Another land swap: ‘Approval in principle’ for Butterworth RMAF base relocation

In the next few days, we will be taking a closer look at the controversial proposed relocation of the 1007-acre RMAF Base in Butterworth in a land swap deal which even Penang Umno was reportedly opposed to. 

(This was the same air force base that received global attention following the failure of the RMAF to follow through on the reported radar detection of the turnback of MH370. It is also the same air force base, where Major Zaidi Ahmad worked until he faced a court martial charge – hearing now in progress – for highlighting to the media the ineffectiveness of the ‘indelible ink’ used at the 2013 general election. The base is also the centre for a Five-Power Defence Agreement.)

Was there even an open tender? It says below that a new joint-venture company led by TSR Capital had sent a proposal to the federal government.

The following was an announcement made by TSR Capital Bhd:

Proposed Relocation and Reconstruction of A New Air Force Base for the Royal Malaysian Air Force Through Land Swap

TSR CAPITAL BERHAD

Type Announcement
Subject OTHERS
Description Proposed Relocation and Reconstruction of A New Air Force Base for the Royal Malaysian Air Force Through Land Swap

1. INTRODUCTION

The Board of Directors of TSR Capital Berhad wishes to announce that on 3 February 2014 the Company has received a letter dated on 29 January 2014 from the Ministry of Defence Malaysia (“MINDEF”) informing the approval-in-principle granted by the Federal Government of Malaysia (“Government”) for the proposed joint venture company (“JVC”) which details is described in Note 3, to enter into negotiations with the Government over terms for the proposed relocation and reconstruction of a new Air Force Base for the Royal Malaysian Air Force (“RMAF”) Butterworth, Penang through land swap (“Proposal”).

The Government’s approval-in-principle to the Proposal submitted by the JVC is subject to terms and conditions to be agreed between the Government and JVC (“the Parties”) and the execution of a formal agreement pertaining thereto.

2. STRUCTURE OF THE PROPOSAL

The Proposal will be carried out by a joint venture company to be established which the equity proportion shall be as follows:

Company	%
(i) TSR Capital Berhad	51
(ii) Lembaga Tabung Angkatan Tentera	30
(iii) Pembinaan Bukit Timah Sdn Bhd	19

(hereinafter refer as “JVC” or “LTAT-TSR-PBT JV”)

The JVC has proposed to the Government to undertake the following:

· To relocate and reconstruct the existing Air Force Base of RMAF Butterworth which is currently situated in Butterworth, Penang on a land to be identified.

· The JVC is to design, build and finance the development and construction of the New Air Force Base.

· The Government shall pay the JVC for the New Air Force Base through land swap at the current market value of the Government Lands. The Government Lands includes but not limited to the land measuring approximately 1,007 acres where the existing RMAF Butterworth is situated (“RMAFB Land”).

· Propose, plan and develop the existing RMAFB Land into an integrated mixed-used development project.

3. INFORMATION ON THE MEMBERS OF JVC

Lembaga Tabung Angkatan Tentera (“LTAT”), a statutory body enacted in 1972 by an Act of Parliament.

Pembinaan Bukit Timah Sdn Bhd (“PBT”) was incorporated in Malaysia on 2 October 1995 as a private limited company. PBT is chiefly engaged in construction and civil engineering works.

4. INFORMATION ON THE RMAFB LAND

The RMAFB Land is located at Teluk Air Tawar, Seberang Perai, Butterworth, Penang and situated approximately 8km from Butterworth which is directly opposite Penang island. The size of the land is measuring approximately 1,007 acres.

Air Force Base of RMAF Butterworth is currently situated on the said land.

5. RATIONALE FOR THE PROPOSAL

The Proposal which is presently being negotiated between the Parties was mooted by the JVC to the Government along the lines of the Public Private

Partnership (“PPP”) concept with the following benefits to the Parties:-

Benefits to the Government

The proposal enables the Government to reap the value of the Government Lands to obtain a new fully integrated and advance Air Force Base.

The land swap nature of the deal means that the Government will not have to fund the cost for the relocation and reconstruction of the Air Force Base. This will be paid by the current market value of the Government Lands.

The Government will also have the opportunity to participate in the redevelopment of the Government Lands through LTAT’s 30% equity interest in the JVC.

Benefits to the JVC

LTAT-TSR-PBT JV will reap the benefit by being in the capacity of master developer of the redevelopment of the Government Lands into a city of arts and leisure which promotes for eco-sustainable, culture and modern life-style.

6. FURTHER DETAILS

Further details will be disclosed after definitive and conclusive terms have been agreed upon, and a formal agreement entered into by the Parties.

This announcement is dated 5 February 2014.