Wednesday, January 28, 2009

IJM on track to complete Delhi Metro Line project

IJM on track to complete Delhi Metro Line project
By Balan Moses
Published: 2009/01/28

A MALAYSIAN company is well on track towards completing a crucial part of the 19km New Delhi-Indra Gandhi Internatonal Airport Metro Line by next year. A Delhi Metro spokesman said IJM Corp Bhd, one of six foreign companies handling civil projects under Phase 2 of the Metro Line, was on schedule in complete its projects on the ultramodern network. Chief public relations officer Anuj Dayal said IJM was performing well along with British and Japanese companies contracted to complete civil projects on the state-of-the-art line. "IJM is doing a good job on its part in building the line to the airport. There are no problems at all," he said, adding that it will take just 18 minutes to cover the distance from Connaught Place in the city centre to the airport.

He said the company had met the stringent pre-qualifications for contractors bidding for the project. "It put in a bid along with other top contractors in the world and succeeded in winning a contract," he said in New Delhi recently.The airport line under the second phase of the Delhi Metro Line is expected to be completed in time for the 2010 Commonwealth Games expected to be held in New Delhi. The 440km Delhi Metro network carries 800,000 passengers a day with fares ranging between six rupees and 22 rupees - among the lowest in the world. Some of the lines under the RM7 billion first phase of the project run below buildings in the city centre that are up to 400 years old.

Dayal said the Delhi Metro had the tightest security system among similar networks in the world with every passenger frisked before entering stations and on leaving stations. "They also have to walk through metal detectors while entering stations and exiting them. The Delhi Metro is very high on the terrorist hit list and this is why we have such a tight security." The Delhi Metro has seen two bomb blasts since the project took off in December 2002 - both occurring just outside the entrance to stations.

Saturday, January 24, 2009

Part of 2nd stimulus plan will focus on construction

Part of 2nd stimulus plan will focus on construction
Published: 2009/01/24

"A PORTION" of the second economic stimulus package will focus on the construction sector, Deputy Prime Minister Datuk Seri Najib Razak said.The sector is an important catalyst to Malaysia's economic growth, he told reporters at the Industrialised Building System (IBS) international exhibition in Kuala Lumpur yesterday.The construction industry has a multiplier effect on about 120 other related and supporting industries, economists said.Najib, in his keynote address, said the sector needs to step up its competitiveness by using new technology such as IBS.

IBS is a construction process that uses techniques, products, components or building systems which involve prefabricated components and on-site installations.Najib urged developers to adopt IBS given its many benefits such as lower construction costs, shor-ter completion timeframes and a reduced dependency on for-eign labour.Last November, the government had issued a directive requiring the Public Works Department and its related agencies to use 70 per cent IBS content for their building projects.

As at January 8 this year, there were 303 government projects nationwide worth RM9.2 billion that can be implemented using IBS technology.

Monday, January 12, 2009

AirAsia's case for its own home

DATUK TONY FERNANDES: "The principal cause of moving to Labu was our fear of MAHB’s inability to build a terminal in time. 2011 is fast approaching and we can’t afford a delay because a lot of our planes have already been bought. We definitely need a bigger place."

AirAsia hit turbulence over its plan for a purpose-built airport in Labu, Negri Sembilan. CEO Datuk Tony Fernandes tells DAVID YEOW that having its own terminal is the only way to accommodate the budget airline’s growth

Q: What's the story behind Air-Asia's plan to build its own low-cost carrier terminal (LCCT) in Labu?
A: AirAsia has had three moves; it's not something we enjoy doing. We've gone from operating in Subang to the main terminal at Kuala Lumpur International Airport and then to the LCCT in Sepang, all in the space of seven years. Most airlines don't move in their lifetime.At each stage, the move was prompted by capacity. When we were operating from KLIA, Ma-laysia Airports Holdings Bhd (MAHB) could see that we were going to outgrow the main terminal quickly.But this is something a lot of people don't understand, because when they go to KLIA, it looks empty. So the question people always ask is, why doesn't AirAsia just stay at the main terminal?If you count all the parking bays or aerobridges at the main terminal and its satellite, there are only 55 bays. That's insufficient for AirAsia's entire fleet, let alone in combination with those of Malaysia Airlines and others.

