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Saturday, March 8, 2008

Encorp wants to venture into Asia, Mideast

PETALING JAYA: Having made its mark in the prefabricated building technology locally, Encorp Bhd is ready for its maiden foray overseas and has set its sights on projects in Asia and the Middle East.

It was negotiating to undertake homes, government quarters and commercial building projects in several countries in the two regions, said group chief executive officer Yeoh Soo Ann.

He said Encorp's reputation in designing, financing and constructing 10,000 teachers' quarters in Malaysia using the industrialised building system positioned the company well to seek overseas ventures that used such technology for mass housing projects.

Yeoh Soo Ann

“We will go where the returns are operationally and financially viable after taking into consideration the political and currency risks of that particular country and/or region,” he told StarBiz.

On when it expected to conclude talks, Yeoh said it hinged on due diligence and feasibility studies.

He said Encorp was also aggressively pursuing opportunities presented by the Ninth Malaysia Plan (9MP).

“We are looking at several projects in the 9MP, with a total value estimated at RM2bil. They are currently at tender and/or negotiation stage,'' he said.

Encorp returned to the black in the financial year just ended Dec 31 (FY07) with net profit of RM69.88mil against losses of RM124.84mil in FY06. Revenue more than doubled to RM327.74mil from RM143.13mil a year earlier.

Yeoh believes that the company was poised for growth and better financial results.

With Encorp's stable financial standing, coupled with successful sales of existing projects, it is scouting around for land that could yield higher returns.

“We do not fancy having a huge land-bank as that will also mean having to carry the cost over a longer term,” Yeoh said

Encorp was also looking into potential partnerships and joint ventures with property developers and landowners, Yeoh said, adding that talks were ongoing with several potential partners, locally and abroad.

An artist's impression of The Strand Damansara

He said the group was optimistic its property division would continue to enhance profits in the future. Meanwhile, plans have been finalised for the launch of serviced apartments and small office, home office phases of The Strand, Damansara later this year, followed by the Shopping Mall at The Strand.

“We are expecting sizeable recurring income from the rental of the mall when it is completed in 2010,” Yeoh said.

Encorp will also launch the Section U10, Shah Alam development this year. With a gross development value of RM300mil, the integrated eco-concept gated community project is expected to be completed by the second quarter 2010.

By The Star - StarBiz - (by Chan Ching Thut)

Millionaire’s property can be a ‘small estate’

A “small estate” is the property of a deceased person having a total value of RM2 million or below, but it must at least consist of some land or a building (that is, immovable property).

The property of a deceased person is known as an “estate” in law. In addition to the land or building, a small estate may consist of movable property, such as cash, money in bank savings or current account, unit trusts, and company shares.

After the recent amendment known as the Small Estates (Distribution) (Amendment) Act 2008 (the amending Act), the value of a small estate is increased to RM2 million. In other words, after the amendment, the property of a deceased millionaire can be a “small estate”.

The debts of the deceased are not to be deducted when ascertaining the value of a small estate. A trust property is not to be included either in the small estate. A small estate must include some landed property (known as immovable property in law) for example, a piece of land, a house or a shop. Without landed property, it cannot be a small estate.

Even if the property of the deceased person consists of only a few thousand ringgit in cash, it does not become a small estate. Movable property (such as cash or company shares) does not constitute a small estate.

Value increased
The amending Act received the Royal Assent on Jan 24, 2008, and was published in the Gazette on Feb 7, 2008. It will come into force on a date to be appointed by the relevant minister by notification in the Gazette.

The most important amendment introduced by the amending Act is the increase in the value of a small estate. The value of a small estate is increased from RM600,000 to RM2 million.

Such an increase is phenomenal. The total value of a small estate is now up to RM2 million. It is 333% of the original value of RM600,000 before the amendment. The drastic increase in the value of a small estate in a way reflects the fast spiralling inflationary trend in this country.

It is instructive to note the upward adjustments in the value of a small estate over a period of 50 years since the inception of the principal Act in 1957.

A “small estate” was worth only RM10,000 or below, when it was first introduced in 1957. The principal Act came into effect on Oct 1, 1957, soon after this country achieved independence.

The recent increase in the value of a small estate from RM600,000 (since 1990) to RM2 million is considerable. The adjustment of 333% in the value of a small estate has been the highest since the introduction of the principal Act (apart from the sixfold increase in 1979).

If one compares RM2 million with the initial RM10,000 (the value of a small estate first introduced in 1957), the former is 200 times the latter! This would mean that over a period of 50 years, the increased value of a small estate amounts to 20,000% (or 200 times) its initial value!

Could it be that the government is anticipating that an impending fuel price hike would lead to a steep increase in property prices?

Where to file the petition?
After the amendment, the petition is to be lodged in the district where the immovable property (a piece of land or a house) is situated: s.8(1). The petition need not be lodged in the district where the greater part of the property is situated.

For example, if a house is situated in district A, the petitioner of a small estate must file his petition in district A, though the greater part of the property is found in another district, say district B. Even though the house may constitute a minor part of the small estate, the petition must be filed in the district where the house is situated.

The Director of Lands and Mines (PTG) of the state concerned, or the Director General of Land and Mines (PBGT) of the Federation, has discretionary power to order that the petition be heard by the land administrator of a particular district.

But someone must make the application. The order made must appear to be convenient to the parties or witnesses, or it is in the interest of justice to make such an order. The order made is final and not subject to any appeal: proviso to s.4(2).

