden Triangle area. According to sources, the land-bank assets of the plantation-based government agencies in Malaysia could easily top RM20bil.

Top officials from these agencies have openly admitted that offers are pouring in, in the form of acquisitions/joint ventures to develop their prime land bank as well as leasing of public buildings from various government-linked companies and major private corporations.

MRB, which is estimated to own over RM1bil worth of land bank nationwide, had indicated to StarBiz that it was aiming to monetise part of its assets in Rubber Research Institute (RRI) in Sungei Buloh as well as in Jalan Ampang.

Another rubber agency, Risda, is also evaluating offers for its prized small pockets of land in Jalan U Thant and Jalan Ampang given their high commercial value in the Golden Triangle. Risda, however, is believed to be in no hurry to let go of its Jalan Ampang land and still biding for the right time.

Previously, Risda had also successfully monetised its 40,000ha in Sungai Petani and transformed it into a lucrative residential property project.

So far, the three most talked-about parcels of land likely to be developed are those in Jalan Ampang Hilir, Jalan Cochrane and RRI’s Sungei Buloh.

A recent report, quoting sources, said that Malaysian Resources Corp Bhd and its single-largest shareholder, the Employees Provident Fund, had been given the green light to acquire and develop a land of “an unspecified size” in Jalan Cochrane and Jalan Ampang Hilir.

The rationale for the Government’s move to allow its agencies to monetise their assets, especially those non-core ones, should be applauded as it would enable the agencies to sustain or increase their revenue and become less dependent on government allocation and subsidies.

That said, the public, however, wants government auctions – especially of its land or other assets – to be conducted via an open-tender system rather than through direct negotiation for the sake of transparency.

There have been claims that many closed-door negotiations to sell government-related assets are often subject to abuse, inefficiency and misallocation of funds.

● Hanim Adnan is assistant news editor at The Star. She often wonders whether transparency is always the best policy.