COMMENT In 1997, Tropical Island Resort Sdn Bhd (TIRSB) was set up by both the BN federal and BN state government with a paid-up capital of RM31.5 million. The Penang Development Corporation (PDC) had injected RM15.44 million into TIRSB for a 49 percent share, whilst the Urban Development Authority (UDA) contributed RM16.07 million for a 51 percent share.
The BN state government had already surrendered control to the federal government as early as 1997.
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 or RM3.71 per square feetc(psf).
In 2001, the market value of the 80 acres of Pulau Jerejak land was RM47.6 million or RM13.65 psf. In other words, the BN state government had sold the land nearly four times cheaper or at a loss of RM34.6 million to TIRSB. This is 73 percent below the market price.
The land title was transferred to TIRSB by the then-BN state government on Jan 3, 2001 even before the land premium of RM12.95 million had been fully paid. TIRSB only completed paying the balance RM10.60 million in owed land premium sometime in 2012, after we threatened to take back the land.
TIRSB was already making losses since 2001 and yet PDC gave out a loan of RM3.4 million to TIRSB on Dec 28, 2007, at an interest rate of 3.5 percent per annum. The loan principal and interest had increased to RM4.4 million by 2016.
UDA brought in Q Islands, a subsidiary company of Ideal Property Development Sdn Bhd (Ideal), to offer to buy out PDC’s 49 percent stake for RM156 million. UDA is the effective owner of TIRSB with 51 percent majority control. PDC cannot do anything without UDA’s consent. Unlike PDC, UDA can sell its shares without PDC’s consent. It is ridiculous for BN and Gerakan to claim that PDC can dictate terms to UDA with only 49 percent control.
PDC’s condition for the sale was that the RM4.4 million loan must be settled first and considered separately from the RM156 million sale price. This was accepted by UDA and the RM4.4 million loan was fully paid up in April 2016.
TIRSB had incurred losses of RM40 million as at end of 2015, and was no longer financially viable. Therefore, PDC agreed to the sale for its 49 percent stake in TIRSB for RM156 million. The 10 percent deposit for RM15.6 million had also been paid and received by PDC. Payment will be made over a period of eight years. PDC shares will only be transferred after full payment is made in 2024.
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. PDC will make a profit of RM 140.6 million.
Observing environmental safeguards
The development plans submitted by UDA over the 80 acres must observe environmental safeguards 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.
The heritage buildings, especially the famous prison camp, will be retained and restored. There will be a 11.5km round island cycling track and the remaining part of the island will be gazetted as a forest reserve.
Gerakan’s claims of the Pakatan state government approving the building of a casino is untrue. In fact it is Umno’s Padang Besar MP who supported the proposal for building a casino in Penang, a suggestion that is rejected by the Pakatan state government.
The Pakatan state government took eight long years of determined insistence of protecting the rights of the people of Penang over Pulau Jerejak, to finally secure this transaction that is fair and favourable.
Once again the Pakatan state government had rehabilitated and saved a failed BN project as well as recouped our investment, loans and losses. Not only did we recoup back our RM4.4 million loan and the amount invested of RM15.44 million by selling for RM156 million. We also disposed off our 49 percent stake in a loss-making company, TIRSB with RM40 million losses, to secure a profit of RM140.6 million that is nearly 10 times over our initial investment.
This is a clear case of sour grapes when Gerakan attacks the sale because they failed to do what we have done by recouping the RM15.44 million investment and the RM4.4 million loan. Despite this remarkable turnaround of also recording a profit of RM140.6 million that is nearly 10 times the amount invested, Gerakan and BN Penang continues to attack us for selling out on Pulau Jerejak to the BN federal government. Are they not part of BN?
More importantly, Gerakan should be ashamed of themselves for selling out Pulau Jerejak as early as 1997. This is a classic case of a ‘thief shouting thief’! A tragic end after 20 long years has somehow been avoided by the Pakatan state government.
Whilst the Pakatan state government does not need Gerakan to thank us for recouping our investments, loans and losses, Gerakan should apologise to the people of Penang for acting against public interest when they sold out to TIRSB in 1997.
LIM GUAN ENG is chief minister of Penang and DAP secretary-general.
