Penang government must provide itemised breakdown of land sales, profits since 2008

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So we now know that the Penang Development Corporation, a state government agency, sold land parcels for proceeds totalling RM1.9bn from 2008 to 2015.

But PDC recorded a “net profit” of only RM147m after deducting RM1.8bn for “land acquisition, development costs over the land in providing infrastructure and holding costs” (see below).

As questions have been raised over land sales, the state government must provide an itemised listing of the PDC land sales totalling RM1.9bn: date sold, selling price per square foot, size/area, location, buyers, the market prices at the time, and payment terms.

[The state government should provide a separate listing of its own land sales totalling RM1.1bn – or is it RM658m (see figures in press statement below dated 4 January 2017)? So are we talking about RM2.5bn-3bn in land sales in total by both the state government and PDC?]

It must also give an itemised breakdown of the original cost/net book value in PDC’s books of those plots sold. Did the land acquisition etc cost of RM1.8bn relate entirely to the plots sold or were they new plots acquired (in which case they should be capitalised as assets and not included in the calculation of profit on disposal)? (A separate listing must be provided showing the breakdown of the original cost/net book value of the plots of land sold by the state government.)

I am wondering about this because PDC’s surplus on all its land sales is just RM147m.

In one land deal alone, PDC sold 103 acres of Bayan MutiaPDra land to Ivory Properties in 2012 . This land alone was sold for RM1.1bn on generous terms of seven instalments over five years, with the last instalment now said to be due in November 2017.

The Bayan Mutiara payment schedule in 2012

Ivory then entered into a joint venture with Dijaya Corporation (now known as Tropicana) to develop the land. Vincent Tan’s brother Danny had a 31 per cent stake in Dijaya, according to the firm’s 2010 Annual Report.

How much was the original cost/net book value of the Bayan Mutiaras land in PDC’s books at the time of the sale and what was PDC’s profit on this particular disposal?

How did PDC end up with only RM147m total profit for all its land sales? There is just not enough information to make sense of these figures.

On another note, PDC should never have sold the Bayan Mutiara land to a private developer lock, stock and barrel. Instead it could have sold just a small portion and retained the rest for public amenities such as a people’s park and plenty of affordable housing for workers in the area.

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This was Penang Chief Minister Lim Guan Eng’s statement on 16 December 2016:

I wish to correct the misrepresentation given by some BN-controlled newspapers that Penang Development Corporation earned RM 1.7 billion from selling land since 2008. This is untrue. From 2008-2015, PDC sold RM 1.94 billion worth of land for industrial and mixed development purposes. PDC recorded a net profit of RM 147 million from the land sales of RM 1.94 billion.

The cost involved of RM1.8 billion relates to land acquisition, development costs over the land in providing infrastructure and holding costs. PDC will continue to use the RM 147 million profits for economic development to make Penang as a location of choice for investors, a destination of choice for tourists and a habitat of choice for a livable city.

PDC has to also lead the charge to make Penang to participate actively in the 4th Industrial Revolution of Big Data Analytics, cloud computing, Internet of Things and e-commerce. PDC’s profits would have been higher if PDC is allowed to sell the land at a higher price. However PDC cannot do so because it has to perform its statutory duty of bringing in new factories to generate job and business opportunities for Penang as well as attract retail outlets like IKEA and premium retail outlets, universities and hospitals to grow the services sector and tourism.

Another press statement by the chief minister on 4 January 2017:

No wonder Malaysia’s economy is in a state of crisis if we are led by dummies pretending to know accounting or Malaysians facing a water rationing crisis with Syarikat Perkhidmatan Air Negara(SPAN) led by Liang Teck Meng! I had wanted to ignore Gerakan Secretary-General and MP for Simpang Renggam Liang Teck Meng for his childish and irresponsible statement questioning Penang’s undoubted success in recording annual budget surpluses, with total accumulated surplus of RM574 million since 2008.

However I feel duty-bound to expose Liang’s wild lies and school him to the truth of the state government’s factual figures, fully supported by the certification of the Auditor-General’s annual reports. Hopefully Liang can be schooled to understand some basic accounting principles.

