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Monday, November 30, 2009

Malaysian construction firms in Dubai have minimum exposure

Malaysian construction companies are not likely to be hit by the debt crisis affecting Dubai

PETALING JAYA: Malaysian construction companies are not likely to be hit by the debt crisis affecting Dubai, said industry players. Dubai has been struggling to ease fears of a massive debt default after it moved to delay repayments at two flagship firms, which has shook confidence in the Middle East as a centre for investment.

Ng Kee Leen (right) ... ‘There aren’t many Malaysian construction firms left in Dubai.’

Master Builders Association Malaysia (MBAM) president Ng Kee Leen said most of the Malaysian construction companies had either pulled out or were at the tail-end of completing their contruction projects there.

“There aren’t many local construction companies left in Dubai,” he told StarBiz yesterday.

Meanwhile IJM Corp Bhd chief executive officer Datuk Krishnan Tan said the company had already completed the bulk of its projects in Dubai.

“IJM is not affected. We don’t have much there (construction projects in Dubai). We’re almost done with the construction of Fortune Tower at Jumeirah Lake in Dubai,” he said, adding that currently there was no problem with payments.

A Gamuda Bhd top official said the company was not significantly exposed to the fallout in the construction sector in Dubai.

Interior fit-out (IFO) company LCL Corp Bhd founder and executive chairman Datuk Low Chin Meng said payments were generally slow in Dubai.

“We will shift our focus on interior fit-out (IFO) contracts in cash-rich Abu Dhabi, after the completion of projects in Dubai,” he said.

The company has projects such as Atlantis The Palm Hotel, Dubai Metro System, Dubai Mall and Dubai Marina Hotel.

Concern over the level of debt held by the Government and its affiliated companies had sent jitters throughout the Gulf region and had affected investors confidence level.

Earlier in the year the Dubai’s stock market was down 60% and many residents believed that the property market was on the brink of collapse.

Dubai had borrowed billions to finance its infrastructure and construction companies such as Dubai World, and Emirates Airline.

A local property analyst said Dubai was likely to be on the road to recovery.

“The worst is likely over as the market has bottomed out. The economy was very bad at the start of the year. The housing market fell into a slump and property prices fell as much as 50% even in prime location and many expatriates left the place,” he said.

Early this year, WCT Bhd lost a US$1.3bil (RM4.6bil) contract to build a racetrack in Dubai it had won back in 2007 as the client alleged that WCT and its partner Arabtec Holding PSJC was behind schedule. However, WCT disputes the accusation and is presently fighting to reclaim RM300mil that includes advance payment of RM178mil and a performance bond.

It also seems that the Iskandar growth region in southern Johor will not be affected by the Dubai debt crisis. It was reported that Johor Mentri Besar Datuk Abdul Ghani Othman said this was because only one company from Dubai had invested in a real estate sector in the growth region. He said the company, Damac Properties, was involved in a property project on an 8ha site in the Iskandar region. He added that most of the investors in the growth area are from Saudi Arabia, Kuwait and Abu Dhabi and that the Dubai company had yet to start operation.

By The Star (by Danny Yap)

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