Friday, February 17, 2012

The AliBabeng of Penang: Lividen of Land Conversion

Guan Eng shows proof Bayan Mutiara land sold above market rate By Clara Chooi February 15, 2012 KUALA LUMPUR, Feb 15 — Lim Guan Eng disclosed today valuation documents proving his government sold a 102.6-acre plot of prime land in Bayan Mutiara at over double the market rate, disputing Umno’s claims otherwise. The Penang chief minister told a press conference that the land in question had been valued at RM84 per square foot (psf) for an 18-acre plot and RM65 psf for an 88-acre plot as of November 2009. Lim reiterated his challenge today to Umno leaders, particularly Abdul Rahman, to bid for property in Bayan Mutiara at RM420 psf.  “The smaller the plot, the higher the price,” he said. Barely six months later on April 7, 2010, Lim said, the Penang government set its rate for the state-owned land at RM200 psf, well above the valuated price. “When I decided to fix the price at RM200, everyone opposed. They said — you can’t sell it. But I said — let’s try. I prefer to fail trying than not trying at all ... luckily we succeeded,” he said. Lim said the 102.6-acre plot — located near the Penang Bridge, the free trade zone and the Penang International Airport — was eventually sold off via open tender to the highest bidder, Ivory Properties Groups Bhd, which had offered RM240 psf, or a total of RM1.07 billion, to be paid up in five years.

“What else does Umno want to say? We are not Umno, selling at cheap prices. We sell at the highest price. “Do not think that just because Umno is corrupt, we are corrupt too. Do not think that just because Umno sells land without open tender, we do the same ... or if they use money to put cows in condos, we do the same. No,” said Lim. Umno leaders, including a Sabah MP Datuk Abdul Rahman Dahalan, had accused the Penang government of selling the prime real estate at a 50 per cent discount to private developers. According to their allegations, the 102.6-acre plot in question was actually worth RM420 psf, well above the RM240 psf it was sold at. Lim reiterated his challenge today to Umno leaders, particularly Abdul Rahman, to bid for property in Bayan Mutiara at RM420 psf. “A person so far in Sabah wants to interfere in our affairs. So I challenge him ... we challenge Umno; if they say the land is actually worth RM420, then we ask them to buy it at that rate,” he said. here

Well I never thought that my initial query on Bayan Mutiara has now developed into something that CM Lim Guan Beng needs to "explain"

My concerns in the initial post was that (here)

  • The statement of affordable housing at RM42,000 to RM 72,500 Vs the actually planned RM 72,500 to RM 220,000
  • How the state plan to pay for the RM500 Million when the proceeds from the land sale would only accumulate to that amount in 2 years
After reading Calvin's piece, I followed up with another query which was then picked up in Tweeter, on why the land was sold at that price and this is referring to a particular deal on between Queensbay and Evergreen
slightly before the announcement of Ivory winning the tender.

Anyone would wonder why the state sold at 240psf when the last done deal was 420psf.

Source IVORY here

These are valid questions, there is no need for political gimmick jinjang mari kinda thing. So kampung

I've actually relooked at the data. Something is not right. How can RM 160Million for 100 acres becomes 420psf?

100acres is equivalent to 4,356,000square feet.

Plus if you look at the land I don't think it is 100 acres

George Town: The development potential of Penang island's southeastern area is growing as more property developers are eyeing it for their projects. Business Times has learnt that CP Land Sdn Bhd, the property arm of the CP Group, has disposed of 40 hectares of land it owns in the Queensbay area at Bayan Lepas to a Penang-based property player. Sources said the land was sold at RM420 per sq foot (psf) to Asia Green Development Sdn Bhd in May and the transaction is believed to be worth RM160 million. Asia Green is said to be planning to build serviced apartments on the land, which is currently serving as a parking lot. here
Actually folks these whole set of land was part of the reclamation project sometime in the late 80's

Source here (check it out folks!)

Now let us go deeper into the statement of over double the market rate

Let us look at the historical transactions of the actual site
 BUSINESS TIMES 26th June 2007
THE Penang Development Corporation (PDC) has sold land at its sea-fronting integrated Bayan Mutiara development to two government agencies so far and is in negotiations with another federal agency. PDC general manager Datuk Rosli Jaafar yesterday said besides selling a 0.82ha plot to the Inland Revenue Board (IRB) to build a 16-storey corporate tower, the Marine Police Department has also purchased land totalling 4ha. “The 4ha plot is the biggest we have sold to a government agency so far and negotiations are in progress with another federal agency at the moment,” he told reporters after the signing of a sales and purchase agreement between PDC and the IRB for the land purchase. Rosli signed on behalf of the PDC while IRB’s chief executive officer and director-general Hasmah Abdullah represented the board. Witnessing the signing was Penang Chief Minister and PDC chairman Tan Sri Dr Koh Tsu Koon. (here)
Would those transactions be done at arms length?