One, Liang is confused between the accounts of the Penang state government, Penang Development Corporation(PDC), local authorities Majlis Bandaraya Pulau Pinang and Majlis Perbandaran Seberang Perai. These are different and separate accounts and cannot be mixed up together as one. Liang mixes them up to try to claim that the state government sold more land than the RM 658 million recorded since 2008. Mixing them up is wrong and the Auditor-General separates them just as the Federal government accounts are separated from TNB, PNB or Tabung Haji.

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Two, Liang cannot blindly include the sale of assets belonging to PDC as part of the state government’s revenue. Doing so is wrong when the assets do not belong to the state government unless Liang wants to invent a new system of accounting understood only by him.

Three, Liang claimed that the state government sold Bayan Mutiara state land and land reclamation rights in 2011 for RM1.07 billion, but why only RM658 million was recorded for the period between 2008-2015. I had explained many times that full payment was not paid in 2011 but paid progressively over a period of 6 years. Final payment will only be made by 10.11.2017. Clearly Liang does not understand the difference between cash and accrual system of accounting.

Four, Liang questioned how the state government can still record a surplus when our annual operating spending now has jumped three-fold from RM283 million in 2008. Liang should be praising us for our success in still recording a surplus despite our spending increasing by 3 times due clearly to CAT administration of competency, accountability and transparency. Cost containment is achieved through open competitive tender that gives us the best pricing, efficiency savings and clean leadership where public money is not stolen through corruption scandals like BN. There are no RM52 billion 1MDB or USD 1 billion donation scandals in Penang. Penang state government’s revenue are fees and quit rent based on land. It is shocking that BN leaders can be so ignorant as to ask whether assessment rates are included when that is collected throughout Malaysia by local governments MBPP or MPSP. Penang’s annual budget surplus is unquestioned and an undoubted fact, when it is certified by the annual Auditor-General Reports. Or is Liang even questioning the veracity of the Auditor-General Reports in his desperate attempt to frame up the state government?

Five, Liang explained that the BN state government sold 36 times more land(3,661 acres) than the present state government(106.1 acres) but yet received less money(BN’s RM1,058 million compared to Pakatan’s RM1,110 million) because the BN state government was selling both land and land reclamation rights whereas Pakatan was only selling land. This is untrue because Bayan Mutiara land sold by the present state government involved both land and land reclamation rights. Land reclamation rights at Bayan Mutiara was sold at RM 240 per square feet by the present state government through open competitive tender whereas Tanjung Pinang land reclamation rights was sold by BN at only RM 1 per square feet because there was no open competitive tender.

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I wish to assert that Penang would have recorded RM1,074 million in accumulated surplus since 2008 if RM500 million had not been allocated for the Public & Affordable Housing Fund. This RM500 million Public & Affordable Housing Fund was taken out of the RM658 million in land sales by the state government, clearly showing that land sales was not the reason for the annual surpluses of the state government.

Since 2008, Penang has recorded accumulated budget surpluses of RM574 million over the last 8 years, which is more than what BN achieved over the last 50 years they ruled Penang from 1957-2007 of RM373 million. The Penang state government received a total revenue of RM4,947 million since 2008. Land sales revenue since 2008 amounted to RM658 million or 13% of the total revenue of RM4,947 million.

Out of the land sales revenue of RM658 million, the state government had allocated RM500 million for the Public and Affordable Housing Fund to build low cost, low-medium cost and houses below RM300,000/-. In other words, since 2008 only RM158 million was available as contribution towards accumulated surplus of RM574 million, and towards establishing a welfare state where over RM400 million has been paid out as cash payments to 1.6 million Penangites and schools. Or hundreds of millions of ringgit for development purposes to build public infrastructure.

There is no special maths employed by the present state government as claimed by Liang, as all these figures are verified, acknowledged and certified by the annual Auditor-General Reports. There is only clean and honest accounting. The public can judge who can be trusted to save the Malaysian economy and prevent our children’s future from being stolen.

