The Penang state government should not sell its 49 per cent stake in Tropical Island Resort on Pulau Jerejak to Uda Holdings Berhad as it will only add development pressure on this green satellite island.
The resort, located on the west coast of Pulau Jerejak, is presently a joint venture between PDC and the federal Uda. Pulau Jerejak lies off the southeast coast of Penang Island, between the first and second Penang bridges.
As it is, the resort is hardly profitable. If PDC sells its 49 per cent stake at a price based on the present land value, then Uda’s cost of investment in the resort will rocket. For Uda to then realise a reasonable return on its invesment (ROI), it might feel compelled to further develop the resort, which owns 80 acres or almost 10 per cent of the 895-acre Pulau Jerejak.
And it is already mulling such plans.
See this excerpt from a report in The Star:
Asked about UDA Holdings’ future plans for Pulau Jerejak if the acquisition goes through, Ahmad said the company would suggest turning it into another tourist destination, which at the same time would involve real estate activity.
“We want to have seaview villas and also refurbish the existing hotel on the island.
See the magic term “real estate activity”? Seaview villas? What do you think all that is about? Earlier, the state goverment had confirmed there was a proposal to build 1,000 condos, a bridge, and a theme park. (Oh no, not again!)
Do we really need all that, including a bridge? What is wrong with a leisurely boat ride to the island? It is not that far away. I took a boat ride to the island a few years ago and found it an enchanting experience. See below:
Unless people need a bridge to drive their cars across and park them at those expensive “seaview villas” to be built on Pulau Jerejak!
Uda has not had a brilliant record in Penang, not just in managing the Pulau Jerejak resort but also in Tanjung Tokong.
We can almost predict the game plan by learning the lessons of the past.
Take the case of the Tanjung Tokong land reclamation rights. The Seri Tanjung Pinang project undertaken by Tanjung Pinang Development Sdn Bhd was originally a joint venture among Permaijana Ribu (M) Sdn Bhd (owned by UEM Bhd, Penang Bumiputera Foundation and Magma Bhd), Koperasi Gabungan Negeri (KGN) Pulau Pinang and state government-owned Penang Development Corporation (PDC).
The joint venture was awarded 980 acres in land reclamation rights. The project began in 1992 but UEM flopped during the 1997-98 financial crisis.
E & O then bought a stake in Tanjung Pinang Development. For just over RM100m in shareholders advances and settlement of outstanding loans, E & O captured almost 980 acres of land reclamation rights for the Sri Tanjung Pinang project, which has a GDV of close to RM30bn (in total for both Phases 1 and 2). Amazing!
Today, E & O holds 78.8 per cent in Tanjung Pinang Development with PDC holding the remaining 21.2 per cent. The project includes the planned creation of an artificial 760-acre island under Phase 2, i.e. 85 per cent the size of Pulau Jerejak.
The people of Penang lost a huge source of potential revenue from land reclamation rights through this convoluted wheeling and dealing. In contrast, federal GLC Sime Darby, the largest shareholder in E & O, stands to reap hefty returns from the project.
Back to Pulau Jerejak in the present: PDC is in a joint venture with Uda. If PDC sells its 49 per cent stake in Tropical Island Resort to Uda so that the latter controls 100 per cent, what is to stop Uda from later selling the resort and its 80 acres of land to a well-connected developer?
PDC’s present stake in the resort may not be yielding a fat return; but please, not everything in life should be measured in terms of ringgit and sen. You don’t have to surrender everything, including the kitchen sink, to the developers, you know.
The state may argue that land is so expensive and that we can’t afford the land to create public parks. But here we have an entire green island – a ready-made natural park – on our door-step, and what do we do? Surrender a chunk of it to a federal entity – for what? More property development? This goes against the global trend these days of greater decentralisation – not more centralisation (which the state government is, rightly, always complaining about).
Pulau Jerejak should not be turned into yet another playground for the wealthy. It belongs to us all. It should be preserved as a green lung for the recreational and therapeutic benefit of the many who are feeling increasingly suffocated by the congestion and concrete jungle engulfing the island.
Hands off our Pulau Jerejak!