CMSB Halts Kuching Isthmus Hotel and Serviced Apartment Project
Cahya Mata Sarawak Bhd (CMSB) has announced the termination of its joint venture (JV) to develop a four-star hotel and serviced apartments in Kuching Isthmus, Sarawak. The decision was reached mutually by all shareholders of Isthmus Developments Sdn Bhd, the JV company overseeing the project. The JV agreement will cease to be valid from December 31, 2024, according to a filing with Bursa Malaysia.
Background of the JV and Project
The partnership was formed in December 2010 to construct a 381-room hotel alongside 96 serviced apartments on a 10.5-acre site in Kuching Isthmus. The area is a prominent business district within Sarawak’s capital city. CMS Land Sdn Bhd, a 51%-owned subsidiary of CMSB, contributed two plots of land—Lot 2839 and Lot 2852—to the JV.
At the time, the project carried an estimated cost of RM380 million, with construction scheduled to begin in early 2011 and completion targeted for the end of 2013. However, the project has remained stalled since its inception.
Ownership and Financial Implications
The shareholders of Isthmus Developments and their respective stakes in the JV are as follows:
- Premier Cottage Sdn Bhd: 54.57%
- Hikmat Majusama Sdn Bhd: 21.14%
- Boulevard Jaya Sdn Bhd: 21.14%
- CMS Land Sdn Bhd: 3.23%
CMS Land will now reimburse its shareholders RM3.23 million for costs related to land improvements and approvals for the two lots, which will remain under CMS Land’s ownership.
Reasons for Termination
CMSB cited that the development is “no longer desired by the shareholders,” marking the primary reason for the termination of the JV. This decision underscores the project’s lack of viability amidst shifting priorities and market dynamics over the years.
Historical Context and Stakeholders
CMS Land is 49%-owned by the Sarawak Economic Development Corporation (SEDC), a key player in the state’s economic landscape. Other notable shareholders in CMSB include:
- Tun Abdul Taib Mahmud’s family: Approximately 23%
- Lembaga Tabung Haji: 6.8%
- Norges Bank: A stakeholder as a global institutional investor
The hotel project was originally envisioned to bolster Kuching Isthmus’s appeal as a high-end business and leisure destination. However, the protracted delays and changing economic conditions appear to have rendered the plan obsolete.
Stock Market Impact
CMSB’s shares ended the day slightly higher, rising one sen or 0.84% to RM1.20 on Tuesday, giving the group a market capitalization of RM1.29 billion.
Conclusion
The abandonment of the Kuching Isthmus project reflects a strategic realignment by CMSB and its partners. By reallocating resources and retaining ownership of the land, CMS Land can explore alternative opportunities that align better with current market trends and stakeholder expectations.