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57 Comments on "Penang government must provide itemised breakdown of land sales, profits since 2008"

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Tay SL
Tay SL

GHOST CITY – Inside the Chinese Housing Bubble

LSS
LSS
The Penang Govt in 2011 said that they had sold 41.5ha of land in Bayan Mutiara – of which 27.3ha are existing land and 14.2ha are to be reclaimed. The price then was RM1.07b or RM240psf. As I understand it, the contract said minimum of 14.2ha to be reclaimed. However, a recent report has shown two things: 1. The buyer will now reclaim 24.7 ha instead of 14.2ha. Based on agreement, this should increase the price to be paid to the Penang Govt to RM1.343 billion instead of the original RM1.07b. 2. The reclamation cost of RM200m for 24.7 ha… Read more »
tunglang supports Bersih 5 & coming Bersih 6
tunglang supports Bersih 5 & coming Bersih 6

Seven things to avoid if you are a corrupt public official
http://www.malaysiakini.com/news/368511
SATIRE Now that the Malaysian Anti-Corruption Commission (MACC) has declared all-out war against corrupt public officials, it may be time for those who have crossed the line to watch their step.

gk ong
gk ong

‘Don’t take away the rights of the rakyat. It belongs to them’, says PM Najib on spate of MACC arrests.

tunglang supports Bersih 5 & coming Bersih 6
tunglang supports Bersih 5 & coming Bersih 6

Or is it the rights of Thieves?

Tay SL
Tay SL

Country Garden’s Forest City in Johor, as featured in China’s CCTV program (with English subtitle):
https://m.youtube.com/watch?v=lVB9SCkdQK4

tunglang supports Bersih 5 & coming Bersih 6
tunglang supports Bersih 5 & coming Bersih 6

Goes to show who is the target market, PRC Chinese or Johoreans.
If Hang Jebat is still alive & around today, he might not hesitate to correct the situation.

Tay SL
Tay SL
“Next to Singapore” is Country Garden’s publicity slogan for the massive project in the second largest city in Malaysia, commercials for the project can been seen in metro stations in China’s major cities and national television, showcasing its forest-like design. Forest City is just one example of how the property buying spree of Chinese investors has extended to Southeast Asia. As China’s currency weakens and the growth rate of China’s domestic real estate market slows down, more and more Chinese buyers are now buying properties abroad, and the relatively affordable houses in Southeast Asia are their latest choice. Chinese property… Read more »
Andy
Andy
The only way Penang State Government can answer this call by Anil satisfactorily is by revealing figures in such details that no other government agencies has ever attempted. PDC’s audited report has very clear summarised numbers but what Anil is asking here is seriously something else (even more details). Penang State Government has done it a few times before, by revealing numbers either ahead of time, or providing breakdown that’s normally not required to be revealed… Maybe LGE will do it again this time… But no matter how many times he does it… after the numbers are out…. the attention… Read more »
gk ong
gk ong

The Penang government is unlikely to provide full details, just like the federal government has OSA to conceal its own secret not for public consumption. Therefore no obligation under the present practices of Malaysian politics.

LGE tak boleh
LGE tak boleh

Oh, this is called CAT government? Transparency?

tunglang supports Bersih 5 & coming Bersih 6
tunglang supports Bersih 5 & coming Bersih 6

Then what is Transparency?
To Shiok Penangites…?

zoro
zoro

are state matters also oso under OS? you mean MACC cannot do anything to state if pandi wants???

YYT
YYT

MACC now focus on civil servants playing golf overseas.

james k
james k

So, because the federal gov is practicing as such, therefore the state gov is obliged to follow it?

Are you implying that Pakatan should follow BN’s lead in terms of governance?

Soon Fong
Soon Fong

Federal government does not provide enough funding to Penang, thus sell g more land?

Simone Sng
Simone Sng

Big scale residential projects including reclamation of land is happening in big cities in Malaysia: Johor and Melaka, not just Penang. It gives impression that Malaysia is welcoming foreigners to make their second home here. However the adverse impact is housing price has gone up beyond the affordability of average Malaysians, who may have to move to smaller towns for cheaper options.

Sora Zhen
Sora Zhen

Yesterday on The Star Property supplement plenty of new condominium development in Penang.
Is the property market still vibrant in Penang when the economy is getting nowhere despite the feel good messages from BN?