Sale of movable property by land administrator
The land administrator has been given additional power to sell property. Under a new provision, if two (or more) beneficiaries are each entitled to a share in any movable property (such as company shares), the land administrator may sell the property. But, when exercising his discretion, he must have regard to the interests of the beneficiaries concerned: new s.15(5A).

Transitional provision
Under the transitional provision, all small estate petitions filed before the amendment, are to proceed under the old procedure. Only petitions lodged after the amendment are to be heard according to the new procedure.

All petitions for small estates distribution lodged before the coming into force of the amending Act, must follow the previous procedure: s.12(1) of the amending Act.

All small estate matters commenced before the amending Act takes effect (or pending before a land administrator), must continue to be heard under the previous procedure: s.12(2) of the amending Act.

The Small Estates (Distribution)(Amendment) Act 2008, increases the value of a small estate to RM2 million. As a result, a millionaire’s property may be treated as a small estate. It reflects the rapid inflationary trend taking place in this country.

Every land office must therefore have sufficient resources to deal with the influx of small estates matters. Otherwise, the accumulation of small-estate cases and undue delay in their disposal are inevitable. It is hoped that the authorities concerned have taken necessary steps to cater for such eventualities.

The writer is a member of the Conveyancing Practice Committee, Bar Council, Malaysia

Note: This column is brought to you by the Malaysian Bar Council for your information only. It does not constitute legal advice. You should therefore seek professional legal advice for your specific needs. Neither the Malaysian Bar nor the Sun Media Corporation Sdn Bhd shall be liable to any reader who suffers losses as a result of relying on this column.

Articles by theSun (by Yang Pei Keng)

Local REITs gain global attention

Cross-border REIT partnerships will benefit all

BARELY three years after Malaysia's first real estate investment trust (REIT) was on the stock exchange, the industry crossed a new milestone with Wednesday's signing of a partnership agreement between Hektar Klasik Sdn Bhd and Singapore-based Frasers Centrepoint Asset Management (M) Pty Ltd (FCAM).

Today, not only have local REITs grown in market capitalisation to over RM1bil, investors can look forward to enjoying the benefits of this first cross-border REIT partnership. This surely augurs well for the industry as a whole and for the REITs in terms of global recognition by institutional investors.

Commenting on the cross-border REIT partnership, Hektar Asset Management Sdn Bhd chief executive officer Datuk Jaafar Abdul Hamid said the joint venture would benefit both parties.

“It would help harness the combined strengths of the sponsors: FCAM's strategic reach and financial resources within South-East Asia and Hektar group's experience and expertise in Malaysia.

“We have extensive understanding of the Malaysian market and we are gaining momentum in growing the REIT's asset size, especially with our recent retail acquisition in Johor,” he said.

The joint venture agreement is part of the sale and purchase agreement entered into between Hektar Klasik and Fraser Centrepoint Ltd (FCL) on May 16, 2007 for FCL's acquisition of a a 40% stake in Hektar Asset Management Sdn Bhd, the managers of Hektar REIT.

FCL fully owns FCAM and also has a stake in Frasers Centrepoint Trust (FCT), which purchased a 27% stake in Hektar REIT for RM104.5mil in June 2007. FCL is a unit of Fraser & Neave Ltd.

A foreign REIT analyst said the partnership would bring about tremendous synergy and was a win-win situation for both Hektar REIT and FCT.

“It shows commitment by FCAM to grow FCT via a stake in Hektar REIT and also benefits the latter through the combined expertise of the REIT managers from both trusts,” he said.

The Securities Commission had earlier approved the appointment of two directors from FCAM and a third independent director to the board of Hektar Asset Management.

Asked if there could be more cross-border REIT partnerships in time, the analyst said it would be difficult to predict but certainly other REIT managers would be looking at ways to increase their trust asset size, exposure to foreign investors and market capitalisation via various means including cross-border REIT partnerships and mergers and acquisitions.

He said REIT managers could also work with property developers and third parties with good prime assets in strategic locations to inject matured properties into the trusts.

“Every trust is trying to grow by attracting more investors and the competition for funds is getting tougher,” he said.

By The Star (by Danny Yap)

Acerinox picks Malaysia for first Asian plant

The RM5bil facility is Johor's largest foreign investment

JOHOR BARU: Spanish steel company Acerinox S.A. is investing RM5bil in its new production plant in Tanjung Langsat near Pasir Gudang.

The Johor plant will be the company's first plant in Asia. Its existing plants - all developed with partner Nisshin Steel of Japan - are in Spain, South Africa and the US.

Acerinox's investment is the single largest foreign direct investment (FDI) to be secured by Johor to date.

The integrated plant, on a 140ha site, will be developed in phases. When fully ready in 12 years, it will have the capacity to produce one million tonnes of stainless steel, including 600,000 tonnes of cold-rolled steel sheets, annually.

“This is a major success for Johor to continue to position itself as the premier destination for capital-intensive high-technology industries in Malaysia,” Mentri Besar Datuk Abdul Ghani Othman said in a statement yesterday.

Since 2005, maintained its position as the most popular destination for FDIs in Malaysia, he said. The state attracted RM9.24bil in FDIs last year.

Under phase one, the partners will spend RM1bil to build a 240,000-tonne-per-year production line of which 182,000 tonnes will be cold-rolled steel.

The line, which will come on stream in 2011, will include a cold-rolling mill, a combined annealing and picking facility, a skinpass and a finishing shop.

Ghani said Aceronix and Nisshin Steel picked Johor because of its strategic location and excellent connectivity to potential markets within Asean as well as Australia and India.

Once completed, the Malaysian plant - together with the existing three facilities - will boost the group’s installed capacity to 4.5 million tonnes per year.

By The Star (by Zazali Musa)