So, MAHB said they would look for a new facility, which led to the current LCCT in Sepang. We were assured by MAHB that we would have good connectivity and low charges, which were the main thing.We went in March 2006. But as soon as we got there, we began to outgrow the capacity. So, we were concerned because the next spurt of growth, which would be coming from AirAsia X (the airline's long-haul affiliate), would be scotched if we didn't have the facilities.Our prediction is that if we continue to operate from the LCCT, by 2011 it would be 4.5 million short in passenger capacity. Already with the current LCCT, we are running by a million passengers short and it's a nightmare.So we started scouting around for land to build a new LCCT.Our first option was with MAHB, but then there was the issue of who would finance it. We said, let's try to do it ourselves this time so the process wouldn't be so slow.

The principal cause of moving to Labu was our fear of MAHB's inability to build a terminal in time. 2011 is fast approaching and we can't afford a delay because a lot of our planes have been bought. We definitely need a bigger place.We looked at 13 sites outside KLIA, and stumbled on Sime Darby's Central Vision Valley project. Subang would have been my ideal choice, I've been a broken record about it. But a lot of the land has been sold, so we abandoned that.

Q: People are concerned that the move to Labu would make the distance longer and connectivity a bigger headache. Is this true?
A: I see the LCCT at Labu as KLIA-East, and not another airport. It's just 8.6km from KLIA, about the same distance from Terminal Five to Terminal One at London's Hea-throw airport.And in a strange way, due to the geography of the land, it's actually closer to Kuala Lumpur. It is 58km from KLCC, compared with 78km to KLIA from the city.It's just off the Nilai highway interchange and is also well connected by rail. It's actually an easier airport to get to.

Q: KLIA serves about 25 million passengers a year. KLIA-East can serve up to 50 million annually. What would you say to detractors who see KLIA-East as undermining KLIA's role as the nation's premier airport?
A: It's two business models. Ours is a low-cost airline, theirs caters to the premium airlines.I guess we also have to look at where Malaysia is going. Does everything need to be in one place?At the end of the day, with good connectivity, we are making Kuala Lumpur the hub. We are serving the Kuala Lumpur tourism market.Clearly we have established the need for a new terminal. The question now is, should it be at KLIA or somewhere else?It's a perfect scenario here. We have a massive piece of land adjoining KLIA, which can meet the needs of an airline that was not there when the KLIA master plan was conceived.There was no such thing as a low-cost airline in Malaysia back then. We came out of nowhere.

Q: Why not use the proposed new expanded LCCT at KLIA, which MAHB now promises to complete at about the same time in 2011 as the one in Labu?
A: Prior to us coming out with the proposal to build KLIA-East, there was no such plan mentioned to us. The only plan MAHB talked about was offering us the terminal opposite the main one at KLIA at a cost of RM2.9 billion, which is substantially more than what we have budgeted for.And on top of that, we wouldn't have our own runway.On the actual date of completion for MAHB's LCCT, we heard that it's fluctuating between 2012 and 2014. This is despite the press release that states it would be completed by the end of 2011.That caused me panic. You're talking about our bread and butter. What am I going to do with all the planes?

Furthermore, we looked at the site MAHB is considering -- we had considered it ourselves initially -- and became concerned about the condition of the soil there.It's swamp land. The treatment of that soil would take a long time before you can start building.And MAHB's plan did not mention a runway. They talked about a runway at some stage, without further details. They also didn't give details about the cost of the new LCCT, which is crucial to us because someone has to pay for that terminal and that someone is AirAsia.We have been complaining that we have been overcharged and it doesn't look like things will change if we continue with MAHB.

Airport charges are fundamental to us. How costly the building of an airport is will result in how expensive the airport charge is.On the other hand, AirAsia is confident that it can build KLIA-East for less than RM1.6 billion, including our own runway, and complete it in the next two years.If we have our own runway next to our terminal, we can cut our operational costs, including environmental benefits from less fuel burn.Since MAHB's announcement, we, as their biggest customer, have yet to get a phone call or word from them saying "let's talk".

