This article first appeared in The Edge Malaysia Weekly on December 16, 2024 - December 22, 2024

THE government has given its blessing to Malaysian Resources Corp Bhd (KL:MRCB) for the redevelopment of Kuala Lumpur Sentral (KL Sentral) as it was the master developer of the transport hub connecting the Keretapi Tanah Melayu Bhd (KTMB) train service, Light Rail Transit, KLIA Transit and Rapid KL bus service.

Last year, the cabinet approved the proposal to redevelop KL Sentral, which was opened in April 2001, to ease the congestion of commuters and vehicles.

“MRCB was the master developer of KL Sentral. The fact that it is still running KL Sentral, we thought that would be the easiest way to redevelop the area to avoid any complications. If any other party were to come in, it would probably complicate matters because there are operational rights involved,” Minister of Transport Anthony Loke Siew Fook tells The Edge in an interview.

“Also, the entire design and development was undertaken by MRCB in the past. That’s why the cabinet decided to award the project to MRCB. Additionally, the proposal came from the company to redevelop KL Sentral in exchange for air rights. It was not done through a tender process. It was a proposal coming from MRCB and we took it up as a public-private partnership (PPP) project [thus the entire cost will be covered by the developer].”

In October, Loke was reported as saying that the cost of the KL Sentral redevelopment was estimated at more than RM1 billion. He also said the air rights would allow the developer to build mixed-use developments, such as commercial and residential buildings, on top of or next to the station.

The minister points out that MRCB is a government-linked company, with the Employees Provident Fund holding a 36.21% stake and Lembaga Tabung Haji having 5.57% as at March 18, 2024. MRCB executive vice-chairman Tan Sri Mohamad Salim Fateh Din owns 15.48% through Gapurna Sdn Bhd.

“All the parcels of land in the surrounding area belong to MRCB. It has the right to develop the land. There are multiple users/stakeholders at KL Sentral such as KTMB, Prasarana Malaysia Bhd, Express Rail Link Sdn Bhd and MRCB. It is not operated by one user. So to undertake such a complicated project, if you are not the original master developer there, it will be very problematic,” Loke notes.

“Second, our condition is that it has to rebuild the station first, which must continue to run before it can monetise the project. It is a brownfield project. You have to ensure that operations continue to run as normal, while at the same time you have to redevelop the station.

“Another thing is that it has to come up with a few hundred million [ringgit] to upgrade the station. That is, of course, not easy for any other party to come in.”

According to Loke, MRCB is currently in discussions with UKAS (the Public Private Partnership Unit under the Prime Minister’s Department) on the commercial arrangement. “Once we get the approval from UKAS, and MRCB has to submit all the planning for approval to the local authorities, hopefully the redevelopment will begin next year,” he says.

Loke stresses that the government’s decisions are based on practicality. “What is the most practical solution and what is the best way to execute the project? We thought this is the best way to ask for an upgrade. First, we would never have that [budget] allocation to upgrade the station. If it was not a PPP project, it would be status quo. You would never see an upgrade of a new station.

“Hopefully, the company can come up with a nice, contemporary good station that we can be proud of. And that it can recoup its investment through developments. In terms of management and operations of the station, we will evaluate whether or not MRCB continues [to manage KL Sentral], or we can appoint any other operator. That is something to be decided later.” 

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