State to Federal?

How would you be at the negotiation table when your counterpart has the power to invoke the Land Acquisition act?

He also mentions the smaller the size the higher the price, that I agree.

Source here
RM 4,600,000 for 679.998 square metres (equivalent to 7319.24 sqf)

That would give you RM 628.48psf

Wonder why he is in a rush to sell a very large block?

Now let us also look at the land that was so called sold at RM420psf

This is the land of CP Group

It was mired in controversy quite sometime ago.

Penang will not convert reclaimed land to freehold GEORGE TOWN: Chief Minister Lim Guan Eng does not want to follow the previous state government’s policy of circumventing the National Land Code (NLC) 1965 by converting reclaimed land to freehold status. He said Section 76 of the NLC prohibited the state authority from converting reclaimed land to freehold, or for any period exceeding 99 years in order to protect and reserve coastal areas. “I have been advised that after a piece of land has been reclaimed, it ceases to be seabed and foreshore factually, physically and legally; leaving it within the state’s right to convert its status to freehold. “But this state government will not choose to exercise its powers to make such conversions,” he said in a press statement yesterday. Lim was commenting on the land conversion of the 28ha Queensbay development project in Bayan Lepas in 2006 that sparked controversy recently when it was reported to be against the NLC. He said that while he disagreed with the previous state government’s policy of converting reclaimed land to freehold, he was advised by state legal advisers and consultants that it was done legally. “The state government also has to comply with the Penang High Court’s consent order given to the scheme arrangement to rescue the original Bayan Bay project,he said. here

That statement from the CM drew a response from a laywer as well as Prof Saleh Buang

Since the last election, our political landscape has changed beyond recognition. Many have openly adopted partisan stands on issues affecting the people on a zealous quest to defend the Pakatan Rakyat state governments whenever there is a criticism. The Penang government under the leadership of Lim Guan Eng surprised a lot of those who voted for change by pursuing the policies and projects of former chief minister Koh Tsu Koon with a zeal beyond the imagination of Penangites. Lim Guan Eng has willingly - without bribery or corruption - fast-tracked all the projects he inherited from Koh Tsu Koon's administration.

When pressed on the Queensbay land conversion controversy, Lim Guan Eng blamed Koh Tsu Koon for the decision. Lim Guan Eng said he does not quite agree with the decision but he has to comply. Lim Guan Eng continued to defend the decision of Koh Tsu Koon. The chief minister said that state legal advisers informed him that the land was not bound by a crucial proviso in the National Land Code (NLC) 1965 which forbade foreshore land from being converted to freehold. He said the land had been gazetted as state land – and was not considered foreshore – by the previous state administration.

In a press report, lawyer Agatha Foo pointed out a proviso in section 76 of the NLC, which Lim had overlooked in his reply to the state assembly. Foo noted that the proviso expressly prohibits the state from disposing of ‘any part of the foreshore or sea-bed for a period exceeding ninety-nine years’. The proviso had been inserted when section 76 was amended in Parliament in 1985. ‘Consequentially, the said proviso would also prohibit the state from re-alienating or converting any part of the reclaimed foreshore or sea-bed to freehold land. Any subsequent attempt by the state to re-alienate or convert any part of the foreshore or sea-bed to freehold, notwithstanding that the foreshore or sea-bed have now been reclaimed, would tantamount to a circumvention of the prohibition in section 76 and hence be ultra vires the NLC’.

A lot of critics were puzzled by the fact of how can the chief minister miss a crucial proviso in the National Land Code. The truth is now being revealed. The chief minister has since wanted to convert a 1.4ha seafront site, adjacent to the 124-year-old Eastern and Oriental (E&O) Hotel along Lebuh Farqhuar, from leasehold to freehold on his own free will. On Oct 15, Lim Guan Eng issued a press statement promising not to follow the footsteps of Koh Tsu koon in circumventing the National Land Code by converting all reclaimed land from leasehold to freehold status. But hardly a year has gone by and Lim Guan Eng has silently converted the PDC Heritage Hotel site from leasehold to freehold status. The PDC Heritage Hotel site is on a 1.4ha seafront site adjacent to the 124-year-old Eastern and Oriental (E&O) Hotel along Lebuh Farqhuar. This site is not even on reclaimed land. The conversion is clearly against the NLC proviso.