Q: Is any sort of government loan involved in KLIA-East?
A: It's going to be completely privately financed and AirAsia is ready to undertake it. The cost would probably be less then RM1.5 billion, probably RM1.3 billion, roughly the price of 10 Airbuses.We have been inundated with calls from investors. So we are confident of this. Even if we have to take it up in our own balance sheet, we can easily finance this because the returns on the project are good and there are a lot of people who want to finance it.In terms of ownership, I think it's too early to say who will own KLIA-East. We might take it up or we might enter into a sale-and-lease agreement with interested parties.

Q: With your new LCCT based in Labu, some people are concerned that you are disrupting the government's plan for KLIA as an international airline hub.
A: Again it's a myth. The hub is not KLIA. The hub is Kuala Lumpur.In the United Kingdom, no one talks about the hub being in Heathrow and everything having to be built around it. The hub is London and there are five airports around it to serve different segments of the population.When we talk about KLIA as the hub, what are we talking about?

The truth is, there is no connectivity between the current LCCT and KLIA that is worth getting excited about.A hub offers the ability to change airlines with a minimum of hassle and a maximum of connectivity. It's impossible to do that at the main terminal. You cannot fly in to KLIA and change to AirAsia without going through Immigration and Customs.The KLIA hub that we think we have has been destroyed in that respect. And don't get me started on the connectivity between KLIA and LCCT.A person flying in from the UK would have to get his luggage, check out of Immigration, pass Customs and take a bus or taxi to take a flight via AirAsia.I rate the bus service as one of the worst in the world for airport connectivity. It's badly managed and doesn't run on time.Or you can take a taxi, which costs you about RM45 to get from KLIA to LCCT. You call that connectivity? You call that a hub?But why is only AirAsia being accused of undermining the KLIA hub?

What about FireFly and their plans to bring in one million passengers to Subang Airport? Shouldn't someone argue that the one million passengers should be sent to KLIA?

Q: But if AirAsia moves into MAHB's new LCCT at KLIA, wouldn't that make it a hub? Wouldn't it be better for the country for AirAsia to move there instead?
A: One reason why we started AirAsia X is because the connectivity at KLIA is poor. There are not that many international connections.That's why we thought that if we don't do something, we are going to lose out because Tiger Airways (a Singapore competitor) has all the benefits of Changi airport.Malaysia only has two European connections, Lufthansa and KLM (Royal Dutch Airlines), and maybe five Gulf airlines.We were scared.

That's why we started AirAsia X. And now we can say we have passengers from Australia who connect with us. Eighteen per cent of passengers from AirAsia's foreign connections stay in Malaysia, while the rest use us to connect elsewhere. By March 2011, we will have flights to London, Japan and the Gulf.In other words, AirAsia has become a hub by itself. You can put us in the new MAHB-proposed LCCT and there still wouldn't be any on-site connectivity.We might be at KLIA but we are still situated at the terminal opposite the main airport. No link, no connectivity, hub destroyed.If we can focus on Kuala Lumpur as the hub, I dare say we could be bigger than Changi by 2013, when we collectively serve up to 55 million passengers a year.Where in anyone's dreams would KL the hub beat Changi? And yet it is near to realisation. The reality to all my fellow Malaysians is, that's income coming into the country.

Q: What about accusations of wastage? That the government has spent all that money building the current LCCT and now we need to build another one, possibly two.A: There's no way AirAsia can remain at the existing facility. Something needs to be built.It's set that we have to build a new terminal. Whether we build it in KLIA or Labu, it has to be built, so there's no money wasted there.Then you say there are two runways at KLIA, we should maximise them first. But MAHB has said that eventually there is a need for a third runway, and guess what we are doing? We are building it now and it's only 7km from the existing two.There is no wastage. Nothing unnecessary is being built.The only duplication I would say is the tower. Because of the distance of the new runway from KLIA, we need our own air traffic control tower.We will finance the construction of the tower, not the government. Department of Civil Aviation officials will have to man it, but we will also pay their income.Q: There has been a lot of negative public perception of this project. People are suspicious of the way the project was approved by the cabinet. People are wondering why Sime Darby, a huge government-linked company, is coming in. The blogs are rife about you benefiting from cronyism. A: I have responded to many of the allegations on the blogs themselves. I have nothing to hide.We are a very negative nation. I think we live in a wonderful country though it's not perfect.But the bad thing is, Malaysians have this bad habit of stereotyping successful people.AirAsia has worked really hard for all that we have for the last seven years, without any handout.Let's look at this situation and the potential cronyism.Sime Darby is a public-listed company. Everything is open, it's all public accounts. It's transparent, everything is an open book.AirAsia is now negotiating aggressively with them on the terms of KLIA-East, no different from how we negotiate with MAHB or anyone.As for the cabinet decision, we put in the proposal six months ago. It's only now that the information has come out. It wasn't an on-a-whim decision. The government doesn't do things like that.Even Penang Chief Minister Lim Guan Eng is asking us not to build the new LCCT in Labu but in Penang. If we are cronies, then why is the opposition asking us to do that? It took me seven years to get the KL-Singapore route. If I was a crony, would I have to wait that long?We are basing the terminal in Labu for many reasons and one of them is the potential of bringing more development to Negri Sembilan and Malacca.The government has been talking about its economic stimulus package, but the government alone cannot be responsible for stimulating the economy.By building KLIA-East, we are creating jobs and pumping money into the country. Sime Darby has an amazing plan for its Central Vision Valley project.KLIA-East can be the first purpose-built low-cost airport in the world. We can radicalise the passenger experience. No one has done that.
addthis_pub = 'nstonline';

