ISSUE 2! JANUARY 2009

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USHERING IN

THE NEW 2009

As 2009 unfurls, it is time to look forward to bet ter days and ne w challenges ahead.

Wishing you a New Year Sparkling with Happiness, Success & Joy.

Happy 2009!

Country Manager

!Zainal Fitri

!MERCU UEM!

With e f fect f rom Januar y 1 , 2009 our parent company, UEM Builders Berhad, has mo ved to i t s ne w premises at MERCU UEM, Kuala Lumpur.

Please see Page 6 for more details.

UEDI TIMES

D e c e m b e r, 1 9 2008 : Country Man"ager, Zainal Fitri, was proud to launch the first ne ws le t te r, U E D I T I M E S . With the quarterly Newsletter UEDI will be able to share its news with the fellow colleagues in Ma"laysia and Qatar. He

thanked the Chief Editor, Miss. Asha Pujar; the Designer and Tech"nical Advisor, Mr Manjunath; and their team in realising one of his many dreams for UEDI #pic above$.

INTRODUCING OUR

NEW CORPORATE

LOGO

ISSUE 2! JANUARY 2009

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Mr James Wong holds a B.Sc. in Civi l Engineering from Imperial College of Science, Technology and Medicine University of London, UK. He also holds a M.Sc. in DIC Concrete Structures. He is a member of Institution of Engineers of Malaysia and the Board of Engineers of Malaysia.

Mr Wong joined UEM Group in 1989, and was appointed Director of Operations #Engineering & Construction$ of UEM Builders Berhad in 2002. He joined UEDI in 2003 and stood by and sustained through thick and thin for the past 6 years. He consistently impressed and inspired all of us with the sheer magnitude of his knowledge and information. When such souls quit our Company it is his aspirations and inspirations that remain like a fragrance in the air. In a beautiful book of remembrance his name is engraved in gold, his endless e%orts, his wisdom stay with us and his memories will never grow old.

REALTY SECTOR SET FOR UPTREND IN 2009

With the interest rates on home loans expected to drop to around seven percent in the months to come Countr y Manager, Zainal Fitri, expects to see an enhanced activity in the realty sector.

The Government in realising that the realty sector will play an important role in reviving the industry, has already prompted banks to lend at a concession rate of 9.25 percent on loans between Rs 5 lakhs and Rs 20 lakhs and at 8.5 percent on loans up to Rs 5 lakhs.

The decline in the prices of commodities like steel, cement, crude oil and other metals in the global markets has led to a fall in

their prices in the domestic markets. This has led experts to feel the inflation rate will further fall to three percent in the near future.

Most public sector banks have said that if the inflation rate falls to around three percent the interest rates on home loans cou ld fa l l to a round seven percent. The drop in home loan interest rates will give a massive thrust to the realty sector says, Zainal Fitri, resulting in more buyers in the market. There will be demand for a f fordab le hous ing and commerc ia l projects.

UE Development India will seriously look to participate in

the fast growing realty sector. We aim to help build India, says Zainal Fitri.

JAMES WONG TET FOH " COLOSSUS OF UEDI

The expected fall in the inflation rate to 3 percent will drive interest rates on home loans down to around 7 percent.

James Wong Tet Foh

Engineering & Construction Division

#Private/Local and Overseas Project$

ISSUE 2! JANUARY 2009

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Chinese New Year starts with the New Moon on the first day of the new year and ends on the full moon 15 days later. The 15th day of the new year is called the Lantern Festival, which is celebrated at night with lantern displays and children carrying lanterns in a parade. New Year's Eve and New Year's Day are celebrated as a family a%air, a time of reunion and thanksgiving. Probably more food is consumed during the New Year celebrations than any other time of the year.

Vast amounts of traditional food is prepared for family and friends. In Malaysia the famous dish i s the raw f ish with a delectable mix of colourful vegetable ingredients and sweet sauce, Yee Sang.