Had Lim Guan Eng something to hide from Penangites when he defended Koh Tsu Koon's decision on the Queensbay land conversion controversy? Did Lim Guan Eng learn anything from the Queensbay land conversion controversy? Lim Guan Eng has no excuse to plead ignorance on the proviso. Why did Lim Guan Eng opt to flout the National Land Code proviso by converting the 1.4ha seafront site adjacent to the 124-year-old Eastern and Oriental (E&O) Hotel from leasehold to freehold? The PDC heritage project is within the heritage enclave which means it must comply to the height requirement of being not taller than 18 metres. Without the conversion from leasehold to freehold, the project will not have sufficient commercial value to sustain. Does Lim Guan Eng want to mislead us again that the prime seafront land which is a state land can not be considered as foreshore land? I am calling all concerned Penangites to stand up and voice their concern over the conversion of reclamation land from leasehold to freehold. We want a state government that abides by the law and not look for loopholes to circumvent any proviso of the National Land Code when dealing with state land. We need to initiate a movement to stop all illegal land conversion especially on reclaimed land and seafront land. I believe we need to put a full stop to this bad practices before it gets out of control. For those who are interested, you are welcome to join us in our fight against all illegal seafront land conversion issues. (here)
And also here

Crucial clause overlooked Guan Eng missed proviso when defending land conversion Himanshu Bhatt GEORGE TOWN (Oct 8, 2008) : Chief Minister Lim Guan Eng had defended the controversial conversion of land housing the Queensbay project, reportedly worth RM3 billion to freehold, at the Penang state assembly in July, but had overlooked a vital clause in the National Land Code (NLC) 1965. It is learnt that Lim (who is currently away in the United Arab Emirates on an investment mission) had in a written reply reasoned that the NLC allowed the state to convert the land from leasehold to freehold.

He made the reply to a question from Batu Uban assemblyman S Raveentharan who asked how reclaimed coastal land had been made freehold in Batu Uban and Pantai Jerjak. In his reply, however, Lim missed a crucial proviso in the NLC. He reasoned that the freehold status was given as an effort to revive the project after it was left unfinished. (The project had been stalled as the original developer Eternal Resources Sdn Bhd was affected by the economic crisis of the late 1990s.) Lim referred to section 76(aa)(iii) of the NLC which says land could be converted “where the State Authority is satisfied that there are special circumstances which render it appropriate to do so”.

It is now learnt that Lim was sent a letter by a senior conveyance lawyer in Aug, expressing concerns about his plan to convert residential leasehold land, including areas that had been reclaimed from the sea, to freehold. In her letter, lawyer Agatha Foo pointed out a proviso in section 76 of the NLC, which Lim had overlooked in his assembly reply. Foo noted that the proviso expressly prohibits the state from disposing of “any part of the foreshore or sea-bed for a period exceeding ninety-nine years”. The proviso had been inserted when section 76 was amended in Parliament in 1985. “Consequentially, the said proviso would also prohibit the state from re-alienating or converting any part of the reclaimed foreshore or sea-bed to freehold land.” “Any subsequent attempt by the state to re-alienate or convert any part of the foreshore or sea-bed to freehold, notwithstanding that the foreshore or sea-bed have now been reclaimed, would tantamount to a circumvention of the prohibition in section 76 and hence be ultra vires the NLC.

When contacted, land commentator Prof Salleh Buang, who is currently a visiting professor at Universiti Teknologi Malaysia (UTM), said the NLC was very clear that the lease for state foreshore land cannot exceed 99 years. “The law says it very clearly. It is on record that you cannot make such land freehold,” he said. He stressed that the state should be careful to ensure public access remains in foreshore areas. “If you allow seafront to be freehold, what would happen to open public access to the area?” he asked.(here)
If you are wondering if the state had converted the 1.4H Seafront Land

