Kedah Umno urges state govt to closely monitor negotiation with Kedah Rubber City investor

ALOR STAR: Kedah Umno have urged the state government to monitor the renegotiation between Hong Seng Consolidated Bhd and the Northern Corridor Economic Region (NCER) regarding the initial agreement for the construction of a nitrile butadiene latex (NBL) factory in the state.

The renegotiation, aimed at exploring alternative land usage options, came after Hong Seng's decision to cancel a RM3 billion project to build and operate an NBL manufacturing plant in Kedah Rubber City, amid a downturn in the glove industry. 

Kedah Umno information chief Datuk Shaiful Hazizy Zainol Abidin said the cancellation of the investment project by the KRC investor has raised concerns about the current progress of KRC. 

According to Shaiful, Hong Seng was one of the earliest investors in KRC, purchasing approximately RM45.74 million worth of land spanning 42.49 hectares in 2020.

"A decision in exploring alternative land use options must be executed carefully and transparently to prevent losses for both KRC and Kedahans. 

"The failure of this investment will result in the loss of more than 3,000 potential job opportunities for the people of Kedah," he said in a statement today. 

Meanwhile, Shaiful said Kedah Umno would consistently support any decisions aimed at attracting investors to KRC, which was established by the previous Barisan Nasional government.

He stressed that Kedah Umno demanded that the state government to continue its commitment to streamline all investment processes in the state.

"We believe that this surprising decision is also rooted in the failure and sluggishness of local authorities in managing specific requirements, especially regarding the acquisition of certain lands, which are indeed critical factors for KRC's development," he added. 

According to a disclosure to Bursa Malaysia Securities on Sept 13, Hong Seng stated that it made a strategic decision to suspend the NBL plant's development due to various factors, including project requirements and financing.

In 2020, Hong Seng bought 42.49 hectares of federal land in Kedah Rubber City for RM45.74 million from Northern Corridor Implementation Authority (NCIA)  for the set up of the plant. 

Kedah Rubber City is the first dedicated rubber industrial park in Kedah, covering an area of 494.5 hectares.

Following its decision to suspend the NBL plant, the company said it will renegotiate with NCIA on the terms of the agreement in relation to the Kedah Rubber City NBL project and explore alternative use of the land.

With its decision, a plan by its subdiary, HS Petchem Logistics Sdn Bhd, to build storage tank facilities to store feedstocks such as Butadine (BD) and Acrylonitrile (AN) petrochemicals, and provide logistics services for the supply of feedstocks to the NBL has also been aborted.

BD and AN are the raw materials required for the manufacturing of NBL.

The group has reached an agreement to terminate the sub-lease of 1.2 hectares of industrial land from Penang Port Sdn Bhd,  where the storage tank facilities were to be built, for a period of 20 years for a total rental payment of RM8.5 million.

Hong Seng's share price was down 10 per cent to 4.5 sen on the news as at time of writing.

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