Yee Sang, a must for Chinese New Year, is tossed high up in the

air before it is eaten. Doing so, it is believed, will mean a new year with good fortune “piled high” as the sky.

Also etiquette dictates that one must bring a bag of oranges and tangerines and enclose a lai see when vis it ing family or friends anytime during the two"week long Chinese New Year celebration.

Tangerines with leaves intact assure that one's relationship with the other remains secure. Oranges and tangerines are symbols for abundant happiness.

At Chinese Ne w Year celebrations people wear red clothes, decorate with poems on red paper, and give children "lucky money" in red envelopes.

THIS IS HOW YEE SANG IS ENJOYED.

Top CS GanWishing A" a Happy Chinese New Year Botto! Datuk Gary T. see# $ith his family enjoying his Ye%

HAPPY CHINESE NEW YEAR ! THE YEAR OF THE OX

SIGHTSEEING IN BANGALORE

The Bangalore Palace is situated in the heart of Bangalore. It is set amidst over 430 acres with a built up area of 45000 square feet boasting of 140 years old Tudor architecture. Come and see it ya.

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NEWS FLASH

The Times of India:

Government plans to make India slum"free by 2020. The housing ministry is considering a proposal to impose a cess of 0.5& on all central taxes to establish a dedicated “Shelter Fund” to meet the target of “a%ordable housing for all”. It is estimated that alleviating the urban housing shortage could raise the rate of GDP growth by at least 1"1.5& and have a huge impact on improving the quality of life.

The Economic Times:

The government is working on a mechanism to monitor implementation of infrastructure projects and ensure that the recent measures taken to boost infrastructure spending deliver results. With as many as 26 road projects, sanctioned in February, still awaiting financial closure, the committee of secretaries #CoS$ headed by the Cabinet secretary is looking at ways which could lead to stricter monitoring of projects.

The Indian Express:

In a move to quicken the pace o f in f ra s t r ucture development on the Delhi "Mumbai Industrial Corridor #DMIC$, the Government has identified twelve early"bird projects in Gujarat, Madhya Pradesh and Haryana, which will kick o% before the master plan is put in place. These include an inter nat iona l a i rpor t , a knowledge city and mass rapid transport system #MRTS$ links for which the government is on course to invite bids at the

request for qualification stage #RFQ$. The investment required for these projects is expected to be an additional Rs 20,000 crore over and above a similar amount announced earlier for railway projects on the DMIC.

Mint:

The proposal to create two infrastructure indices moved a s tep for ward wi th the government approaching the National Statistical Commission, or NSC, the apex statistical authority, to provide a standard definition for infrastructure. An infra index would be key to ident i fy ing in f ra s t r ucture scarcities in the economy.

The Times of India:

The Delhi High Court seems to have hit upon the root cause of why crucial highway projects across the country have been moving at snail’s pace in the past few years. And the discovery has left the court both shocked and angry. The HC found that the ministry of surface transport and highways was indulging in ‘‘day to day interference’’ in the a%airs of the National Highways Authority of India #NHAI$, a statutory body g ranted funct iona l autonomy by Parliament.

The Times of India:

The slow progress of highway projects across the country has the Delhi HC seeing red. The court’s strong remarks came whi le dec id ing a batch o f petitions filed by infrastructure companies assailing NHAI’s shor t l i s t ing of b idders for construction of the Hyderabad"Vijaywada section of National Highway 9. In its verdict, HC

quashed a government circular rejecting the candidacy of one of the pet i t ioner, GMR, to participate in the bidding process even as it upheld co"petitioner Reliance Infrastructure being declared ineligible.

The Indian Express:

The Delhi High Court has slammed Ministry of Shipping, Road Transport and Highways, led by T R Baalu, for changing the chairperson of National Highways Authority of India #NHAI$ far too frequently ' five in two"and"a"half years ' and also interfering in its functioning. The NHAI is an autonomous public sector undertaking set up under an Act of Parliament in 1988 . In i t s December 16 judgment on a case filed by GMR Inf ra s t r ucture and Madhucon Projects against the Government and NHAI, the High Court said that frequent changes of a public authority is a gainst “the concept of an independent authority and makes any chairman vulnerable to pulls and pressures”.