Friday, January 9, 2009

Labu LCCT ownership structure ready by April

Friday January 9, 2009
Labu LCCT ownership structure ready by April

SEPANG: AirAsia Bhd expects the ownership and financing structure for the proposed low-cost carrier terminal (LCCT) at Labu in Negri Sembilan to be finalised by April, said group chief executive officer Datuk Seri Tony Fernandes.
“We are in talks with several domestic and international investors who have expressed interest in financing the project,’’ he told reporters yesterday in a briefing on the project, to be known as KLIA East.

He did not name the potential investors.

Sime Darby Bhd was recently given the nod by the Government to build the low-cost terminal at Labu, which is estimated to cost between RM1.6bil and RM2bil.
Sime Darby will provide about 3,000 acres of land which will house a terminal building that can cater up to 30 million passengers a year.

The facility can be expanded to handle 50 million passengers with two runways.
The Labu site is 50km from Kuala Lumpur and 18km from KLIA. If all goes as planned, the terminal will be completed by 2011, at a time when AirAsia’s passenger capacity will be much higher than the 10 million it handles at the current domestic LCCT.

AirAsia handled about 20 million passengers last year, taking into account its operations in Thailand and Indonesia, and that of sister airline, AirAsiaX.
By 2013, it expects to fly 60 million passengers per year, when it will have 159 narrow-bodied and 25 wide-bodied aircraft.

“By 2013, only Japan Airlines will be bigger than us in terms of passenger numbers. We would be the second biggest airline in Asia by 2030,’’ Fernandes said.

That was why AirAsia needed a new terminal as the existing terminal’s capacity at LCCT, which is being expanded to handle 15 million passengers annually, would not be able to handle the projected growth, he said.

Fernandes said the airline had seen 13 sites but found the Labu location ideal. “The key thing is that we cannot slow down our growth because we have bought aircraft and we need a bigger terminal. We are building for 30 million passengers and we should be supported,” he said.

By having a dedicated terminal, Fernandes said the airline could bring down its cost by 20% and this would be translated to lower fares. Asked if other airlines would be able to use the KLIA East airport, Fernandes said “the idea is not to go into (the) airport business but to serve our business.’’

Tuesday, January 6, 2009

Dubai axes racecourse deal with WCT Engr

Dubai axes racecourse deal with WCT Engr
Published: 2009/01/06

DUBAI: Dubai’s Meydan LLC said yesterday it has cancelled a racecourse construction deal with Malaysian construction firm WCT Engineering Bhd and local firm Arabtec.A Meydan statement did not give a value for the deal, but WCT said in 2007 that its 50-50 joint venture with Arabtec had won a US$1.3 billion contract to build the racecourse in Dubai.The contract was cancelled “because of non-adherence to the agreed time schedule for construction,” Meydan said in the statement.Arabtec officials could not be reached for comment.