The heritage enclave of George Town in Penang may see a waterfront development soon. It is learnt that YTL Corp Bhd will embark on a project, through joint-venture company PDC Heritage Hotel Sdn Bhd, to build luxurious condominiums and an eatery on a 1.4ha seafront site adjacent to the 124-year-old Eastern and Oriental (E&O) Hotel along Lebuh Farqhuar. PDC Heritage was set up about a decade ago, with YTL Corp holding 51 per cent stake and Penang Development Corp (PDC) the remaining 49 per cent. It is not known if PDC has since divested its interest in the joint-venture company. According to sources, the project will feature six blocks of high-end condominiums. A double-storey building housing food and beverage outlets will also be built on the site where two dilapidated heritage structures are currently standing. However, the development value of the proposed project is not known. Local authorities gave PDC Heritage approval in June this year to convert its prime seafront land from leasehold to freehold status. The land, bordered by the E&O Hotel and St Xavier’s Institution, was originally state-owned and had nine pre-war buildings. In 1996, the land on which sat government staff quarters, the former Public Works Department district engineering office, watchman’s quarters and a garage, was alienated to PDC. In 1998, PDC came under fire from heritage activitists when it demolished the 80-year-old buildings without local council approval to make way for a five-star hotel, which was to be developed by PDC Heritage Hotel. YTL Corp group managing director Tan Sri Francis Yeoh could not be reached for comment. By Business Times (by Marina Emmanuel) Source here Oct 30 2009 
So CAT like...the very the quiet one.

He would probably say that it was the previous state government who "agreed in principle" (here) but if it is against the National Land Code why did you proceed?

 The previous state government converted for payment in kind to CP for coming in as a white knight to rescue a failed project by PDC
Source here

If the State Government had to go to court over its conversion of the Queensbay. I wonder what is the status of the Bayan Mutiara Block and when was it converted to Freehold to prepare for the Bayan Mutiara "Tender"?

I look forward to your reply on the matter. Be a professional no need to demonize anyone. Kang aku pelempang kang bisu sebulan

Market players who are active in the real estate expects more of such "conversion" deals are coming.

Penang Projects to Gain from Conversion JUNE 2, 2008 A NUMBER of property projects in Penang, especially those on reclaimed land of the island and township developments by state agencies, can look forward to higher property value if the land tenure of these projects is converted to freehold from their current leasehold status. According to Real Estate and Housing Developers Association Penang chairman Datuk Jerry Chan, while most privately owned pieces of land are on freehold status, projects on state reclaimed land are mostly on leasehold land. Townships undertaken by state agencies in Bayan Baru and Seberang Jaya and commercial projects such as Komtar are also on leasehold basis. “The initiative to allow the conversion of leasehold residential land to freehold status is certainly welcomed as it will add value to leasehold property and development projects in the state. “It is a timely exercise to raise Penang's profile and attraction as a real estate destination,” Chan said. The projects that stand to benefit include IJM Properties Sdn Bhd's 350 acres of reclaimed coastal land along the Jelutong Expressway, which has a potential gross development value of RM6.5bil. Under a privatisation exercise in 1997 to build the Jelutong Expressway, IJM was granted the right to reclaim the land for property development. Development plans for an integrated waterfront township called The Light will comprise residential, entertainment, business, education and commercial components. Under phase one, six parcels of high-end residences will be developed over 17ha comprising 1,186 units. It is scheduled for completion in three to five years. Phase two will comprise a commercial and retail centre on 41.68ha while phase three would be developed into a 2.8ha seafront park.

Previously, there were also other sizeable leasehold property developments in the state that have been converted to freehold status. In October 2005, the former Penang state government allowed the 73-acre Queensbay land to be converted from leasehold to freehold. The Queensbay project, which was located on reclaimed land, was jointly developed by the state and a private developer. When the original developer was unable to continue with the project, the state government in a kind gesture granted the conversion of the freehold titles to the buyers as “compensation in kind”, as the developer (the state is also a partner) was unable to pay the liquidated damages. The CP group was invited by Bayan Bay Development Bhd to be the “white knight” to revive the project. Work started in 2005 and the project is scheduled for completion in 2013. here

I also wonder what are the Financial Conditions set to the "winner" in your "transparent selection process"

Source here

In case you are wondering on the actual payment from Ivory

A second three-month extension for the payment of the first instalment was approved by PDC on 3 February to allow more time for Ivory to fulfil “conditions precedent”. As you can see, Ivory is requesting a reduction of the interest due to PDC.

The following was announced to Bursa by OSK Investment Bank Bhd. Announcement Details/Table Section : We refer to the announcements on 11 November 2011, 5 December 2011, 30 December 2011, 6 January 2012, 9 January 2012, 30 January 2012 and 8 February 2012 in relation to the Proposals. Amongst the terms of the PDA and the supplemental letter dated 11 November 2011, Ivory is subject to the following:- (i) obtaining the approval of its shareholders within three (3) months from the date of the PDA; and (ii) to pay RM88,235,136 (“Balance Instalment”) within three (3) months from the date of the PDA. As at the date of this announcement, Ivory has yet to dispatch its circular to shareholders as it has received the approval from Bursa Securities on 3 February 2012. Further, the payment to PDC is still pending as the approval from Ivory’s shareholders is one of the condition precedents for the drawdown of its financing facilities.

