I am sorry; this is not the point (see the statement below about who is making losses and who is making a profit re: Pulau Jerejak). Everything cannot be boiled down to ringgit and sen.
This is about the need to preserve Pulau Jerejak as a green lung for present and future generations of Penang residents. We are always complaining about a lack of open green spaces. Here we have one – and what do they do? Hive it off for high-end property development!
In the end, the federal Uda Holdings and the private property developer Ideal Property will very likely make a profit. The state PDC makes a profit. These profits are fleeting and will soon evaporate.
The losers (in terms of loss of a large tract of precious open green space, ‘The Commons’, to private interests) are the residents of Penang. Their loss will be permanent.
There are other issues that need to be explained: How did Uda Holdings end up choosing Ideal Property? What kind of negotiations took place and who were the parties involved?
If the 49% stake in the resort company belonged to PDC, why was UDA offering to sell the stake to Ideal Property (see statement below)? In other words, who chose Ideal Property and on what basis? This must be clearly explained.
When was the sale of PDC’s 49% stake in the resort company to a subsidiary of Ideal Property signed? Was it before or after the 27 June MBPP planning workshop to amend the draft Penang Island Local Plan at which Ideal Property reps were reportedly present – and at which the status of Pulau Jerejak including the resort were discussed, according to a Penang Forum press release?
See also: Why are vested corporate interests influencing Penang’s urban planning? about that same workshop.
I reproduce the following below:
PRESS RELEASE BY DATO’ ROSLI JAAFAR, GENERAL MANAGER
OF PENANG DEVELOPMENT CORPORATION (PDC) ON 11.11.2016 In Penang.
Accepts UDA’s Offer To Sell PDC’s 49% Shares In Tropical Island Resort Sdn Bhd (TIRSB) To Ideal Property Development Sdn Bhd (Ideal) For RM 156 Million Generating A Profit To PDC Of RM 140.6 Million.
PDC has accepted UDA’s offer to sell PDC’s 49% shares in Tropical Island Resort Sdn Bhd (TIRSB) to Ideal Property Development Sdn Bhd (Ideal) for RM 156 million generating a profit to PDC of RM 140.6 million. UDA had brought in Ideal to jointly developed their project and also buy out PDC’s 49% stake in accordance with PDC’s conditions.
Only when these conditions protecting PDC’s interests were fulfilled, the shares sale agreement with Ideal’s subsidiary company, Q Islands Development Sdn Bhd (Q Islands) was signed this year. The 10% deposit of RM15.6 million has been received by PDC. As payment will be made over a period of 8 years PDC shares will only be transferred after full payment is made in 2024.
In 1997, TIRSB was set up by both the BN Federal and state government with a paid-up capital of RM31.5 million. PDC had injected RM15.44 million into TIRSB for a 49% share whilst UDA contributed RM16.07 million for a 51% share. The BN State government in 2001 had then approved the award of 80 acres of leasehold land for 60 years (expiring in 2062) in Pulau Jerejak to TIRSB, at a price of RM12.95 million.
In 2001, this price of the 80 acres of Pulau Jerejak land of RM12.95 million or RM3.71 per square feet is below the market value of RM47.6 million or RM13.65 per square feet. In other words, the BN state government had sold the land to TIRSB at only 27% of the market price. The land title was transferred to TIRSB by the then BN state government even before the land premium of RM12.95 million had been fully paid.
PDC even gave out a loan of RM3.4 million to TIRSB on 28 December 2007 at an interest rate of 3.5% per annum. The loan principal and interest had increased to RM4.4 million by 2016. One of the conditions for accepting UDA’s offer is that the RM4.4 million loan must be settled separately from the sale of the 49% shares. This was agreed to by UDA and the RM4.4 million loan was fully paid on April 2016.
In other words, PDC will receive a total of RM160.4 million. With this equity sale, PDC will recover its cost of investment of RM15.44 million, together with the shareholders’ loan and interest of RM4.4 million which has also been paid by Ideal. PDC will make a profit of RM 140.6 million. UDA will have 100% control of TIRSB upon completion of the Novation Agreement.
TIRSB has been incurring heavy operating losses since it commenced operations of Jerejak Rainforest Resort & Spa (JRRS) in 2004 and they have now closed its operations from May 2016 due to accumulated losses amounting to RM 40 million as at end 2015.
UDA had submitted their development plans to the Penang state government for their 80 acres land. The redevelopment will comprise 1,200 units of residential development over 80 acres, a marina, four- and five-star hotels, theme park, an 11.5km round island cycling track and related infrastructure to promote tourism in the state. The state government intends to gazette the remaining few hundred acres on the island as forest reserves.
The state government had approved UDA’s proposals on condition that environmental safeguards are in place and comply with Environment Impact Assessment(EIA) requirements. For instance the bridge linking to Pulau Jerejak will not allow cars and vehicles to cross to Pulau Jerejak.
(Dato’ Rosli Jaafar)