Thomas White Global Investing
Malaysia Stamp
December 17, 2010
A Postcard from the Asia Pacific
Malaysia: Ambitious Plans for New Economy

Petronas Twin Towers

The Petronas Twin Towers may soon be overtaken by Warisan Merdeka as the tallest building in Malaysia.

The first sight that greets any visitor to Kuala Lumpur, the capital of Malaysia, is the Petronas Twin Towers, which dominate the skyline. Once the tallest buildings in the world, the Petronas Twin Towers are a source of pride to any Malaysian, and a prime tourist site. But the allure is fading. The Petronas Twin Towers find themselves being overtaken by other taller skyscrapers. And Prime Minister Najib Razak plans to bring back some of that attraction – by building a completely new 100-story skyscraper – the Warisan Merdeka tower. The question though is: Does Malaysia need it?

To be built at a cost of a staggering $1.6 billion, Warisan Merdeka or the Heritage of Independence tower has attracted dismay from critics who believe that the building would be an unnecessary expenditure at a time when the clouds of recession haven’t been completely lifted. Others say that there is already a commercial property glut in Kuala Lumpur – the existing Petronas Twin Towers are not fully occupied – and they wonder if the project would create any benefit, apart from massive traffic jams.

Razak announced the skyscraper project during a new budget, which includes plans for a new eco-resort in Sabah, and a new mass rapid transit project in Kuala Lumpur, among other infrastructure initiatives. The Prime Minister defended the plan, stating that the tower would be built only if it is ‘commercially viable.’ He went on to state that Warisan Merdeka would not be built from taxpayers’ money, but would be privately funded, asking his critics to look at ‘the long-term perspective.’ Construction of the tower would begin next year, and conclude in 2015. Razak insists that the country needs an economic facelift, something that would enable Malaysia to roar on the Asia economic stage. It currently barely whimpers.

Malaysia has a sound economy, but it hasn’t achieved anything spectacular recently. Tagged as a middle-income country, it finds it hard to compete with the likes of Taiwan or South Korea, which are moving on ahead to developed country status. Economic growth slowed in the third quarter when gross domestic product rose 5.3% year-on-year, compared to 8.9% in the second quarter.

It is this slowdown that Razak intends to target not just with Warisan Merdeka, but with the slew of other infrastructure projects announced in his budget. “This project is not a waste,” he told The Star. “We want to have a building that will reflect Malaysia as a modern and developed nation,” he added, mirroring Malaysia’s desire to move ahead and be a power economy. When Razak was sworn in as Prime Minister last year, he had promised to change Malaysia’s economic landscape. And a transformation is definitely what Malaysia needs – a shot in the arm, so to speak – that would help the country benefit from the Asian economic surge. But whether or not a towering cosmetic facelift is the cure, or remedies that go much deeper, is another matter indeed.

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