Friday, November 27, 2009

Convention Centre "For Free" and Pigs Can Fly

Minister of International Trade and Industry's statement that the Government is getting the MATRADE Convention & Exhibition Centre for “free” leaves Malaysians “flabbergasted”

In an astounding reply to the reporters at the Parliament, the Minister of International Trade and Industry (MITI), Datuk Mustapa Mohamed claimed that:
Matrade is not putting up a single cent. Otherwise we have to beg and steal and borrow from the government. But maintenance is, of course, ours. That building, when it is completed in four years, is going to be ours. We are getting the building for free, otherwise we have to pay RM628 million, which is a big amount of money.
The usually composed and competent Minister fondly known as Tok Pa, must have had a moment of madness for claiming that the Government will get Malaysia's largest convention and exhibition centre “for free” from Naza TTDI, when the latter is being paid with 62.5 acres of prime land.

The Minister had earlier replied in Parliament that the 62.5 acres of land given in exchange for the convention and exhibition centre was valued at RM197 million.

The reply still leaves Malaysians completely flabbergasted as the Minister expects us to believe that Naza TTDI, a private company belonging to the Naza Group which has milked billions from “Approved Permits” to import luxury cars via MITI is so charitable as to build a RM628 million convention and exhibition centre at the price of RM197 million. If what the Minister had said is true and accurate, Naza TTDI is in fact “donating” RM431 million to the Malaysian Government, and we should all be eternally indebted to Naza for its immeasurable generosity.

However, the Minister's reply only raises more questions, for there must be a catch somewhere in the entire exercise. At RM197 million for the 62.5 acres piece of land means it is valued at only RM72 per square feet, which is unbelievably low for the prime land between Mont Kiara and Jalan Duta.

In a report by The Star on the 18 November:
Sources valued the state land, when converted to commercial land, at between RM350 to RM500 per sq ft. “RM500 may be a bit on the high side, but it makes sense. The total gross development value (GDV) of all the projects on that 65 acres is going to be RM15bil. That means the market value of that commercial land of 65 acres is RM1.5bil,” Kumar said.

A source who declined to be named said at RM500 per sq ft, the land cost would comprise 10% of the total GDV of RM15bil that Naza is undertaking. In Singapore, the land cost can go up to 50% of GDV, in Hong Kong, it is 65% of total GDV. “If it is valued at RM350 per sq ft, the cost of land is about RM970mil. So it is around that range,” Kumar said.
Kumar Tharmalingam is the chairman of Hall Chadwick Asia Sdn Bhd, a leading property consultant in Malaysia. He is also a resident of FIABCI Asia Pacific Real Estate Federation and Secretary General of FIABCI Asia Pacific Secretariat, the International Real Estate Federation headquartered in Paris and a Board Member of FIABCI International based in Paris and Immediate Past President of FIABCI Malaysia, so he should certainly know what he is talking about.

Hence, even by taking the conservative estimate of RM350 per square feet by the experts, which works out to a valuation of RM970 million for the land paid paid to Naza TTDI, the Government is in fact paying RM342 million more than the stated RM628 million cost of building the Matrade Convention and Exhibition Centre! And if we take the higher estimate of RM500 per square feet, then the Government is in fact paying in excess of RM870 million! Under such circumstances, it will not be wrong to say that it is Naza TTDI which has received land from MITI “for free”.

When asked why was Naza TTDI awarded the contract without “open tender”, Datuk Mustapa Mohamed responded that it was because they were the first company to “propose the project”. Instead of reassuring the public, this reply has cemented the fact that the Barisan Nasional Government is addicted to cronyism for the Naza Group had intimate links with MITI having received hundreds of thousands of APs from the Ministry. It is now clear that due to the connections of Naza, they were able to table the convention and exhibition centre proposal to the powers that be at MITI and as a result, ensure that they will have exclusive rights to the project.

Datuk Seri Najib Abdul Razak's “second wave of privatisation” announced in the 2010 Budget is starting on a disastrous note, and his promise and commitment to “open tender” to “curb corruption and bring back the people’s confidence in the Government” lying in complete tatters.

Datuk Seri Najib Abdul Razak must immediately conduct a probe into the irregularities surrounding the project and make immediate rectifications to ensure that the income for all its existing assets are maximised. He must suspend the project pending the investigations, and all its outcome must be disclosed publicly to ensure that the final decision of the Government is able to withstand scrutiny.
Post a Comment