Malaysia’s airmen may not be getting a new base in Butterworth, Penang, after all — news that will likely bring relief to residents and business operators opposed to the plan from the start.

According to a source familiar with the plan, the redevelopment of the new air force base for the Royal Malaysian Air Force (RMAF) in Butterworth, Penang, which has been in the works since early last year, may be scrapped altogether.

The source told the digitaledge DAILY that after the federal government granted in-principle approval to TSR Capital Bhd to enter into negotiations with the former to redevelop the RMAF base via a land swap in February last year, not much had happened.

“The project was stalled after much criticism and debate over the impact of the air force base relocation on the livelihoods of [the] people and business operators, and by the likelihood that it will be scrapped,” the source said.

On Feb 5, 2014, TSR Capital, a property developer and construction company controlled by its deputy chairman Tan Sri Lim Kang Yew with a 33.69% stake, announced to Bursa Malaysia that it — together with Lembaga Tabung Angkatan Tentera (LTAT) and Pembinaan Bukit Timah Sdn Bhd — will redevelop the existing 407.52ha air force base in Butterworth into an integrated mixed-use development with a potential gross development value of more than RM10 billion.

In return, the three parties are expected to build a new RM3 billion air force base for the RMAF at a different location.

It was reported that the RMAF base would be relocated to Ara Kuda, near Tasek Gelugor, while the seafront land currently occupied by the RMAF in Teluk Air Tawar, about 8km from Butterworth directly opposite Penang Island, would be transformed into “a city of arts, culture and leisure”.

When met recently, LTAT chief executive Tan Sri Lodin Wok Kamaruddin told the digitaledge DAILY that the fund was in the dark about the status of the air force base redevelopment and had so far not been updated.

He said this when asked on the status of the project and if the redevelopment of the air force base was still on the cards despite little news of the project.

“We are just a proposed passive party. We were invited [to participate in the redevelopment] since it is a military project, and why not if the government so decides,” he added.

Lodin, however, noted that the decision as to whether the project should proceed or not lies with the major stakeholder and not LTAT.

Under the collaboration, TSR Capital will get a 51% stake in the joint venture company, while LTAT and Pembinaan Bukit Timah will hold 30% and 19% stakes, respectively.

The project has drawn much criticism from the opposition, as well as residents and business operators located within the vicinity of the current RMAF base in Teluk Air Tawar, for its upheaval of the established neighbourhoods in its path.

It was reported that many, whose livelihoods were dependent on business involving RMAF staff, were worried that they would be at a great loss after the base’s relocation.

Some quarters have also voiced disparity over the proposed land-swap deal, saying it does not commensurate in value since the three companies will only need to fork out RM3 billion to build the new air force base in the outskirts of mainland Penang.

Penang Chief Minister Lim Guan Eng reportedly said that the state government would not change its stand on the matter, noting that the land-swap deal between the federal government and TSR Capital was “shrouded in secrecy”.

Tasek Gelugor member of parliament Datuk Shabudin Yahaya, who is also Penang Regional Development Authority (Perda) chairman, has also vocally opposed the plan to relocate the RMAF base, saying the new site in Ara Kuda for the base belongs to Perda.

He said Perda had earmarked the land for the building of low-cost and affordable homes.

TSR Capital (fundamental: 0.85; valuation: 2) shares have tumbled 52.3% from its Feb 7, 2014 close of RM1.30, losing RM79.08 million in market capitalisation. The stock closed down 4.62% at 62 sen last Friday, with a market cap of RM72.11 million.

Source: TheEdgeMarkets.com