Meydan is taking steps to commission other companies to complete the racecourse by 2010, when it is to be opened with the Dubai World Cup horse race, the statement said.The racecourse is designed to include a 1 km (0.6 mile) grandstand and capacity for up to 60,000 spectators.Because of the global financial crisis and falling construction costs, Gulf Arab countries have cut back on some large projects or tried to renegotiate costs with contractors. - Reuters

Malaysia Airports to proceed with LCCT plan

Malaysia Airports to proceed with LCCT plan
By Presenna Nambiar
Published: 2009/01/06

The airports operator says the permanent low-cost carrier terminal could be built at a reasonable cost due to the availability of existing infrastructure

MALAYSIA Airports Holdings Bhd (MAHB) (5014) will go ahead with its plan to build a permanent low-cost carrier terminal (LCCT) under the National Airport Master Plan, which maps out the development of all the airports in the country except Senai Airport, which is privately owned."Pending the government's approval, the first phase of this project could be ready by the end of 2011 and could be built at a reasonable cost due to the availability of existing infrastructure," MAHB said in a statement released to Bursa Malaysia yesterday.

The master plan was initiated to set the direction for the future development of airports and the aviation infrastructure in the country.The study, which started in July 2007, was recently completed and was formulated with feedback from all government agencies, Malaysia Airlines, AirAsia and representatives from all foreign airlines.

The study needs the endorsement of the government to be implemented.The site for the permanent LCCT is believed to be near Runway 2 of the airport.MAHB said due to its restructuring plan being recently approved by the government, it was now in a position to self-fund the development of the LCCT, something it had done before.Under the plan, the existing Express Rail Link would be extended for another 1.5km to connect the new LCCT to the existing main terminal.The LCCT would be built via a multi-modular design, with each module able to handle 15 million passengers.

MAHB also addressed issues highlighted by various parties regarding its working relationship with AirAsia and the congestion of the current LCCT.MAHB said AirAsia had been given a five-year waiver of all aeronautical charges, excluding passenger service charge, at all airports run by MAHB, when it moved out of Subang in 2002 to KLIA.This waiver was for both domestic and international flights, which includes landing, parking, aerobridge and check-in counter charges. AirAsia also enjoyed special rental rates for office space at all airports. MAHB said while it was not able to accommodate the budget carrier's request for an extension of the waiver once it expired in 2007, a new scheme, which will provide waivers for landing charges and incentives for growth, would be announced with the approval of its restructuring plan.

Go-ahead for Sime Darby and MAHB terminals

Tuesday January 6, 2009
Go-ahead for Sime Darby and MAHB terminals

PETALING JAYA: Even as Sime Darby Bhd announced it has received government approval to proceed with the proposed private low-cost carrier terminal (LCCT) project in Labu, Negri Sembilan, Malaysia Airports Holdings Bhd (MAHB) gave details of its plans to develop a new LCCT at the KL International Airport (KLIA).

MAHB managing director Datuk Seri Bashir Ahmad, when contacted by StarBiz, said: “We still need to provide an LCCT at KLIA for airlines other than AirAsia that will fly into Kuala Lumpur.
“As a GLC (government-linked company), we will talk to the Government on our plans for the future with regards to the LCCT.” On the existing LCCT, Bashir said: “This was always meant to be temporary, we will convert it into a warehouse.”

On whether MAHB’s LCCT project would be scaled down as AirAsia would now use the terminal in Labu, he said: “We will have to see about this when we discuss with the Government.”
Sime Darby is also a GLC with its major shareholders (as at Sept 12, 2008) Skim Amanah Saham Bumiputera holding a 34% stake, and the Employees Provident Fund, Permodalan Nasional Bhd and Yayasan Pelaburan Bumiputera each owning about 14% in the plantation giant.

Sime Darby in a statement to Bursa Malaysia yesterday, said the LCCT project was an integral part of its development plan for its Negri Sembilan Vision City (NSVC).

Monday, January 5, 2009

Dubai dream turns sour as job cuts rise

Dubai dream turns sour as job cuts rise
Published: 2009/01/05

DUBAI: Dubai's rapid expansion in recent years provided jobs for millions. But the global financial meltdown has abruptly ended the dream for many people as more and more firms sack staff to cut costs.Spectacular economic growth, spurred by a robust construction sector, lured people from far and wide to the booming city on the shores of the Gulf, tempted by high pay, low tax and - for many Europeans - the year-round sunshine.Foreigners form most of the population in Dubai and with residency permits linked to employment many of the people who are losing their jobs face the added upheaval of leaving the country.