Danny
Danny

The Star is not honest about the current housing issues so long as it get advertising revenue from the developers. It will report what the developers want it to.

Julian Candiah
On this matter I think you barking up wrong tree. PDC reasonably managed. Not perfect but then who is. PDC set up under the PDC act. Board has representatives from Federal Govt, State CFO, SS and of course CM as Chairman. I have very high regard for several current Board members. well known that PDC been buying land in batu Kawan and also in SPS for future industrial usage. At current prices, the numbers not beyond reason. Apart from industrial land, all transactions above a certain threshold need federal approval so a lot of checks and balances in place. Of… Read more »
james k
james k

We need to see the numbers and how every dollar and cent was spent of the 1.9 billion. Its as simple as that.
Where did the money go?
1.9b – 0.1b = 1.8b spent.
So what was the 1.8b spent on, PDC?
Its as simple as that.

gk ong
gk ong

PDC has obviously learnt the trick from 1MDB?

zoro
zoro

you mean no expert in pg forum can give. some possiblities or tun lang can epintas the missing 1.8b?

Disgruntled Penangite
Disgruntled Penangite

Precisely ! All the land sales have to be itemized and it’s also the responsibility of the councilors too !
Alas, Anil is not representing us in the new council line-up, they get instead of a rich-background Penang forum member Khoo to take over Dr. Lim’s place ?

tunglang supports Bersih 5 & coming Bersih 6
tunglang supports Bersih 5 & coming Bersih 6

Anil not representing Penangites could be b’cos of too much ‘noises’ from zoro complaining realistic + non-worshipping comments against CAT Deity.
Whoever dare to hear, to think & to speak against the ills of CAT will be axed!…

zoro
zoro

Another worshipper and dedak of pg forum and self appointed tokong and we cannot speak against dedak but he has right to make noise.

zoro
zoro

how come no voice from you in this missing 1.8b?

Mat Jasun Bon
Mat Jasun Bon

Bayan Mutiara traded RM1.1billion for Penang World City as envisioned by Dato Low Eng Hock’s Ivory Properties joint venture with VinceTan’s brother Tropicana, but Ideal Properties has surpassed them for projects from Relau to Bayan Lepas stretch -, all awaiting foreign $ to sustain profitability to engage more locals to work for them … as property agents some can earn free holiday trips?

Seng Aun Teoh

Not forgetting the terms of payment. Payable when able?

tunglang supports Bersih 5 & coming Bersih 6
tunglang supports Bersih 5 & coming Bersih 6

Yeah, the terms of payment in instalments? Guaranteed?
Have they figured in the (1) falling Ringgit value & (2) inflation & (3) rise of Penang Island land value (future’s profit potentials)? Which may required prudent decision-making whether to sell or to rent or to lease?

While developers are overtly-smart & greedy to up the prices of properties way beyond today’s (live price) accountable pricing, is Penang CAT Gomen also more than overtly-smart to figure out the above (1), (2) & (3)?

Any boasting of financial scorecard may require some doubts & fine-combing ala Anil before falling for exhilaration.

Danny
Danny

Interest could be up soon. More could default on loan payments if got retrenched. More lelong coming up?

zoro
zoro

Dedak happy happy with crocodile laugh. Time to sapu. Buy low sell high.

tunglang supports Bersih 5 & coming Bersih 6
tunglang supports Bersih 5 & coming Bersih 6

What are u mumbling?

tunglang supports Bersih 5 & coming Bersih 6
tunglang supports Bersih 5 & coming Bersih 6

AKPK will get its hands full soon! But banks will not be happy.
Developers will cry crocodile tears while lamenting bad market, the causes of which started from them greedy fellas. Karma is watching them closely.

zoro
zoro

Bank not happy and Developers crocodile tears? But dedak crocodile laugh, glee and happy happy.

Alif
Alif

Deep pockets ones must be careful now that MACC is in action targeting Datuks (especially those playing golf overseas) who hide solid cash at home.

Niao Boh
Niao Boh

Newspapers of Penang awaiting Developers advertisements revenues during CNY period. More showcases supplements to woo those with deep pockets and also not so deep but bin chui thick ego ones to seek loans.

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