RM3.1 billion Klang Port Authority land spree
Parliament 19.10.05 (5)
One issue which I raised during the winding-up of the 2006 budget debate on Wednesday was the RM3.1 billion Klang Port Authority (KPA) land spree involving 1,000 acres of land in Pulau Indah, Klang to build a regional distribution hub comprising RM1.81 billion “calculated at the rate of RM25.00 per square foot on a special value basis” in November 2002 (Auditor-General’s Report on KPA 2003) followed by another RM1.3 billion for the "development" of the land in 2004(both inclusive of 7.5% interest).
I had raised the issue during the my earlier speech as to whether KPA should have entered into such a deal, when its role had been reduced to one of a licensing authority, with most of port operations privatized. .
Furthermore, how could the KPA conclude such an agreement which provided for a 10% advance payment of the land price amounting to RM108.85 million and the balance of RM1.7 billion to be paid over 10 years from 2007 until 2017, with annual payments between RM130 million and RM179 million, when KPA did not have the funds to go through with the deal without government support.
There are two reasons why grave questions are being asked about the accountability, propriety and integrity of the RM1.81 billion KPA land purchase , viz:
* The same company which had sold the Pulau Indah land to KPA had subsequently offered to buy land adjacent to the project (from a different party) at one-third the price it sold to KPA.
* As reported by the Auditor-General’s Report 2003: “In the year 2003, the Authority had signed an agreement with the same company for the development of the project for RM519 million (inclusive of RM7% interest). In early 2004, the Authority again signed a supplementary agreement with the same company. Through this agreement the project development cost has increased to RM1.30 billion (inclusive of 7.5% interest). This capital outlay for the development of the project will be advanced by the company and the Authority will pay RM100 million in the year 2004 with the balance to be paid from the year 2007 until 2012 on an annual payment basis ranging from RM53.89 million and RM230 million.”
The Auditor-General had noted that in the original RM1.81 billion deal, “the company is required to provide infrastructure facilities such as drainage, main access road, bridge, land reclamation and water supply”, including making contributions to the Water Supply Department.
Is KPA paying twice to the company concerned to complete all infrastructural works related to access roads and other basic infrastructure covering the 1,000 acre site? This would bring the total cost of the 1,000 acres of Paya Indah land to RM3.11 billion.
The answer by the Deputy Transport Minister, Tengku Azlan, was most unsatisfactory. All he said in his reply was that in 1998, the Transport Ministry had valued the land concerned at RM13.50 psf, and taking into account infrastructural works related to land reclamation, access roads, drainage and water supply as well as the 15-year terms-of-payment, the suitable land value was RM25 psf.
Tengku Azlan said that the Paya Indah land deal was made on a “willing buyer, willing seller” basis with the valuation approved by the Valuation and Property Services Department of the Finance Ministry.
In view of the time constraints which led to the imposition of 15-minute limit for each Ministry winding-up on Wednesday night, I was unable to get Tengku Azlan to throw more light on the KPA “willing buyer, willing seller” land spree involving RM3.1 billion of taxpayers’ money without proper accountability and transparency.
One issue which I raised during the winding-up of the 2006 budget debate on Wednesday was the RM3.1 billion Klang Port Authority (KPA) land spree involving 1,000 acres of land in Pulau Indah, Klang to build a regional distribution hub comprising RM1.81 billion “calculated at the rate of RM25.00 per square foot on a special value basis” in November 2002 (Auditor-General’s Report on KPA 2003) followed by another RM1.3 billion for the "development" of the land in 2004(both inclusive of 7.5% interest).I had raised the issue during the my earlier speech as to whether KPA should have entered into such a deal, when its role had been reduced to one of a licensing authority, with most of port operations privatized. .
Furthermore, how could the KPA conclude such an agreement which provided for a 10% advance payment of the land price amounting to RM108.85 million and the balance of RM1.7 billion to be paid over 10 years from 2007 until 2017, with annual payments between RM130 million and RM179 million, when KPA did not have the funds to go through with the deal without government support.
There are two reasons why grave questions are being asked about the accountability, propriety and integrity of the RM1.81 billion KPA land purchase , viz:
* The same company which had sold the Pulau Indah land to KPA had subsequently offered to buy land adjacent to the project (from a different party) at one-third the price it sold to KPA.
* As reported by the Auditor-General’s Report 2003: “In the year 2003, the Authority had signed an agreement with the same company for the development of the project for RM519 million (inclusive of RM7% interest). In early 2004, the Authority again signed a supplementary agreement with the same company. Through this agreement the project development cost has increased to RM1.30 billion (inclusive of 7.5% interest). This capital outlay for the development of the project will be advanced by the company and the Authority will pay RM100 million in the year 2004 with the balance to be paid from the year 2007 until 2012 on an annual payment basis ranging from RM53.89 million and RM230 million.”
The Auditor-General had noted that in the original RM1.81 billion deal, “the company is required to provide infrastructure facilities such as drainage, main access road, bridge, land reclamation and water supply”, including making contributions to the Water Supply Department.
Is KPA paying twice to the company concerned to complete all infrastructural works related to access roads and other basic infrastructure covering the 1,000 acre site? This would bring the total cost of the 1,000 acres of Paya Indah land to RM3.11 billion.
The answer by the Deputy Transport Minister, Tengku Azlan, was most unsatisfactory. All he said in his reply was that in 1998, the Transport Ministry had valued the land concerned at RM13.50 psf, and taking into account infrastructural works related to land reclamation, access roads, drainage and water supply as well as the 15-year terms-of-payment, the suitable land value was RM25 psf.
Tengku Azlan said that the Paya Indah land deal was made on a “willing buyer, willing seller” basis with the valuation approved by the Valuation and Property Services Department of the Finance Ministry.
In view of the time constraints which led to the imposition of 15-minute limit for each Ministry winding-up on Wednesday night, I was unable to get Tengku Azlan to throw more light on the KPA “willing buyer, willing seller” land spree involving RM3.1 billion of taxpayers’ money without proper accountability and transparency.
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