Malaysia Airports Holdings Berhad to operate and develop 39 airports

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The Government of Malaysia has approved in principle the new material terms for the operating agreements (OA) between the government and Malaysia Airports Holdings Berhad (MAHB) to operate, manage, maintain and develop 39 airports and short take-off and landing ports (STOLports) until 2069.

The terms and conditions of the OA stipulate that the government and MAHB have the flexibility in the method of funding airport development costs, either using government allocations through development expenditure (DE) or MAHB through any suitable investment recovery model mechanism, subject to the mutual agreement of both parties with the weighted average cost of capital (WACC) to be determined only when a project will be implemented and subject to government approval.

The agreement will see the establishment of the Airport Development Fund (ADF), a development trust account under Section 9 of the Financial Procedures Act 1957 [Act 61], to receive contributions from airport users, the public and also airlines and does not involve contributions from government funds. The OA terms and conditions state that 50% of the passenger service charge (PSC) component that is taken into account in the calculation of the user fee will be channeled to the ADF trust account. The percentage of PSC or percentage of other components in the user fee to be contributed to the ADF account will be reviewed every three years.

The government also agreed to the proposal to rebrand KLIA and klia2 to KLIA Terminal 1 and KLIA Terminal 2 to improve their marketability value and effectiveness, in addition to strengthening competition with international airports in the region. The government has retained the right to restructure the airport industry through clustering, carving out, divestment of airports, closure of existing airports or terminals or the restructuring of the ownership of any of the facilities subject to the mutual agreement with MAHB.

The agreements are intended to benefit the country and stakeholders through better airport service levels and continued development of airport capacity as OA 2023 will provide an opportunity for the company to invest and reinvest in the modernization and development of viable airports.

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