THE Malaysian government is likely to be tapped for a loan to kick-start the development of the proposed Legoland theme park in south Johor in view of the current credit crunch which has made funding tougher and more expensive to obtain.
A senior government official told BT that the joint venture behind Legoland Malaysia was expected to approach the federal government for a loan not exceeding RM500 million (S$207 million).
‘It is difficult to get loans now, so it will have to be Malaysian government sponsored,’ he said of the park which is scheduled to be completed by the end of 2013.
Should the government agree to a loan of RM500 million, it would provide two-thirds of the project funding - a point critics could conceivably latch on to as evidence that the theme park might not be otherwise commercially feasible.
The Legoland Malaysia project was announced over the weekend, with a planned investment of RM750 million. The theme park in Iskandar Malaysia will be the first of its kind in Asia and will be located about 20 minutes from the Second Link.
The project is to be 80 per cent owned by a consortium led by Iskandar Investment Bhd (IIB) and the balance by Merlin Entertainment, the designer and operator of the park.
Merlin’s shareholders are US private equity firm Blackstone Group, Dubai International Capital and Lego Holding, while state investment agency Khazanah Nasional holds 60 per cent of IIB.
Over time, IIB plans to dispose of part of its equity in the theme park to other interested players - hotels looking to operate in the Legoland theme park, for example - so that investors are motivated to ensure the park’s success.
Besides the entertainment hub where Legoland and possibly two other theme parks would be sited, Iskandar Malaysia has delineated other areas for clusters of commercial activities, including logistics, education, ICT, and banking.
Over time, the government hopes to transform the planned special economic zone - an area about two-and-a-half times Singapore - into an engine of growth.
A multi-phase development, Iskandar Malaysia has reportedly received slightly over RM40 billion in international and domestic investments, or 86 per cent of the RM47 billion targeted in the first phase up to 2010.
Legoland Malaysia, which would incorporate millions of the colourful plastic bricks for which Lego is famous for, would be built on a 145-acre site in Nusajaya and would feature over 40 types of rides and other attractions.
It is expected to generate over 5,000 jobs during its construction as well as upon its completion.
Although Legoland Parks managing director John Jakobsen has projected a million visitors annually to the park, some remain sceptical of the theme park’s future given Malaysia’s hot and humid climate.
Even in the cooler climes of Paris and Hong Kong, Disney theme parks are struggling to meet projected visitor numbers and critics contend that Hong Kong’s problem ought to serve as a warning of the potential pitfalls ahead, given that it borders China’s vastly populated Shenzhen.
Singapore’s upcoming Universal Studios in Sentosa could also prove challenging despite the contentions of Legoland backers that both attractions would be ‘complementary’.
Universal Studios Singapore would have a headstart in that it is scheduled to be completed in 2010 - at about the same time when construction is expected to start on Legoland Malaysia.
Other existing Legoland parks are located in Denmark, Germany, the United States and Britain.
Source : Business Times - 16 Dec 2008
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