THE recent Penang Development Corporation (PDC) land sale of 559 acres costing more than RM646 mil in mainland Penang’s Byram seems to have opened the Pandora’s box.
The land was sold at RM26.53 per sq ft, apparently the price of raw land or land without basic infrastructure – when information from reliable sources indicate that the land value in Byram is around RM80 per sq ft.
It apparently never crossed the minds of those in the PDC that there is a flip side to investors locating their companies near landfills for obtaining carbon credits.
That industrial land is lacking very much in Penang is one of the main reasons why Penang is not able to attract foreign investments. Instead, foreign and local investors might be looking at other states with ready availability of land.
In this respect, PDC is under pressure for more industrial lands to be made available to the prospective investors. It was this in mind that PDC participated in the Dubai Expo in 2020 to attract investors to Penang.
At the Expo, PDC identified a company called Umech Construction Sdn Bhd with sufficient financial backing to buy and develop industrial land in Penang, particularly in the Batu Kawan Industrial Park 2 (BKIP2) located in the Sebarang Perai Selatan (SPS) area.
Even though PDC negotiated with Umech Construction, the said land was ultimately sold to Umech Land. Umech Construction and Umech Land could be two different legal entities but with similar shareholders.
Sudden emergence of Sunway Bhd
A few days before the signing of the sales & purchase (S&P) agreement, 70% of Umech Land’s shares were acquired by Sunway Bhd.
I understand that the funds for the purchase of the land will come from Sunway’s investment. Umech paid a deposit and the balance will be paid in four yearly instalments,” the former Perai state assemblyman pointed out.
It is strange that the name of Sunway never cropped up in the earlier discussions in PDC about the land sale to Umech Construction.
Moreover, as pointed out by the Penang Chinese Chamber of Commerce (PCCC), Umech Land did not have the financial strength as reported by credit reporting agency CTOS Digital Bhd.
PCCC which fired the first salvo against the sale of the land to Umech Land has raised questions pertaining to:
- Why was the land sold through direct negotiations?
- Why there was no open tender?
- Why was the price of the land undervalued?
- Why there were no local or Penang-based investors? and
- Why the former landowners cannot resort to legal action as the sold land was compulsorily acquired?
On his part, Penang chief Minister and PDC chairman Chow Kon Yeow (main pic, left) had given a six-point explanation to the questions raised by PCCC last week (Oct 3). His explanation included the following:
- The sale of PDC land through direct negotiations was not new given there have been cases in the past where land was sold directly;
- Price of the land was low because it was raw in nature and without the required infrastructure;
- The land was sold to Umech Land on the recommendations provided by the sub-committee that was set up in November 2022 to engage in due diligence;
- The Umech Land had sound financial credentials; and
- The buying of shares by Sunway was done before the land sale was effected (PDC has been asked to seek clarification on the matter.
Chow must clear the air
The sub-committee did not recommend that the PDC land be sold to Umech. It was wrong on the part of Chow to have said that the decision to sell the land to Umech was based on the recommendations of the sub-committee.
The sub-committee made no recommendations but merely wanted more information from Umech on industrial land development.
It is with much regret that the others and I have been dragged into the present controversy unnecessarily to endorse the decision of the PDC to sell the land to Umech.
While I was privy to the one or two PDC board meetings that discussed the land application by Umech, it was at the preliminary stage.
It is essential that the Penang state government or the chief minister Chow should clarify the exact role of the sub-committee and not give the inaccurate and false impression that it endorsed the move to sell the said land to Umech.
Anyway, much water has passed under the bridge since the land sale agreement was concluded between the PDC and Umech Land. I think that in the larger public interest in Penang, the land sale to Umech Land should be temporarily suspended on the following grounds:
- Why the land was sold to Umech Land although the negotiations was with Umech Construction,
- What prompted Sunway to acquire 70% stake in Umech Land without properly notifying the PDC, the Penang state government and other public authorities; and
- Whether the sale of the land was undervalued as alleged by the PCCC and others. – Oct 10, 2023
Former deputy chief minister II of Penang Prof Ramasamy Palanissamy was also a former Penang Development Corporation (PDC) board member.
The views expressed are solely of the author and do not necessarily reflect those of Focus Malaysia.