The Pioneer:

Taking a lesson from the flyover tragedy on Faizabad road, the National Highways Authority of India #NHAI$ has created two new posts. The flyover had caved in on September 30 killing four persons and injuring 10. The experts appointed on these posts w i l l ensure that a l l s a fe ty measures are being followed in right earnest. The project o(cers associated with various NHAI projects have been asked to submit in writing that there is no life"threatening risk to anyone on their projects.

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UE DEVELOPMENT’S GUEST HOUSE, NEW DELHI

Our Guest House #pic above$. As part of UE Development’s bid to save cost, the Management has taken up a tenancy of the 1st floor of this building with 3 bedrooms and 2 bathrooms. The place is intended to house local and oversea visitors having business in New Delhi.

The Guest House is also equipped with a caretaker who cooks well Her curries have met

with the approval of the local Indians and our Malaysians.

Regretfully, the facility does not include the Toyota 4"wheel drive nor the driver nor the satellite dish seen here in the photo on the left.

The Management estimates that it would save approx imate l y Rs6 ,60,000/ " on hote l accommodation annually.

PPP IN THE TIME OF SLOWDOWN! NARVIND MAYARAM THE ECONOMIC TIMES "DELHI EDITION#

In the recently concluded Inf ra s t r ucture PPP Days organised by the World Bank Institute and the ADB Institute, the main theme of discussion was how to combat the adverse impact of financial meltdown on PPP projects. Globally, there is rapid scaling back of hedge funds, private equity funds are in a wait"and"watch mode and holding back capital, currency devaluation is making foreign debt more expensive, investors are demanding higher returns and private investors are focusing on the largest, developed markets and good policy frameworks. This is considered the worst credit cr unch in “working” memory and has impacted every economic activity. However Infrastructure is still seen as part of the solution by all players, as it

is in India.! The profi le o f infrastructure projects in India is not weak. According to William Streeter'Managing Director, Global Infrastructure & Project Finance "Asia Pac i f i c , FitchRatings'who has rated many new infrastructure project loans in Ind ia # to l l roads , desalination plants, airports and rail$, the pricing of project risks has varied over time and depends more on the availability of capital and the nature of sponsor"bank relationships than on a broader and more rigorous evaluation of operations.

This aspect has become more acute in the current financial scenario. Whereas domestic banks are still waiting to start l end ing , fo re ign funds a re difficult to find. Whereas the

Finance Ministry relaxed ECB norms recently, even if coupled with allowing IIFCL to raise Rs 30,000 crore through tax"free bonds, this may not be enough to get adequate finance flowing into infrastructure projects.

My contention is that in the present scenario in India’s PPP projects still present the most attractive channel equally for equity investors and lenders. This is on account of the robust f r ame work that ha s been established by the government. There is money out there. What is required is to convince the investors and the lenders that PPP pro ject s a re a g reat opportunity for them.

See page 8

ISSUE 2! JANUARY 2009

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KL Sentral, one of Kuala Lumpur’s emerging business landmarks, is set to welcome its newest addition within its thriving neighbourhood. The imposing 29"storied building, MERCU UEM, is the new UEM Group headquarters.

With much pride, UEM B u i l d e r s undertakes the unve i l ing o f MERCU UEM that testifies our exper t i se and experience within the construction indust r y. The s u c c e s s f u l construction of MERCU UEM

cements their strong foundation within this industry, reinforcing the lead role they play in steering the nation’s progres s towards industrialisation.

