Wednesday, August 29, 2007

Malaysia infrastructure company eyes Vietnam

Gamuda vying for big name in Vietnam

GAMUDA Bhd, which has made a name for itself in various infrastructure projects in Malaysia, the Middle East and Indo-China, is keen to make inroads in the booming construction, property and infrastructure markets in the region.

The group has set its sights on potential markets such as Vietnam and the Middle East.

Gamuda is actively pursuing RM15bil worth of new jobs locally and in other countries and the group is confident of clinching a few billion ringgit of new contracts by the end of the year.

Group managing director Datuk Lin Yun Ling is bullish on Gamuda's foray in Vietnam.

Datuk Lin Yun Ling
“We want to channel our expertise in building large infrastructure and property projects to other developing countries.

“We see our involvement in our maiden project in Hanoi as the start of our long-term participation in Vietnam's growth,” Lin told StarBiz.

Gamuda has teamed up with the Hanoi People's Committee to undertake the Yen So Park integrated development on 500 acres in the south of Hanoi.

Lin said the Vietnam project would provide “two bites of the cherry” for Gamuda – the construction bite was worth RM1.5bil in the first three years while the development portion of RM8bil would be over the next eight years.

The whole project involves setting up sewerage facilities, cleaning up the Yen So lake system, building a world-class public park and other supporting infrastructure costing RM1.5bil in exchange for the 500 acres of land for property development.

The Yen So Park project, which is Gamuda's first in Vietnam, is a prelude to more things to come for Gamuda in the country.

“Vietnam is short of roads, water, power, bridges and sewerage facilities. We believe that once Gamuda delivers the first three construction jobs – park development, relocation of electrical transmission towers and sewerage treatment works in Hanoi – there will be a platform for us to clinch other projects,” Lin told StarBiz.

Construction of the sewerage and park facilities would begin soon while property launches are expected from early next year.

The 500-acre site will be transformed into a new fully integrated central business district in Hanoi comprising high-rise office towers, 4- and 5-star international hotels, a convention centre, shop offices and residential components within a lake and park setting.

“It is like a big blank canvas for us to paint on – we will be creative and design products that will add value to the place.

“Our property development project will transform South Hanoi into a vibrant and modern hub, with clean and pristine lakefronts and lush green parks. It will also help to develop the neighbouring Hoang Mai and Thanh Tri districts,” Lin said.

The priority is to build up the park and the lake to attract attention to the place. The new park will be ready by 2010, in time for Hanoi's centennial celebrations.

“We expect Vietnam's tourism sector to take off strongly and there is a need for more international standard products and destinations. In this context, Yen So Park is a most timely project to add value to the country's tourism landscape,” Lin said.

He said the main challenge in pursuing more property projects in Vietnam was to locate the right land and partners as foreigners were not allowed to buy land for development but could lease the land user rights from state organisations with an average limited holding of 50 years.

Another way is to form a Vietnamese partnership in which a business partner contributes the land rights as a form of capital to the joint-venture company.

An analyst with a local brokerage said Gamuda might participate in two to three more property ventures collectively worth around RM6bil in gross development value in Ho Chi Minh.

“The next exciting project could be a new development in Long An that could generate a gross development value (GDV) of RM5bil,” he added.

Besides Vietnam, Gamuda has been pre-qualified for RM5bil worth of jobs in the Middle East.

In Qatar and Bahrain, it has an outstanding construction order book of RM1.6bil while contracts in Laos and Vietnam are worth RM3.4bil. In Malaysia, it also has projects in hand worth RM6bil.

Currently, it is constructing the RM1.8bil New Doha International Airport and the RM770mil Dukhan Highway in Qatar. It has commenced works on the RM640mill New Sitra Causeway bridges in Bahrain and started preliminary works for the RM1.9bil Nam Theun 1 hydropower project in Laos.

With the increasing number of overseas projects, Gamuda can look forward to strong double-digit earnings growth in the coming years.

Analysts said the inclusion of the RM1.5bil new infrastructure jobs from Vietnam has raised Gamuda’s current outstanding order book of RM9.7bil to RM11.2bil – the highest in the local construction sector.

Meanwhile, the RM8bil GDV from the development of Yen So Park would provide a new stream of property earnings for Gamuda over, at least, the next five years.