International Trade and Industries Minister Mustapa Mohamed said Malaysia is in "dire need" of a large convention centre in order to be more competitive in attracting investors.

This is why the government accepted a proposal from Naza TTDI Sdn Bhd to build the facility in Jalan Duta, Kuala Lumpur, on land belonging to the Malaysia External Trade Development Corporation (Matrade).

NONE Mustapa ( right ) also said the proposal was mooted in 2007 and since this was a profitable deal for the government, the construction company was given the nod to proceed.

"We need this centre and to us it is value for money. What we have now is small in comparison with our requirements and small in comparison with what other countries have," said Mustapa.

"You must also understand that this is a comprehensive development. It is not just the centre but they will also (be) building hotels, apartments, shopping malls and parking space.

"The gross development value will come up to RM15 billion. The concept will be like KLCC (Kuala Lumpur Convention Centre), except that this will be huge - eight times bigger than KLCC."

He told reporters at the Parliament lobby today that Matrade is not taking out a single cent to finance the construction of the exhibition centre, which is expected to be completed by 2013.

"We are getting the building for free. Otherwise we have to pay RM628 million which is a huge sum of money. We would have to beg, steal and borrow from the government. But maintenance (of the building upon completion) is of course our (responsibility).

"This is nothing but a public-private partnership. We have the land, we partnered with the private sector. We (will) have this building for free and in return, we give them a piece of land."

Naza TTDI will get 75 acres of land. Of this, 12.5 acres will be used for the convention centre, and the remaining 62.5 acres will be developed for other purposes.

"The valuation of the land in 2007 was RM197 million and we are getting RM628 million worth of building, so we are getting value for money," Mustapa said.

Currently there are four indoor exhibition centres in Kuala Lumpur and Selangor:

  • KLCC at 9,710 sq m
  • Putra World Trade Centre at 23,504 sq m
  • Matrade Exhibition & Convention Centre at 13,000 sq m
  • Malaysia Agro Exposition Park Serdang at 10,000 sq m

‘Due diligence done'

Asked why no tender was called for the Matrade project, Mustapa said Naza TTDI brought in the proposal and that due diligence was done.

"They are Naza TTDI, they developed Taman Tun. They are a very experienced developer. We negotiated with them and of course they did not get everything that they wanted.

"It is not for me to divulge what was discussed over the last two or three years. I don't want to give the impression that we gave in everything that they wanted. We have our own principles and stand."

Opposition legislators have cautioned the government that awarding a project through direct negotiation could result in inflated costs to the government and inflated profits for the contractor.

Petaling Jaya Utara DAP MP Tony Pua dap scholarship fund pc 130607 tony pua ( left ) raised a comparison in the House today, saying that the Port Klang Free Trade Zone was also supposed to bring in returns and benefits but ended up otherwise.

Pua: "It does not make sense that Naza is asking for just a little less than RM200 million for the centre and it also seems that they have obtained the 75 acres of land at RM70 per square feet, when the current market price in the nearby Hartamas area is a lot more than that."

Mustapa: "They complain about the building of Subang Airport, about the construction of the second bridge and about Putrajaya...but they now want to go to Putrajaya."

Pua: "We are not complaining about the projects, we are questioning the escalated costs."

The minister, however, evaded the question. He reiterated that the government is pleased with the returns from the deal and with the fact that the area will become a new development centre in Kuala Lumpur.