Above L and R Mercu UEMBottom L and R Podium and Lobby

A LANDMARK BUILT

15-1 Mercu UEM,

Jalan Stesen Sentral 5

Kuala Lumpur Sentral

50470 Kuala Lumpur

Malaysia

Tel: +603 2727 9888 Fax: +603 2727 2323

CATTLE CLASS TRAVEL, ANYBODY?

! ! SHOE SHINE, ANYBODY?

ISSUE 2! JANUARY 2009

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2009, THE YEAR OF UN!

CERTAINTY

" CS Gan, Head of Finance UEDI

Following the financial fall outs by many corporations in USA and Europe in 2008, the wor ld economy i s f ac ing south ....................................The extent of its impact on 2009 is still uncertain.

Many nations start the pump priming process and set out numerous economic and financial measures to sustain its economy and to prevent its country from slipping into recession..............

The Indian economy is not spared either, the exports have dwindled, the liquidity became scarce, interest cost rising, and commercial real estate deals slowed down. Government of India set up numerous measures to combat the economic situation facing the country, some of the more pertinent measures are highlighted below:

#i$RBI slashed 2 short term interest rates by 100 basis point, cut its CRR, Capital Reserve Ratio by 50 basis point to 5& with e%ect from 17/1/09;

#ii$Easing borrowing rules for infrastructure and real estate projects;

#iii$Doubling the foreign investment limit in corporate bonds;

#iv$Grand stimulus plan of investment of 1,00,000 crore in the infrastructure in the next 2 years;

#v$! Go ver nment may a sk Infrastructure Investment Finance Company Ltd #IIFCL$ to put together a corpus of Rs 40,000 crore, thereby reducing the capital requirement of the project company to 15& from 25&;

While al l the stimulus plans are being introduced, the construction sectors remain sluggish with difficulty to draw finances, high operation cost and private banking sectors playing a “wait and see” stand, many infrastructure projects have ground to a halt.

“ It is pointless to float a tender now. Auctions are drawing blank.... we will wait and launch the projects at an appropriate time,” said Ashok Bhattacharya, West Bengal Minister for urban development.

While all the stimulus packages look very attractive, the ground situations are not so bullish yet.

The banking sectors are still hurt from the many bad loans they had given out to companies undertaking infrastructure projects around India. Many are having di(culties in collecting these loans due to substantial contractual claims faced by the companies with NHAI that are yet to be resolved.

What must UEDI do.......................................?

#i$! Reorganise its financial borrowings;

#i$! Restructure and recapitalise its capital;

#ii$! Get involved in the projects with the joint effort of UEM Group, going alone competing with the local companies will not bear any results;

#iii$! Propose Go ver nment to Government e%orts #G to G$ in negotiation of contracts or via butter trade;

#iv$! Start private partnership with local companies for strategic alliances.

For UEM Group to stamp its presence in India, the above may need serious attentions.

ISSUE 2! JANUARY 2009

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This is lunch for our Country Manager, Encik Zainal Fitri, during his visit to Kerala for meeting and site inspection with the World Bank O(cial on our project at KSTP"1, Kerala.

The first day.....

Arrived at Trivandrum Airport at 8.00am after 1 1/2 hours flight from Bangalore.....Enroute to the o(ce at Adoor, which is 2 and ! hours journey, make many stops to check the progress of the work at various link roads.

Had a brief discussion with the sta% at the site office...set off to meet World Bank Official, Resident Engineer, and others. Set o% for site inspection encompassing a total of 400 km journey.

Had a meeting at the RE’s o(ce for an hour to discuss various issues facing the project, quick shower and had dinner with guests and sta%. Went to bed at 11.00pm

The second day.....

Met with the o(cials again, set out for an inspection at di%erent link roads......this time encompassing a total of 300km. Had a meeting with Project Director at Trivandrum and set o% back to Adoor......

Requested h i s co l l ea gue to pack lunch........Had lunch in the car enroute to catch a flight to Mumbai.....time had lunch 4.00pm.

