PROJECT BRIEF

FOREIGN WORKERS ENCLAVES

IN

ISKANDAR MALAYSIA
 CONFIDENTIALITY STATEMENT

This Confidential Information Memorandum (Memorandum) is prepared by

Amasu (M) Sdn Bhd solely for information purposes to be reviewed by
prospective investors.

The information contained herein has been prepared to assist interested

parties in making their own evaluation of the Business Plan and does not
purport to be all-inclusive or to contain all of the information that a
prospective investor may desire.

This Memorandum includes statements, estimates and projections which

reflects the anticipated future performance of the business. While Amasu (M)
Sdn Bhd has endeavored to provide absolute accuracy and completeness of
the information contained herein as a result of our prudence in-depth
analysis, we expressly disclaim any and all liability for any assumption which
may or may not prove to be correct with regard to anticipated results.

By accepting this Memorandum, the recipient acknowledges and agrees that

all information contained herein is of confidential nature and is for limited
circulation only, and the recipient agrees not disclose it without the express
written permission of Amasu (M) Sdn Bhd. Without limiting the generality of
the foregoing, the recipient will not reproduce this Memorandum, in whole or
in part, and will use this Memorandum solely for the purpose of evaluating
the recipient’s interest in the venture, and, if the recipient does not wish to
pursue this matter, this Memorandum will be returned to Amasu (M) Sdn Bhd.
Any proposed actions by the recipient, which are inconsistent with the
foregoing agreement will require the prior, written consent of Amasu (M) Sdn
Bhd.

Amasu (M) Sdn Bhd reserves the right to negotiate with one or more
investors at any time and to enter into a definitive agreement with any party
without prior notice to the recipient or other prospective investors. Amasu (M)
Sdn Bhd reserves the right to terminate, at any time, the further participation
in the analysis, evaluation and proposal process by any party and to modify,
at any time, any procedure relating to such process without disclosing any
reason whatsoever.

The recipient is encouraged to conduct his own investigation, appraisal and

exercises of due diligence. Amasu (M) Sdn Bhd undertakes to assist the
recipient in the course of the recipient’s evaluation of the Business Plan.

Upon request, this Memorandum shall be returned to:

Amasu (M) Sdn Bhd

Amasu Enclave Division

E-mail zainalamal@yahoo.com
amasu@tm.net.my
PREAMBLE

• Iskandar Regional Development Authority (IRDA) has tabled the

Iskandar Malaysia (IM) Security Blueprint which recommended 46
initiatives including Foreign Workers Enclave as interventions to
mitigate the security risks in Iskandar Malaysia.

• This is also part of IRDA long term effort to position IM as the preferred
place to work, live and play in line with its aspiration. IRDA and Johor
State Government at the same time would like to institutionalize the
Foreign Workers Settlement Guideline in it’s effort to better manage
the housing of workers in IM especially foreigners.

• Currently, no similar enclave that meets the desired specification or

standard available in Iskandar Malaysia.

THE PROPOSAL

Amasu Enclaves Sdn Bhd (“Amasu”) has been appointed by Permodalan

RISDA Berhad (PRB) as the project manager/operator for the development,
operations and management of proposed foreign workers enclaves to serve
the Iskandar Malaysia Region. Amasu, with the consent of PRB and the
Iskandar Regional Development Authority (IRDA) intends to construct workers
enclaves within Iskandar Malaysia. Each enclave shall consist of five blocks of
five-storey 420 units of walk-up apartments capable of housing a maximum
of 5,000 workers.

The construction of these enclaves will spearhead as well as provide the

benchmark for the construction of more foreign workers enclaves to house
the increasing demand of foreign workers for the workforce requirement in
the manufacturing, construction, plantation and service sectors in Iskandar
Malaysia and Johor as a whole and in future in the development corridors of
other states.

This proposal outlines a brief description and background of the project,

analyses the status and viability of developing and constructing such foreign
workers’ enclaves and finally, puts forward the Build-Operate-Transfer
arrangement whereby PRB shall provide the land for construction of the
proposed workers enclave; whilst Amasu provides project management
consultancy of the enclave; with the Investor providing the financing
required for the construction and operations of the enclaves.
PROJECT BRIEF
The project is a Workers Enclave (“the Project”) comprising five (5) blocks of
5-storey walk-up apartment i.e. Block A to E, a total of 420 units. The units
have three bedrooms, two baths and two toilets with nett floor area of 820
square feet each.

The Project is based on an apartment concept and not on a dormitory or

hostel concept to enhance the flexibility of usage and to create a more
conducive living environment for the foreign workers by reducing the
psychological impact of being away from home, thereby improving their
working attitude and commitment. The apartment concept also enable
further compartmentalization/ segregation to enable sections of the
apartments to be leased to local workers, bulk-lease or such other
arrangements.

