PUTRAJAYA, 30 August 2007 — A group of Middle East investors inked pacts yesterday to plow $1.2 billion (880 million euros) into a new Malaysian economic hub, marking the first major foreign investment in an ambitious project to modernize the country’s south.
The Iskandar Development Region, or IDR, in southern Johor state bordering Singapore was launched in November as a new regional growth center to woo foreign investors amid stiff competition from China and India.
Abu Dhabi state investment agency Mubadala Development Co., Kuwait Finance House and Dubai-based property developer Saraya Holdings Ltd. agreed to develop a total 2,230 acres (902 hectares) in the IDR, said state agency South Johor Investment Corp. or SJIC.
SJIC Chairman Azman Mokhtar hailed the partnerships as a key catalyst to kick-start growth in the IDR zone. Three times larger than neighboring Singapore, the zone is a major part of the government’s plan to become a developed nation by 2020.
“This is a historic and strategic landmark transaction between our two regions,” Azman said at the signing ceremony, adding that the total investment marked the single largest foreign property development in Malaysia.
The government targets an investment of $105 billion (80 billion euros) over 20 years to develop the IDR, sprawled over 221,634 hectares (547,657 acres), into a regional business, entertainment and leisure hub.
“We are looking long term...there is tremendous potential (in Asia),” said Mubadala Chief Executive Khaldoon Khalifa Al-Mubarak. “This will be a flagship development for the region, not just for Malaysia.”
Under the pact, Mubadala will invest $520 million (380 million euros) to develop the lifestyle and leisure parcel comprising a golf village, an amusement bay, residential district and a medical center, SJIC said in a statement.
Al-Nibras 2 Ltd., a fund managed by Kuwait Finance House, will put in $330 million (241 million euros) to build a cultural village, it said.
Millennium International Dev. Co., a unit of Saraya, will invest $325 million (237 million euros) in a financial hub to serve markets in Asia and for Islamic banking services, it said.
SJIC will hold 30 percent equity in the venture with each of the three groups, which are expected to make “further development investments of several multiples” over their initial investment over a 20-year period, it added.