Having lunch in the moving vehicle is the most challenging especially on bumpy roads that are under construction.... If he is not careful and without balancing skills, the food might ended in his nose rather than his mouth.......Finally, managed to fill his stomach without untoward incident...... travel another 3 ! hours to Cochin to catch a flight.....

The driver drove like an expert in the race circuit so as to reach Cochin airport on time....reached airport at 7.45pm for a 8.15pm flight.....race to the check"in counter and Walla!...... a successful check in... A sigh of relief. Reached the hotel in Mumbai at 11.00pm for dinner and call it the day.

Total km on the road covered for the 2 days.........1,050 km.

Such is the job description of a Country Manager for INDIA...... Any interest?

FANCY A JOB WHERE LUNCH IS ON THE MOVE?

UEMB HR TEAM @ HARD ROCK CAFE BENGALURU

January 11th, 2009:

After two days of gruelling KPI &Key Personal Interest' Workshop UEMB HR Team is seen with Head of Legal, G Saw, relaxing at Hard Rock Cafe Bengaluru. Dr Jamaliah Wan Chik and her team members, En Hato and Puan Rosmiza, made a site visit to KSTP in Kerala on January 12th 2009 and Luknow in Utar Pradash on 13th 2009.

! For more, please turn to Page 12.

Dr Jamaliah Wan Chik

Hato

Rosmiza

G Saw

ISSUE 2! JANUARY 2009

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PPP IN THE TIME OF SLOWDOWN

#contd from Page 5$

The two obvious impacts of the meltdown have been #a$ liquidity crunch resulting in higher cost of finance and lesser leveraging; and #b$ fear of demand downturn.

The increase in the cost of finance and lowering of equity to debt ratios is resulting in delays in financial closure and, in some cases, withdrawal of the developers from the project. The risk premium now charged by the lenders is making the cost of finance unbearable. The general fear of NPAs mounting is also making FIs risk"averse. Despite this, three factors make PPPs in India a relatively safe investment vehicle.

First, the competitive bidding process is fairly well established and robust, even though process management by the government can be frustrating at times This results in e(cient ‘price discovery’, which indicates that project implementation is expected to be completed in time and at least cost. The only rider is that the project must not be overly dependent on real estate development for its revenue streams. Real estate values are fickle and any downturn in real estate prices can quickly make a very attractive project sub"prime in nature. This can lead to committed lenders backing out and may require re"jigging of user fees and/or greater infusion of equity capital. The e%ect this would have on project cost would be a risk that the developer has to bear in the short term.

Secondly, the concession agreements in most cases factor in two contingencies that transfer commercial risk largely to the public sector: #a$ In case of demand downturn, the number of years of concession gets extended; and #b$ even in the event of concessionaire’s default, the sponsoring authority #government$ undertakes to pay 90& of the debt due in the event that the project itself does not take o%.

This underpins the project with contingent government guarantees and ensures adequate returns on investment for the investor irrespective of the fluctuation in demand. It also gives the lender the comfort that in the event that the project itself fails'the probability of which is

extremely low as infrastructure services that the project promises to provide will still be in demand'the lender shall still receive a significant portion of debt due from the government. This provision is not seen in most of the concession agreements around the world.

Thirdly, Viability Gap Funding scheme subsumes all costs that make a project unviable. The bidder bids for the grant to the project based on his calculation of the gap in project viability. As we have seen, one of the consequences of the financial meltdown is the liquidity crunch leading to higher cost of finance. In PPP projects, the higher cost of finance is also subsumed under the viability gap grant. However, the scheme needs to be modified to include mid"term injection of funds in case the projects runs into liquidity problem not envisaged at the time of the bidding by either the sponsoring authority or the bidder.

