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Categories
| Job flow picking up in SCORE |
| Features | |||
| Written by Isabelle Francis | |||
| Monday, 13 July 2009 00:00 | |||
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Industry observers expect the large pie to be shared by only a few, with the favourites being Cahya Mata Sarawak Bhd (CMSB), Naim Holdings Bhd and Hock Seng Lee Bhd (HSL). In the medium term, analysts expect flood mitigation, sewerage and infrastructure jobs to be the first to be farmed out to help spur Sarawak’s industrialisation drive. “We notice more invitations for public works tenders in Sarawak of late relating to flood mitigation and roads,” says Maybank Investment Bank in a recent note. Official data shows there has been a steady increase in tenders since March, with 50% being for jobs related to flood mitigation, drainage and irrigation. The rest is for road and infrastructure works. Furthermore, several packages for flood mitigation works in Kuching, Sibu and Miri have yet to be awarded. To recap, the first package of flood mitigation jobs in Kuching worth RM149 million was awarded to Naim, and in Sibu, jobs worth RM162 million were handed over to HSL. HSL also clinched the first phase of sewerage infrastructure works in Kuching for a contract sum of RM452 million. Given more developments in the pipeline, HSL’s corporate affairs manager Sonja Gan tells The Edge that the bullish stance on SCORE is therefore “justified”. “We had targeted an order book replenishment of at least RM400 million in 2009 and midway through the year, we are confident of exceeding that target,” she says in an email. While HSL has RM1.8 billion worth of projects in hand, it aims to secure new projects that include roads, bridges and building construction works, Gan says. “We have bid for some RM400 million worth of projects so far this year. The majority of them have not been awarded yet and we are hopeful of a good outcome,” she adds, confirming that HSL is already “firming up” two contracts worth RM100 million. Another analyst favourite is Naim, which has an outstanding net order book of RM2.5 billion to last the group over the next five years. Naim’s head of corporate affairs, Ricky Kho, says in a telephone interview that the group is eyeing RM200 million worth of new jobs over the next five months. Meanwhile, CMSB, a major construction materials producer and supplier in the state, is increasing its clinker output, improving the delivery of cement across the state and raising its quarrying reserves to meet the requirements in SCORE. “CMSB has also put in several bids for infrastructure, including the construction of roads and civil works in and around SCORE,” its group managing director, Datuk Richard Curtis, says in an email. Of the total RM334 billion in investment that SCORE is targeted to attract, 80% will involve private investment, which means the participation of foreign investors is important. With the world still in the grips of the financial crisis, concern is rising that foreign investors may pull out of key projects, especially after Dubai-based Damac Group aborted plans to buy a piece of land in Iskandar Malaysia for RM396.44 million. In the wake of the withdrawal, the question that arises is, will SCORE face the same fate? One notable investment that West Asians are slated to make in SCORE is the proposed development of a steel cluster and iron ore hub in Similajau by CMS subsidiary Similajau Industries Sdn Bhd, Pan Kingdom Invest Co of Saudi Arabia and GIIG Holdings Sdn Bhd. A source close to Similajau Industries says there has not been any indication from its partners of an intention to exit the project, but adds that feedback on progress “has been very quiet”. Also notable is the delay in Sarawak Energy Bhd’s (SEB) US$6 billion energy fund that is backed by a consortium of mostly West Asian-owned banks, including Asian Finance Bank (AFB). The plan was for Gulf investors to provide a large part of the funds, which would have been used to finance SEB’s plans to raise generation capacity to 7,476mw by 2015. AFB’s CEO Datuk Azahari Kamil says the energy fund has not been scrapped but will be reviewed, including in terms of the project’s size. “Given the economic condition, it is more difficult to get investors for the fund and companies tend to slow down on projects.” At the growth centre of SCORE, Similajau, Rio Tinto Alcan (RTA) and CMSB will invest in an aluminium smelter worth more than RM8 billion. Since the smelter project will be “beneficial” to the world’s third-largest mining company, it will continue to pursue it “actively”, says a RTA spokesperson. However, the official reiterates that one of the key issues which remain to be agreed upon is the power contract for the smelter. The plan was for the smelter to source power from the Bakun dam by end-2011. As things stand, construction jobs are picking up in Sarawak, but not necessarily in the heavy industries and power sectors, at least not yet. Unfortunately, these segments account for a chunk of SCORE’s targeted investment. Of the RM334 billion in investment planned for SCORE over 22 years, 20% or RM67 billion will come from a single sector — power — while the remaining 80% will come from various industries. Despite the uncertainties, analysts envisage jobs in SCORE picking up ahead of the Sarawak state election, which could be held late next year or in early 2011. This article appeared in Corporate page of The Edge Malaysia, Issue 763, July 13-July 19, 2009
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