Ramasamy questions Penang CM on PDC’s land sale to UMECH Land

The recent PDC’s (Penang Development Corporation) land sale of 559 acres costing more than RM646 million in Byram, Penang, seems to have opened the Pandora’s box.

The land was sold at RM26.53 per sq. ft, apparently the price of raw land, land without basic infrastructure what is more near the massive landfill in Byram.

Information from reliable sources indicate that the land value in Byram is around RM80 per sq. ft. It apparently never crossed the minds of those in the PDC that there is a flip side to investors locating their companies near landfills for obtaining carbon credits.

Industrial land is lacking very much in Penang, this is one of the main reasons why Penang is not able to attract foreign investments. Instead, foreign and local investors might be looking at other states with ready availability of land.

In this respect, PDC is under pressure for more industrial lands to be made available to the prospective investors. It was this in mind that PDC participated in the Dubai Expo in 2020 to attract investors to Penang.

At the Expo, PDC identified a company called Umech Construction Sdn Bhd with sufficient financial backing to buy and develop industrial land in Penang particularly in the Batu Kawan Industrial Park 2 (BKIP2) located in the Sebarang Perai Selatan (SPS) area.

Even though PDC negotiated with Umech Construction, the above land was ultimately sold to Umech Land. Umech Construction and Umech Land could be two different legal entities but with similar shareholders.

A few days before the signing of the sales agreement, 70 percent of Umech Land shares were acquired by Sunway Bhd.

I understand that the funds for the purchase of the land will come from Sunway”s investment. Umech paid a deposit and the balance will be paid in four yearly instalments.

It is strange that the name of Sunway never cropped up in the earlier discussions in PDC about the land sale to Umech Construction.

Moreover, as pointed out by the Penang Chinese Chamber of Commerce (PCCC) Umech Land did not have the financial strength as reported by CTOS.

The first salvo against the sale of the land to Umech Land was fired by the PCCC. It raised questions pertaining to:

● why the land was sold through direct negotiations

● why there was no open tender

● why the price of the law was undervalued

● why there were no local or Penang-based investors and

● why the former land owners cannot resort to legal action as the sold land was came compulsorily acquired.On October 3, 2023, the Chief Minister of Penang and the chairman of PDC Chow Kon Yeow gave an explanation to the questions raised by the PCCC. Chow’s explanation included the following:

● the sale of PDC land through direct negotiations was not new, there have been cases in the past where land was sold directly

● the price of the land was low because it was raw in nature without the required infrastructure

● the land was sold to Umech Land on the recommendations provided by the sub-committee that was set up in November 2023 to engage in due diligence

● the Umech Land had sound financial credentials; and finally

● the buying of shares by Sunway was done before the land sale was effected. PDC has been asked to seek clarification on the matter

I was named as the member of the PDC’s sub-committee along with three others, all members of the PDC board. The chairman of the sub-committee was Chow, the chairman of PDC.

The sub-committee met on November 28, 2023, to discuss the possibility of Umech Construction buying industrial land in BKIP2.

The meeting was not about engaging in due diligence but about getting more information about the company.

Issues such as the financial capability of the company, the need for market survey, and others were raised. The sub-committee did not recommend that the PDC land be sold to Umech.

It was wrong on the part of Chow to have said that the decision to sell the land to Umech was based on the recommendations of the sub-committee.

The sub-committee made no recommendations, but merely wanted more information from Umech on industrial land development.

It is with much regret that I and others have been dragged into the present controversy unnecessarily to endorse the decision of the PDC to sell the land to Umech.

While I was privy to the one or two PDC board meetings that discussed the land application by Umech, it was at the preliminary stage.

It is essential that the Penang state government or the chief minister Chow should clarify the exact role of the sub-committee and not give the inaccurate and false impression that it endorsed the move to sell the said land to Umech.

Anyway, much water has passed under the bridge since the land sale agreement was concluded between the PDC and Umech Land.

I think that in the larger public interest, the land sale to Umech Land by PDC should be temporarily suspended pending further investigation. The following are the grounds for suspension.

● why the land was sold to Umech Land although the negotiations was with Umech Construction,

● what promted Sunway to acquire 70 percent stake in Umech Land without properly notifying the PDC, the Penang state government and other public authorities and finally

● whether the sale of the land was undervalued as alleged by the PCCC and others.