In the event, the demand ceases markedly or the enclaves ceased operations
after say 15 to 20 years or in the event accommodation for foreign workers
are not required anymore and there are no more takers for the workers
enclave, the apartment units can be sold to the public as low-medium cost or
medium cost units depending on the prevailing market situation then and the
shops can be converted to include launderette, kindergarten and
multipurpose hall and the wide open spaces between the blocks can be
converted to car-parking bays.

CORPORATE ARRANGEMENT
1. PRB has appointed AMASU as the project management consultant to
coordinate the development of workers’ enclaves in Iskandar Malaysia
and liaise accordingly with IRDA and the investors.

2. PRB purchases the land (either fully in cash or part-financed).

3. PRB will then lease the land for 30 years to the Investor. The lease
amount of 30 years shall be paid to PRB within 6 months. Investors are
allowed to charge the land with PRB’s consent.

4. Investor will construct the enclave (or appoints Amasu to construct) and
appoints AMASU as the property management consultant to manage
the completed enclave
5. Upon completion of the enclave in 2 years’ time, Investor would have
invested a maximum of RM35 mil in the gross development cost of the
enclave and RM7 mil for the land (including interest incurred during the
2 years’ construction period), giving a total worth of RM42 million for
the property.

6. Investor will own and operate the enclave for 30 years and appoint
AMASU as the PMC to manage the enclave.

7. A concession agreement based on the concept of Build-Operate-

Transfer (“BOT”) to be signed by PRB and Investor will be drafted to
identify the roles of each party and the corporate and financial
arrangement between the parties in the development & completion,
operation & management as well as the transfer of the property to PRB
at the end of the 30- year tenure or concession.

BUILD-OPERATE-TRANSFER ARRANGEMENT PROPOSAL (IF FINANCING

IS REQUIRED)

1. Within 6 months of the purchase of the land by PRB, Investor can procure
a term loan (end-financing loan) based on leasing agreement with PRB
(should it be required by the investor)

2. Should the investor requires financing from any bank, PRB will allow the
land to be charged.
3. Upon completion of signing a tripartite agreement, plans will be
submitted and land matters will be attended to by AMASU. Authorities’
submissions and approvals are expected to take up 4 to 6 months.

4. Construction period will be 2 years upon authorities’ approval, during

which no payment is made to PRB.

5. Survey of workers will be done by AMASU. MoU/ tenancy agreement will

be signed between Factory Company(s) and Investor as owner and
Landlord progressively in preparation for the commencement of enclave
operations.

6. Alternatively a rental agreement can be signed with terms of maximum 3

years each adding up to the total number of years of tenancy for each
Factory Company.

7. During the concession of 30 years, PRB will be paid a commitment fee of

RM7.0 per worker per month which adds up to RM35,000.00 per month
for a population of 5,000 workers in the enclave i.e. RM420,000.00 per
year.

8. Since the rental will be increased by 20% every ten years, the payment
to PRB will similarly be increased. For the full 30 years, PRB would have
received RM15.3million.
9. During the 30-year concession, the rental collections will be paid to
Investor as the concessionaire and assignment of rental collections to
the bank will form one of the securities for the bank loans.

10.Therefore, the rental collections will be defrayed to pay the loan interest
and for the repayment of both the loans.

11.Excluding the payment of loan interest, both the loans will be fully repaid
by the sixth year of operations of the enclave.

12.The success of this concession depends very much on the continuous and
full occupancy of the enclave over the 30-year period. To be realistic
the occupancy will be tagged at 95% to allow for workers turnover at 5%
per year.

13.In the event that before the expiry of 30 years of the concession, Investor
were to face a loss in rental collections due to low or non-occupancy as a
result of weakening market forces or changes in government policies
affecting the factories and foreign workers intake, all other parties will
also suffer.

14.Therefore, it is only fair and justifiable for Investor to be given some form
of rental guarantee. At 100% occupancy throughout the 30-year
concession, Investor will make a margin of RM168 million.

15.From the cashflow calculations, it is estimated that at 60% occupancy

rate, the operating income is insufficient to cover the operating cost of
the enclave.
16.In order to maintain a win-win situation for all parties, in the event the
occupancy rate falls to 60% anytime after the 14th year, Investor should
be given the right to convert the enclave to apartment units and sell
them to the public to at least prevent or cut losses.

17.Investor will in turn give a commitment to pay PRB the fee based on
100% occupancy for the same duration as that of the rental guarantee
given by PRB (back-to-back to that given by IRDA) i.e. up to the 14 th
year.

ARRANGEMENT UPON EXPIRY OF CONCESSION

1. After the 30 years’ concession period, effectively, Investor would have

collected RM168 million

2. Investor will transfer the whole property enclave (including the land title)
back to PRB at no cost, i.e. at an original worth of RM42 million.

3. Assuming the prevailing market price of the refurbished apartment units

is conservatively RM150,000.00 per unit, the total sales value of the 420
units will be RM63 million.

4. Including the commitment fee collected over the concession period of

RM15.3 million, PRB will stand to gain a total of RM78.3 million as against
that of Investor of RM168 million which gives an approximate ratio of
32:68
CONCLUSION

Based on the above write-up as well as the development and operational

feasibility studies and cashflow, the Project is a viable venture and therefore
repayment of the bridging loan is highly assured. Moreover this Project is
fully supported by the Government agencies and authorities viz. IRDA as well
as the Johor State government.

