Complicated deal: The 226.2ha parcel of prime industrial land near the former Byram estate that was sold by PDC to be developed into an industrial park. — TheStar graphics
GEORGE TOWN: Chow Kon Yeow has defended the sale of the Penang Development Corporation (PDC) land in southern Seberang Prai, saying that due diligence was followed and the price was based on the existing condition.
The Penang Chief Minister said that the price paid by UMECH Construction Sdn Bhd (UMECH) should not be compared to the price of industrial land that has been fully filled and equipped with infrastructure.
“Since the involved land is still undeveloped (raw land), the price cannot be compared to the prices of any fully-filled and equipped with infrastructure industrial lands like those in Taman Perindustrian Batu Kawan or Bandar Cassia Technology Park, which are priced at RM80 per square foot,” he said in a six-point statement yesterday.
Chow was replying to the Penang Chinese Chamber of Commerce (PCCC), which had raised questions about the selling price of the 226.2ha (559-acre) land near the former Byram estate.
The PCCC alleged that the current market price of the industrial land was RM80 per sq ft, questioning the selling price and also the four-year term payment.
“Why did PDC sell the land to a private company without an open tender? Is there any research into the feasibility and rationality of the projects?” PCCC president Datuk Seri Hong Yeam Wah asked yesterday.
The above-mentioned land is strategically situated about 4km from the Penang second bridge, offering excellent connectivity, and just a 20-minute drive from Penang Island, as well as a 30-minute drive from the Penang Port.
Chow said PDC estimated that UMECH would need to bear about RM500mil in costs for the provision of major infrastructure, including works such as landfilling, road construction, electrical substations, sewerage treatment plants, bridges, road upgrades, intersections and other related works.
He said to ensure maximum profit for PDC, it had also established an instalment payment schedule, taking into account the increase in land value over the years of payment.
Chow said if UMECH fails to execute the project and make cash contributions according to the established schedule, PDC still has the opportunity to withhold land delivery for subsequent phases.
“PDC brought the proposal for the Byram Industrial Park project to the Expo Dubai 2020 to attract interested investors, considering the challenges of developing this land, which is particularly close to the Pulau Burung landfill site.
“The state was represented at the expo by state trade and industry and entrepreneurial development committee chairman Datuk Abdul Halim Hussain at the time,” he said.
Chow, who is PDC chairman, said the selection of UMECH was made following all the necessary procedures, and due diligence was conducted meticulously.
“A small committee comprising the then deputy chief minister I, Datuk Ahmad Zakiyuddin Abdul Rahman, deputy chief minister II, P. Ramasamany, Halim and Datuk Seri Lee Kah Choon was established to examine the proposal by UMECH.”
He stressed that direct negotiation for the project was one of the methods to secure favourable offers.
Regarding the financial performance of UMECH, Chow stated that PDC had conducted a CTOS search on the company, whose paid-up capital was RM10mil.
He said that based on the review, UMECH did not have any records of bad debts.
It was not “blacklisted” either and is therefore able to obtain relevant loans for financing the project and a letter of credit facility from a reputable financial institution to support its commitment to the joint venture, according to Chow.
“However, the involvement of Sunway as the majority shareholder of UMECH was not known to PDC. This matter came to light only after the signing ceremony of the agreement through an announcement made by Sunway in the media,” he said.
He said PDC had sought an explanation from UMECH and would determine further action after reviewing its explanation during the PDC board meeting.
Earlier, Sunway Bhd said in a statement that the proposed Industrial Park would comprise factories, industrial lots and commercial components with a gross development value of at least RM3.5bil.
