Benalec - The Land Reclamation Industry …dated July 2012

The cost for land reclamation projects is high due to the large amountof raw materials needed, use of expensive and sophisticated heavy machineries,labour force, time to complete and most importantly, the feasibility studiesand engineering designs that are unique to each site.

Since 2006, the sector had grown by a resounding 68 per cent, largelydue to the funds provided by the government under the 9th Malaysia plan.

Having variousdrivers to push the industry was crucial as this meant the industry was notdependent on any one particular sector. The land reclamation industry can be abeneficiary of the oil and gas sector, port and logistics sector, constructionsector, property sector and so forth.

Among the major playersin land reclamation locally are Benalec Holdings Bhd, Muhibbah Engineering Bhdand Galactic Maritime (M) Sdn Bhd.

The good thing about this industry is that it is a very niche businessand not many companies have that specialty. Another reason why the prospects of land reclaimationcompanies will remain bright over the long-term is that some of them receiveland parcels as partial payment of the reclamation job.

Benalec, for example, owns severalparcels of land in Malacca in return for the reclamation works it did there.Having land in return can be beneficial, especially so if the value increases.

The order book of privately-held Galactic Maritime currently stands atabout RM220 million, comprising of reclamation projects around the Iskandareconomic region, including the Nusajaya waterfront development.

The company is also involved in the upgrading of ports, harbour andnavigational waterways along the Tebrau Strait, Port Dickson, Klebang inMalacca, Pulau Indah near Klang and Jambatan PIAI in Johor.

Since 2003, Galactic Maritime has been involved in marine constructionworks in China's southeastcoastal areas, with the successful completion of projects in Zhejiang,Fujian and Guangdong.

About Benalec …

It is able to manufacture land and sell it at amargin.

It had sold two plots of reclaimed land in KotaLaksamana for rm45 psf and another deal done in June 2011 for rm28 psf. Thetotal sale consideration for the 395175 sq ft leasehold land in Kota Laksamanawas rm17.78 million while the price of the 1627405 sq ft land was rm45.57million.

Sources say that Benalec has secured 2400 acres forland reclamation projects in Melaka. Of these, the group has reclaimed 1500acres which have either been paid for in cash by clients or sold to the thirdparty. In Melaka. Benalec still has roughly 900 acres more to go and it hasbeen bidding for more land reclamation projects in Melaka, Johor and Penang.

In addition to land reclamation, it – whichlists marine engineering and construction as its niche – has venturedinto the construction of an oil and gas terminal in Tanjung Piai, Johor.However Benalec is not interested in owing the operating the terminal itself,or even in a JV with another party. Although it still holds a stake in the JVwith Rotary, the stake will be small.

Apart from concession to reclaim 2485 acres in Tanjungpiai, it has also been given the right to reclaim 1760 acres of land inPengerang, which has been slated to become the region’s OG& refininghub with the planned investments by Petronas.and Dialog.