2 years, RM2b for new LCCT? Right! - The Malaysian Insider

MARCH 10 - The good news: A new RM2 billion low cost carrier terminal will be built at the Kuala Lumpur International Airport by Malaysia Airports Holding Berhad.

The bad news: The new facility may not be built by 2011 and the government should prepare for a cost overrun.

Finance Minister Datuk Seri Najib Tun Razak today announced in Parliament the country's worst kept secret: that the KLIA East project has been consigned to the scrap heap of history. He said that MAHB will build the new LCCT at KLIA by 2011.

His statement will end speculation on the cost and site of the new LCCT project. But it is unlikely to be the final word on a project which has

been mired in controversy since Sime Darby Berhad and Air Asia proposed late last year to build a new LCCT in Labu. That plan set off a firestorm of protests with several parties including Khazanah Nasional questioning the need for another airport away from the main KLIA complex.

Air Asia maintained that it needed a new facility to cater to its passenger growth. It said that it would raise the RM1.6 billion financing to build the new LCCT on land owned by Sime Darby. On its part, Sime Darby agreed to bear the cost of the supporting infrastructure for the project,

believing that the airport project would be a catalyst for its Vision Valley development.

But the government-linked company buckled under pressure and said that it would only sell the land in Labu to Air Asia.

The KLIA East project was canned ostensibly because of financing issues.

Najib played peacemaker with several parties including MAHB and Air Asia in January and a broad framework of cooperation was cobbled together.

This alternative plan would see MAHB build the new LCCT while Air Asia would be allowed to give its input in the construction of the new facility as well as benefit from lower charges.

But The Malaysian Insider has learnt from government officials that the nuts and bolts of the new LCCT in KLIA have yet to be nailed down, with the Finance Ministry still trying to narrow the gap between MAHB and Air Asia. With some issues on the table, it is questionable whether the new LCCT can be built by 2011.

Also, the site picked for the new LCCT is a piece of swampy land opposite the Bunga Raya VIP complex. The land will need to be rehabilitated, a process which will take time and money.

Najib's announcement in Parliament today will end all talk about KLIA East. But Malaysians have not heard the last about the new LCCT.

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