IT APPEARS from the media statement made by the Penang Chief Minister Chow Kon Yeow that the controversial land sale issue by the Penang Development Corporation (PDC) might be subject to review by members of the PDC board.
Chow brought up the controversy surrounding the land sale of 556 acres of land to Umech Land Sdn Bhd in yesterday’s (Oct 11) state executive council (EXCO) meeting.
Apparently, it was decided that the subject matter of the controversial sale will be tabled at the PDC board meeting soon. Chow who has been defending the controversial sale has finally decided to leave the matter to the PDC board.
This is a good move because Chow’s defence of the land deal has become indefensible. The more he defends the sale, the more questions remains unanswered. It remains to be seen if the PDC board would ultimately pursue the land sale or otherwise.
To-date, Umech Land through its major shareholder has paid an upfront deposit of RM64.6 mil. The total value of the sale will be RM646 mil to be paid in four yearly instalments.
Under-pricing
The land sale has attracted attention due to a number of factors:
- Firstly, there are allegations that there was no proper diligence done before the sale could be facilitated. The sub-committee functioned as a fact finding mission rather than to engage in due diligence.
- Secondly, unknown to the board members, the land that was supposed to be sold to Umech Construction Sdn Bhd was sold without informing members of the last minute switch to Umech Land.
Just two days after signing of the sales and purchase (S&P) agreement in September 2023, Sunway Bhd took up 70% of shares in the Umech Land. Again, this information was not disseminated by the PDC. Two last minute flips don’t make it right.
- Thirdly, the current market price of the land in Byram, Sebarang Perai Selatan (SPS) is around RM80 per sq ft. But the said land was sold for RM26 per sq ft on reasoning that such was the sale value for raw land (land without infrastructure).
However, years ago, raw or swampy land was sold about RM45 per sq. ft. The question is why the discrepancy in the price.
Unless of course, Umech Land wanted to impart something of great financial and commercial value to the Batu Kawan Industrial Park 2 (BKIP 2) project. If there was such a move, direct negotiations could be carried out justifiably.
- Fourthly, given the fact that there was nothing special or noteworthy about Umech Land, PDC should have gone for an open tender to facilitate competition among companies especially from Penang to take part in the sale.
This would have given the Penang state government a better opportunity to be above board to reaffirm its principle of competency, accountability and transparency (CAT). Direct negotiations in the award of projects or sale of public land might not be the best approach.
- Fifthly, even if the land was hypothetically sold for RM50 pet sq ft which is something much below the market price, PDC would have made an approximate profit of RM1.3 bil or twice the current profit.
- Sixthly, the land that was sold by PDC was an acquired property for public purpose. Isn’t it morally wrong for the land to be sold to third parties for profit? Why didn’t PDC itself transform these acquired lands to be rendered as industrial land?
Has PDC diverted from its core functions?
The above are some of the serious concerns raised by members of the public on the land sale to Umech Land under the control of Sunway.
I hope the PDC board members will address these concerns because they are at core of governance agenda in Penang. Penang might have done economically well for the past 15 years but one scandal has the potential to ruin years of achievement.
So far, there is no big scandal in Penang. However, if the PDC’s controversial land sale is swept under the carpet, the matter is not going away. It will come to haunt the start government forever.
As most of the PDC board members might be new, there is need to understand the chronology behind the land sale. I seriously doubt that PDC being an interested party might not be the most appropriate party to present the chronology.
At some point in the discussions, the state government must appoint an independent body to present a more objective account of what transpired between PDC and Umech Construction, and later Umech Land.
The PDC board meeting presents a best chance for Chow to set the record straight on the land deal.
If egregious mistakes were made, it is best to own up to the mistakes. This will be the test of his leadership, no need to regurgitate the old repetitive arguments about meetings and approvals, the stage as long passed.
For a comprehensive and objective appraisal, it is necessary for the state government to postpone the land sale indefinitely. Only by postponing the land deal, actions could be taken against those “Little Napoleons” especially in the PDC for dragging the state down the dirty path.
It is inevitable that some heads have to roll. Hopefully, “transparent” Chow does the right thing that will be in the interests of the larger public in Penang and Malaysia.
The question before Chow is not safeguarding the interests of the PDC or the state government but the larger public interest. If Chow fails to act then the ignominy of this land scandal will be like the Sword of Damocles around his neck. – Oct 12, 2023
