Penang Cm Defends Direct Deal Struck Over State Owned Land Sale

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Penang Chief Minister Chow Kon Yeow has defended the direct negotiation deal struck with Umech Construction Sdn Bhd for the sale of state-owned land in Byram, South Seberang Perai.
He was responding to the Penang Chinese Chamber of Commerce, which had questioned the tender process and why local companies were purportedly not given the opportunity to participate in the process.
“The Penang Development Corporation (PDC) presented the Byram Industrial Park Project proposal at Expo Dubai 2020 to attract potential investors, considering the challenges faced by this area including its proximity to the Pulau Burung landfill site, garbage truck routes, high infrastructure preparation costs, and more.
“These challenges made it extremely difficult to attract investors,” Chow said in a statement today.
He said the Penang government had made announcements through the media and the Malaysian Investment Development Authority (Mida) in an effort to attract local or international investors for the project.
During the Expo Dubai 2020, Umech expressed interest in investing in the project, he said, and after discussions, PDC was convinced the company had the financial resources to execute the project.
“The selection of Umech was also made following proper procedures and a thorough due diligence process was carried out.
“Direct negotiation projects are one of the methods to secure favourable deals,” Chow said.
The chief minister also defended the value of the land sale by PDC to Umech, saying it was based on the current land prices in the area.
“Since the involved land is still undeveloped, its price could not be compared to the industrial land prices that have been fully developed and equipped with infrastructure,” he said.
PDC estimated that Umech would need to bear about RM500 million in infrastructure development costs.
Clarification needed from Umech
However, to ensure maximum benefits for PDC, an instalment payment schedule was established, considering the increase in land prices over the years.
“This way, if Umech fails to execute the project according to the established schedule, PDC still has the option to not proceed with land handovers for subsequent phases,” Chow said.
Chow also clarified that the land has not yet been transferred to Umech and the firm has merely conducted a feasibility study to gauge market reactions.
“The project’s implementation follows PDC’s procedures and protocols.
“However, the involvement of Sunway as Umech’s majority shareholder was beyond PDC’s knowledge. This matter was only known after the signing ceremony through an announcement made by Sunway in the media,” he added.
According to their agreement, Umech is obligated to notify and obtain PDC’s approval in the event of any changes in the company’s shareholding structure.
Chow said these changes occurred before the agreement was signed. Thus, Chow stated that it is beyond PDC’s control.
However, Chow also mentioned that PDC has written to Umech seeking clarification on this and will determine its next steps after reviewing Umech’s clarification. - Mkini

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