Such funds should still be within the overall ceiling of 40& of VGF but ought to be revolving in nature. In case the project requires fresh injection of funds due to unforeseen contingencies #and duly certified by the lenders$ midstream the VGF provided should be returnable to the government once the crunch period is over"certified by the lenders$ midstream the VGF provided should be returnable to the government once the crunch period is over. have seen, one of the consequences of the financial meltdown is the liquidity crunch leading to higher cost of finance. In PPP projects, the higher cost of finance is also subsumed under the viability gap grant. However, the scheme needs to be modified to include mid"term injection of funds in case the projects runs into liquidity problem not envisaged at the time of the bidding by either the sponsoring authority or the bidder.

Such funds should still be within the overall ceiling of 40& of VGF but ought to be revolving in nature. In case the project requires fresh injection of funds due to unforeseen contingencies #and duly certified by the lenders$ midstream the VGF provided should be returnable to the government once the crunch period is over.

The author is additional secretary & FA in th% ministry of rural development. Views are personal.

ISSUE 2! JANUARY 2009

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THROUGH OUR LENS...

To Unwrap only on Christmas Day!

Come... together... UEDI’s FIRST CHRISTMAS EVE TEA PARTY

ISSUE 2 ! JANUARY 2009

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NEW YEAR’S EVE LUNCH AT “THREE QUARTERS CHINESE”

Sunita, Pratima & Ruma Dimple, Asha & Shanthala

Kulkarni, Chethan & Jagdish

Kulkarni, Chethan, Karaba & Manjunath

Our Ladies’ Man

The Sta%

Sunita, Gan & Pratima Ben & Yap

ISSUE 2 ! JANUARY 2009

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WORKSHOPS ON KPISteering towards a successful strategy

The workshop on KPI held on 9th and 10th January 2009 was presented by Dr. Jamaliah Wan Chik, Senior ) General Manager HR. It dealt with the development and importance of

Key Performance Indicators, which was an amazing eye"opener towards building a successful strategy.. En Hatoruson and Puan Rosmiza were the other esteemed members in her team.

The workshop highlighted the importance of the appraisal format and the process to be followed during a performance appraisal in an Organization. The workshop was excit ing and

encouraging as it introduced the process of KPI. Some of the key areas discussed were how KPI ensures per formance improvement and its use to determine and measure the performance. Plus does it have an impact on the employees?

Dr. Jamaliah demonstrated the way KPI can be implemented

and integrated with business excellence to produce productive results. She underlined the focus on team de ve lopment and management participation for the development. Further she strongly recommended the fact that ultimate success of any change strategy is directly related to the way change is introduced and implemented.

Dr. Jamaliah was extremely passionate about delivering her intellectual thought process in a remarkable manner and made the workshop as interesting and thought provoking as ever. She emphasized the idea to inculcate a simple formula of TIPS"*T" Teamwork , I " Integr i ty, P " Passion and S" Sincerity+ to reach the GOAL.

Dr. Jamaliah concluded her much applauded session with a heart touching song of Mariah Carey “HERO” which exemplified the essence of a HERO within each one of us.

The song p layed a s follows…….

“There is a HERO inside you if you look inside your HEART

And the HERO comes along with STRENGTH to carry on and you cast your fear aside,

So when you feel like HOPE is gone look inside you & be strong & you will see,

There’s a HERO lies in YOU”

The team conducted similar workshop at the KSTP and Luknow site o(ce.

Editorial BoardCHIEF EDITOR

Asha Pujar

e"Mail :asha@uediindia.com

DESIGNER &

TECHNICAL ADVISOR

Manjunath

Manjunath@uediinda.com

CONTRIBUTORS

CS Gan, Ben, G Saw.

UE Development India Pvt Ltd

286/48 2nd Floor Indira Towers

11th Cross Wilson Garden

Bangalore , India

CalendarJanuary 9!10th, 2009Workshop on KPI @ Bangalore

January 12th, 2009Workshop on KPI @ Kerala

January 13th, 2009Workshop on KPI @ Luknow

February 20th, 2009Launch of www.uediindia.com

March 7-9th, 2009Team Working Program and Staff Annual Dinner

March 20th, 2009Contract Management Workshop