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.
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.
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.
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.
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.