On behalf of the Board, OSK wishes to announce that Ivory had, on 3 February 2012, received the approval for extension of time until 10 May 2012 from PDC for the following:- (i) to obtain its shareholder’s approval for the Proposed PDA; and (ii) to pay the Balance Instalment. The above extension of time is subject to interest. Any interest not accrued will be refunded to Ivory free of interest within fourteen (14) days after PDC’s receipt of the respective payments. Ivory is appealing to PDC to reduce the said interest.

This announcement is dated 8 February 2012. This is the second extension after the state agreed to an initial extension in November 2011 with interest at 8 per cent p.a. (here)

Well this is what happens when you award a "BerBillion Billion" contract to An AliBabeng

I still wonder why the State Government award the contract to this company. In the PDA it seems that the Company has the ability to even pass the project and the land to "Approved Nominees"

You all know who Ivory turned to get the funding

Source here

So folks what do we have here eh...

Interesting selection process!

Remember my post of Divident of Anti Corruption Measure "Milaka Mari Banyak Bunyi" (here)

In that post I identified that his "sterling performance" was nothing more than extra income from Land Conversion, Land Sales and some add on interest income due to the spike in the yield curve post Lehman collapse.

That was actually my first post on Penang, to be honest folks I'm bored of writing about someone who has no shame and kencing 24 jam.

This man is just an "accountant" who worked for a few years as a Bank Senior Executive before joining politics
Lim Guan Eng attended the La Salle Primary English School in Petaling Jaya and later the Batu Pahat Montfort Primary English School. For secondary education, he went to Batu Pahat High School and Malacca High School. He graduated from Monash University, Australia in Bachelor of Economics and was a qualified professional accountant by 1983. He was the president of MUISS (Monash University International Student Society). Prior to joining politics he was a bank senior executive. In 1986, he was elected as MP for Kota Melaka, by defeating former Malaysian football captain Soh Chin Aun with a majority of 17,606 votes. here
I guess this is what we get from his lack of experience in management.

Good luck people of Penang. I really wish the best for all of you.

I would like to personally thank Mr Anil Netto for his continuous efforts to raise awareness on the matter and also to Ong Eu Soon of Nibong Tebal who wrote to the media to expose this man (here and here) and Calvin Sankaran of Bukit Mertajam. Your writings on the subject matter have greatly assisted me in drafting this post.

I'm glad to see Penang folks standing up this egoistic tak bole nak kena tegur tryant.

By the way when will the first state Low Cost house be delivered in Batu Kawan with your "500 Million" CON-tribution?

GEORGE TOWN: The Penang government has increased its allocation from 150 acres (60ha) to 200 acres in Batu Kawan to build at least 7,300 quality affordable residential units priced between RM72,500 and RM220,000. Chief Minister Lim Guan Eng said the Penang Development Corp (PDC) has come up with a design concept for the people’s housing project estimated to cost billions of ringgit which is within the mega township development of Bandar Cassia in Seberang Perai Selatan. With excellent accessibility and connectivity to major highways, bridge links to Penang island including the second Penang crossing, major ports and airports, Lim said the scheme will complement the existing development in Bandar Cassia, the largest integrated township development in Penang. Lim said while PDC has come up with the concept, the state government would still call for an open tender for the project to get more suggestions and ideas and enable others to participate.

Earthworks for the entire 200 acres is estimated to take 18 months to complete but work will commence on 60 acres with completion targeted within nine months. Tenders for the first package comprising some 600 apartments are expected to be awarded by 1Q 2012 with construction targeted to commence by 2Q 2012. The whole development is targeted for completion in five to seven years. Lim said Penangites will be given priority for the units as the project will be heavily subsidised by the state government and PDC. here
Penangites or Penang Voters ?

GEORGE TOWN: Only Penang voters will be allowed to buy units at a huge low- and medium-cost and affordable housing project to be built by the Penang Development Corporation (PDC). The corporation has allocated a 60.7ha site in Batu Kawan on the mainland for the project, which will comprise high-rise units. Chief Minister Lim Guan Eng said the state government was imposing this requirement to ensure that only Penangites benefited from the project. (here)
Compare this to the actual conditions on Rumah Murah (here)

Kesian orang miskin tak nak jadi voter kat Penang....nak beli rumah murah pun tak qualify
Minds are like parachutes; they work best when open. -Lord Thomas Dewer