PNB evades questions on funding sources for 100-stories tower

KUALA LUMPUR — Permodalan Nasional Berhad said today that it expects the controversial RM5 billion 100-storey Warisan Merdeka to stimulate the economy, but the fund’s chief executive was tight-lipped about how it plans to pay for the mega project.

Since Prime Minister Datuk Seri Najib Razak announced the plans for the new Kuala Lumpur landmark last Friday, it has come under heavy criticism from the opposition as well as the public.

The Warisan Merdeka project has been called wasteful, among other things, with many Malaysians openly wondering why the city needed another huge commercial project when there was an existing property glut.

The 19-acre development area of the mega project — which includes a condominium and a shopping mall — is sited on the car park and land adjacent to Stadium Negara and Stadium Merdeka.

“If we create really good returns, maybe I want to finance everything,” PNB president and group chief executive Tan Sri Hamad Kama Piah Che Othman told a press conference today.

“But if debt can help to get more margins, why not?” he added.

He stressed, however, that PNB had sufficient funds to complete the massive development project.

The PNB head added that tower alone, which will have an area of two to three million square feet, was expected to cost between RM2.5 to RM3 billion while its construction would likely start next year.

“We will focus on the 100-storey (tower). The condominium part will come later,” said Hamad.

“Development of the entire project is scheduled to go on till 2020,” he added.

The PNB chief also defended the tower’s height and expressed hope that the skyscraper —expected to be the tallest building in the country on completion —would generate excitement and raise property prices in the area.

“Now, we are creating the excitement. We hope that will help to spur the area, and hope that the price [of property] around will go up,” said Hamad Kama.

The project will, however, retain Stadium Merdeka and Stadium Negara as heritage buildings.

Hamad pointed out that the five-star “green” skyscraper would stimulate the economy as it was expected to generate thousands of jobs and attract multi-national companies looking to locate in green buildings.

“It will spur the economy (and) create employment for 5,000 people,” said Hamad Kama.

“I am looking at the long-term returns. In the future, if MNCs want to rent a place, they want green buildings,” he added.

Although Hamad did not specify PNB’s targeted returns on investment from the Warisan Merdeka project, he said a favourable return would be between eight and 10 per cent.

The PNB chief also denied a media report claiming that the 100-storey tower was conceptualised two years ago with Dubai-based property giant Deyaar as the turnkey contractor, but fizzled out as Middle Eastern firm felt that the project was not feasible at that time.

“I am surprised. Where [did] you get that from?” asked Hamad Kama.

The PNB chief said that his firm had bought the land in 2000 for RM310 million, from national asset management company Danaharta, while the board had approved the Warisan Merdeka project in 2004.

He explained that PNB did not start construction earlier as they wanted to ensure that the project would be profitable.

“Many times, we drafted (plans). We wanted to make sure that at the end of the day that returns will be achieved,” said Hamad Kama.

Upon completion in 2015, the skyscraper will be the tallest tower in Malaysia, surpassing even the 88-storey Petronas Twin Towers.

During his announcement, Najib said the rationale for the Warisan Merdeka tower was similar to that of the iconic twin Petronas Towers, in that it would serve as a symbol of a modern and developed Malaysia.

He stressed that the project would also have a “multiplier effect” on the economy and help drive it forward, in addition to providing an attractive commercial centre for Bumiputera and non-Bumiputera businesses alike.