Wednesday, November 23, 2011

1MDB Got Sg Besi Land for a Steal

Did the Government subsidise 1MDB by more than RM3 billion by “selling” the 495 acres of prime land in Sg Besi to 1MDB for only RM1.6 billion?

We would like to call upon the Government to confirm that the 495 acres of land in Sg Besi, or the existing RMAF Sungai Besi airfield has been sold in June this year to 1Malaysia Development Bhd (1MDB) for RM1.6 billion or only RM74.20 per square feet.

If true, then this prime land is sold without any tender to 1MDB at a ridiculously low price at the expense of the Government tax payers.

Recently, the Penang state government has conducted an open tender for 101 acres of land, of which 65% of the area still needs to be reclaimed. The winner of the bid offered RM1.07 billion or RM240 per sq ft.

There can be no doubt that the land in Sg Besi surrounded by developed infrastructure will be worth well in excess of the market price of land in Penang, given its unbeatable location in Kuala Lumpur. At RM240 per sq ft, the Sg Besi land should already be worth a whopping RM5.2 billion. Despite its high potential valuation, the Government has chosen to transfer the land to 1MDB for only RM1.6 billion or RM3.6 billion less.

It would not be a far from the truth to say that the land could be worth a lot more given its development potential compared to other pieces of land in Kuala Lumpur which are valued at in excess of RM500 per sq ft.

The sale of land to 1MDB at such subsidised and preferential prices will only lead to the loss of revenue to the government for additional investments and programmes for the people. In addition, any profits generated by 1MDB as a result of development on Sg Besi will be inflated as it was handed the land at bargain basement prices.

The Prime Minister has clearly failed to meet his own promise of “open tenders” and maximising income from undeveloped land. Just before he took over the premiership, he was reported in The Star (5 Nov 2008) to have said:

Open tenders to ensure transparency and value for money as well as to generate more income will be the way forward for the Government. Deputy Prime Minister Datuk Seri Najib Tun Razak said the Government would ensure that a large portion of government procurement would be via open and restricted tenders... Najib said that the Government planned to maximise income on all its existing assets, including on parcels of land that have not been developed, via open tender.

On the contrary, it is the Pakatan Rakyat Penang state government which has walked the talk by practising its policy of “Competency, Accountability and Transparency” by implementing open tenders which have maximised revenue for the state government on its assets. This in turns allow the state to implement additional development and welfare programmes to help the man on the street.

We call upon the Government to disclose in full the terms of the agreement on all land sale to 1MDB and explain why 1MDB has been given such unfair preferential treatment, which will in turn only crowd out investments from the private sector.
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