Khazanah : Venture here, venture there...even for kids too?

At first glance, there is nothing wrong with the announcement. On second and subsequent glance also reveals nothing unusual. Until,

1. MSM never fails to amuse me. Last night, in business section, TV3 reported that Rakan Riang sdn bhd has signed a licensing agreement with Kidzania. Rakan Riang is expected to construct a RM 50 m theme park scheduled to be open by 2012.
2. Kidzania started in Mexico. It is based on family entertainment centre where children from 3 to 16 years old play adult roles in child-sized replica of an actual city with streets, buildings as well as vehicles. The idea has caught on in Japan, Indonesia and will be opening soon in Dubai, India and other parts of the world.
3. At first glance, there is nothing wrong with the announcement. On second and subsequent glances also reveals nothing unusual. Until, Bernama's biztime revealed that Rakan Riang Sdn Bhd is a joint venture between Khazanah Nasional Berhad and Boustead Holdings Bhd. Khazanah Nasional ? The Khazanah Nasional? The Malaysian Khazanah Nasional? In Khazanah Nasional's webpage, it is so written that:-

   "Khazanah Nasional is the investment holding arm of the Government of Malaysia and is empowered as the Government's strategic investor in new industries and markets. As trustees to the nation's commercial assets, our main objective is to promote economic growth and make strategic investments on behalf of the Government which would contribute towards nation building."

4. Khazanah's list of investment holding structures include automotive, basic materials, financial institution, healthcare, infrastructure & construction, media & communication, property, technology & bio-tech, transportation & logistics, utilities and last but not least others.
5. Khazanah has stakes in more than 50 companies with combined assets of RM 60B whilst Boustead's major stakeholder is Lembaga Tabung Angkatan Tentera (LTAT).
6. LTAT owns 57.5 % of Boustead holdings which has a combined assets of RM 8 B. Now, comes the questions. If Boustead holdings has assets in excess of RM 8B, what is RM 50M to them? Why do Boustead needs to team up with Khazanah to do the theme park? Boustead with its investment in plantation, heavy industries, financial & investment, trading, property, manufacturing & services should have more than enough expertise to run the theme park.
7. Further, Boustead holdings developed Mutiara Damansara where the theme park is going to be located. So do Boustead really needs Khazanah?
8. Another question is on the project costing. The report mentioned that the 60,000 sq ft theme park is going to cost RM 50M. That is roughly RM 830 per sq ft or RM 8,930 per sq m. Is that figure correct?
9. Back to Khazanah Nasional. Why is Khazanah going into theme park? Is this a new strategy? Is Khazanah investing in hospitality and theme park business now? Is Khazanah muscling into small players' industry? Has Khazanah lost track that they are Malaysia's investment arm? Are the returns worth Khazanah's involvement?
10. STAR datelined 24th June 2009 reported that Khazanah will be holding 80 % of Rakan Riang Sdn Bhd whilst Boustead group hold the balance 20 %.
    
11. Rakan riang projected 500,000 visitor per annum paying at RM 50/pax. That works out to RM 25M per year. It also works out to 1,400 paying visitors per day or 700 paying visitors per session in the theme park (assuming that the theme park will run 2 session daily). Is it possible to have 1,400 paying customers daily? For the time being, this scribe doubts it because Mutiara Damansara do not have friendly public transportation service. If that is so, then the theme park will be relying more on private transportation. Can the theme park attract them?
12. On top of that, the price of RM 50/pax is quite stiff for Malaysians (at this time). As this is a children based theme park, its main target market are families. Assuming that a family of 4 going to the theme park, they will need to cough up minimum of RM 200 for a family per session. How many Malaysian families can afford to spend RM 200 for a session of 4 hours? And how many of these families can make regular return trips to the theme park?
13. What about the staffs? The news reported that approximately 400 staffs will be employed for the theme park. Taking an average salary of RM 1,000 per employee per month, the compnay shall reserve RM 4.8 M for salary.
    
14. What about the yearly licensing fee? How much must the company pay to the franchise holder? What about the amenities, the business license and the likes? Rakan riang may need to raedies approximately RM 6 M yearly for overheads cost. It may not be so "riang (happy)" after all.
15. With that, why is Khazanah going for peanuts now? Is Khazanah banking away from its strategic investment? Is Khazanah pouring in money to domestic industry to generate economic growth? Is Khazanah going cold to invest overseas? Maybe the economists outside can give a glimpse of what's going on...
16. It is not wrong to venture in theme park. In fact, Kidzania is good investment for private companies. Khazanah should stay out of the deal and let the local players take the lead and the risks. Companies like YTL, Berjaya, UEM, Gamuda, Sunway are more than able to construct and manage the RM 50M theme park and they have ample land to choose.
    
17. Are we going against the direction? Is Khazanah contracting instead of expanding? Is the returns on investment good enough for Khazanah? Are we paying high premium grade salary for this kind of Khazanah's investment? Are we suckered by Khazanah's decision?
18. As I see it, Boustead can go alone on this deal. It is a feather in the cap for Boustead. But for Khazanah? I think those Khazanah's execs should go and fly kite!! We pay them top salary and is this the best they can do? No wonder Vietnam is fast catching up and will be overtaking us soon...Khazanah is too engrossed in theme parks instead of generating money using the country's wealth.
19. 2012 is not that far away. By then, maybe we will see all the top khazanah execs playing role models in the theme park, competing with the 3 to 16 year old children...Oh, what a day it is going to be...
    

Till then...G'nite M'sia...wherever u are... Read More