In addition, provision of workers enclaves is a way to contribute towards the

betterment of the society at large as elaborated above and RISDA can play its
part by providing the land bank required to facilitate the implementation and
completion of the project and ensure enforcement bylaws pertaining to
foreign workers accommodation in Iskandar Malaysia.
 ADDENDUM 1
AMASU ENCLAVE TEAM

Being the PMC, AMASU is forming The AMASU TEAM whose function is to
undertake all development phases, from planning, construction and
subsequently the day to day operation and management of the workers in
the enclave. The team scope of work includes:
a. Searching for investors
b. Presentation to investors
c. Introducing investors to RISDA
d. Witnessed the appointment of investors by RISDA
e. Overseeing the progress of development of enclave on behalf of RISDA
f. Setting up marketing team to ensure maximum occupancy in enclave
g. Having shares (given) in any SPV set up for the management of any
enclave.
h. Ensure security, safety and cleanliness in all enclaves.
i. Ensure collection of all rentals
j. Liasons with all authorities including IRDA, MKN, KDN, JTK, Local
Councils etc.
k. Reporting of all progress to RISDA and to investors
l. To maintain harmonious living conditions in all enclave.

The AMASU TEAM costs will be borne by investors where the return of
investment for the team will be included during repayment of all investment.

The AMASU TEAM consists of:

a. CEO –1
b. COO-1
c. CFO-1
d. Legal Advisor
e. Development Manager-1
f. Deputy Development Manager-1
 g. Marketing Manager/Collection-1
h. Marketing Executive/Collection-1
i. Marketing Executive-1
j. Liason Officer-1
k. Clerk of work-2
l. Head of Operations-1
m. Deputy head of operations -2
n. Chief Warden-1
o. Supervisors

Phase 1

Upon the investor agreeing to participate in the project, AMASU needs to set
up the preliminary project team. All cost related to this team shall be
borne by the investor. The first phase team will only consist of:
CEO
COO
a. CFO
b. Development Manager
c. Marketing Manager.
d. Legal Advisor

All designs and submissions will be monitored and assisted by the team
which includes identification of suitable and approved area from IRDA.

Fees for the team shall be invoiced to investors monthly by AMASU (M) SDN
BHD. The fee structure will be detailed out in the cashflow attached.

Other costs will also be shown in the cashflow. The full cost of the first team
is estimated at RM30,000.00 per enclave per month.

Operation Phase

AMASU TEAM will set up a new team in managing the running of day to
day operation of the enclave. The full team will be based on the
capacity and occupancy of every enclave.
The investors are advised to set up a new company where AMASU (M) SDN
BHD shall be given some shares (minority). The purpose of this SPV is to
ensure the investor will receive all collections from the employers and finally
distribute it to relevant parties. Both investors and AMASU TEAM shall be
responsible to ensure all collections are well distributed. Details of the
distribution shall be discussed by both parties and mutually agreed.

The full cost of the Amasu Team is estimated to increase to a maximum of

RM75,000.00 per enclave per month.
 ADDENDUM 2
ROLL-OUT PLAN

1. Upon agreeing to undertake the project, INVESTOR is to appoint

AMASU as PMC.
2. Tri-partite agreement between INVESTOR-PRB-AMASU is to be finalized
by appointed lawyer.
3. Relevant consultants shall be appointed and AMASU begins to
coordinate construction drawings for submission and land conversion.
Drawings and approval is expected to take up to six (6) months.
4. Construction period will be 2 years upon authorities’ approval, during
which no payment is made to PRB.
5. AMASU is to provide liason between all parties to ensure construction
progresses without hindrance.
6. During construction, AMASU shall begin to mobilize its marketing team
and work in tandem with IRDA in preparation for the impending
commencement of the workers quarters operations.
7. Once the workers quarters are fully operational, AMASU shall be the
integral part of the management whereby it shall provide the required
manpower as per the list on Addendum 1.
 ADDENDUM 3
PAYMENT PROPOSAL

1. The investor shall be in control of the financial management at all

times during the contract.
2. The maximum capital expenditure to build and fit-out an enclave for
5,000 workers is estimated to be RM35 million and the lease of land is
at RM7 million. All disbursement of payment is at the discretion of the
INVESTOR.
3. No payment is to be made to PRB until the enclave commences
operation. The total amount of the 30 year land lease is to be paid to
PRB within 6 months.
4. A fee of RM30,000.00 per enclave per month is payable to AMASU as
per Appendix 1. This fee shall be increased gradually to RM75,000.00
per enclave per month as more hiring is done to manage the operation
of the enclave.
5. All receivables shall be deposited into the INVESTORS’ account. The
investor is to pay for all monies due to ensure smooth operation of the
enclave.
6. The contribution of RM20.00 per head per month is payable to a
designated account to be advised later.