"I don't feel that I was wronged. This is business... But I would have preferred a cut in my salary rather than being sacked," said an Arab man who was let go by government-controlled property group Nakheel.

Another former Nakheel employee: "Only four days before we were given the termination letter, our director told us in a meeting that the situation was difficult and that the budget for our project had been cut by three quarters.

Nakheel has its fingerprints on most of Dubai's iconic projects, including three palm-shaped artificial islands and a cluster of islands in the shape of a world map.It unveiled in early October another gigantic project to erect a 1km high tower, which, if ever built, would dwarf the unfinished Burj Dubai, currently standing around 700m high.Property sold like hot cakes for the past few years but demand has slumped amid the global credit crunch as panicking investors and creditors fled the market.All of sudden, the viability of the grandiose property projects has become questionable.

Nakheel's job cuts programme is one of the largest so far in the United Arab Emirates, but is far from the only one.Damac Properties, Dubai's largest private property developer, cut 200 jobs, or 2.5 per cent of its workforce, in October.Al-Shafar General Contracting said a few days ago it was laying off up to 1,000 workers as its order book has dropped by US$817 million (US$1 = RM3.47) since September.Emaar, the other local property giant, said recently that it was revising its recruitment strategy and reportedly laid off 100 workers last month.Omniyat has shed 69 jobs out a 350-strong workforce and Tameer has notified 180 employees that December 31 will be their last working day.

The job losses have spread beyond property jobs to the financial sector. Shuaa Capital investment bank, for instance, has cut 21 jobs, or nine per cent of its manpower.Companies in Dubai and the rest of the United Arab Emirates were until recently on a hiring spree. Some 640,000 work permits for foreigners were issued in the first quarter of this year, 306,000 in Dubai alone, according to a study published last week. - AFP

HwangDBS positive on construction sector

HwangDBS positive on construction sector
Published: 2009/01/05

HwangDBS Vickers expects bigger construction players with good execution track records such as IJM Corp and WCT to emerge as winners given the increased focus on timely delivery

HWANGDBS Vickers Research Sdn Bhd said it sees the outlook for the local construction sector in 2009 as positive, boosted by the government's expenditure on infrastructure projects.The high-profile jobs include extension of the Klang Valley light rail transit system and the inter-state water transfer."We expect 2009 to be the year for the government to play catch-up (after 2008's more muted allocation of construction projects) as pump priming efforts appear vital to ensure its internal Gross Domestic Product (GDP) growth target of 3.5 per cent is met and the economy does not slip into recession," it wrote in its market focus report recently."The (government's) development expenditure of RM53.7 billion for 2009 is a hefty 16 per cent increase from 2008 estimates of RM46.3 billion. An additional RM7 billion was announced as part of a stimulus package in November," it said.

The foreign research firm also sees improved outlook for the construction sector's margins, as building material prices have corrected sharply.The price of steel bars at RM1,900 per tonne has dropped from a peak of above RM4,000 per tonne."When material prices were at the peak, the government planned to delay some projects given the higher cost. The lower cost now will allow more projects to be implemented," it said.HwangDBS Vickers said it expects bigger construction players with good execution track records such as IJM Corp Bhd and WCT Bhd to emerge as winners given the increased focus on timely delivery.

"Apart from potential government jobs, we believe IJM will be eyeing projects in India, the Middle East and private sector jobs in Malaysia. For WCT, we expect the group to leverage on their Middle East presence for order book replenishment," it said.Meanwhile, its 12-month target for the Kuala Lumpur Composite Index is 950 points, based on 12 times 2010 earnings."
In the near term, concerns about growth may continue to weigh on the market. In this environment, we like stocks with relatively resilient dividend flows." Utility-type/concession earnings at YTL Power Bhd, PLUS Expressway Bhd and Lingkaran Trans Kota Holdings Bhd should sustain high-dividend payouts," it added.For 2008 and 2009, DBS expects the country's GDP to grow by 5.5 per cent and 3.3 per cent respectively. This estimate factors in another 50 basis points cut in the Bank Negara Malaysia's policy rate to 2.75 per cent by end first quarter of 2009.

About Me

A seeker of success (whatever that means) treading on a path, searching, to return to the wholesomeness that was him when he was launched into this big school called Earth.