Bayan
Mutiara is a prime land, given its proximity to the
Bayan Lepas free
trade zones, the international airport and also the second
Penang
Bridge.
Comment by KHOO KAY PENG
There are still several questions left unanswered by the Penang government over the sale of the prime property.
SEVERAL
Penang-based analysts and local community leaders have questioned the
Penang government for selling a 41.5ha plot of prime
state land to a
private developer, Ivory Properties Group Berhad, for RM1.07bil.
Their
concern is understandable due to scarce availability of state-owned
land on the island which may hinder the ability of the state government
to drive a balanced development and ensure it does not drive out the
lower middle-income group from the area.
Most private property
projects on the island are focused primarily on premium and luxury
property which have driven up prices beyond the reach of most
Penangites. There is worry that the sale of the state-owned Bayan
Mutiara land to a private developer may end up in a similar fate.
Apart
from escalating property prices, there is a concern that the land may
have been sold below the prevailing
market value. The state government
had explained that the current selling price was above market value at
the time of transaction.
However, it does not explain if it is
usual to allow the purchaser a period of five years to settle the full
payment. Did the transacted price factor in any interest payment accrued
by the five-year payment period?
The opportunity cost derived
from a potential increase in land premium over the next five years
should be included to ensure that it is a fair deal.
Accusations
and allegations of a lack of transparency in the tender process should
be comprehensively addressed by the state government. Critics had
alleged that the sale was done through direct negotiations between the
state government and the purchaser.
Without justifying the
five-year payment period, these allegations will create doubt over the
much acclaimed transparency and accountability of the state
government.
Moreover, the allegations are peppered by talk that a
bidder who is prepared to make a full payment for the purchase was not
selected during the tender process.
Some analysts have questioned
how can the sale benefit the people? They wonder why the development of
Bayan Mutiara cannot be taken up by the Penang Development Corporation
(PDC) which has the capacity and experience to handle people-centric
development projects such as the Penang
Free Trade Zones, housing
estates, Komtar and others.
Regrettably, the issue of public
accountability and good governance has been grossly politicised by
certain parties. Politicians have gone to the extent of throwing down
the gauntlet of challenging each other to resign over false allegations
related to the
land sale. We expect such showmanship from politicians
but we deserve straight and accurate answers from them.
Politicising
this issue is going to deprive many concerned stakeholders a chance to
ask relevant and legitimate questions about the decision to sell the
land to a private developer.
Chief Minister
Lim Guan Eng had
described allegations of wrongdoing over the tender award for the Bayan
Mutiara mixed development project by PDC as “a pack of lies”.
While
some of these allegations may be malicious, it is pertinent for Lim’s
administration to identify legitimate concerns over the sale. He should
acknowledge that the state government controls less than 5% of total
land size on the island and this calls for a prudent and strategic
management of state-owned prime land.
Hence, it is best for his
administration to address these issues immediately in order to convince
the people of Penang that it has taken the best interests of the people
into consideration before agreeing to the sale. Major issues include:
>
What was the rationale to allow a five-year payment period to the
purchaser? It gives an impression that the purchaser may not have
secured financing for the purchase.
> Is it true there was another bidder who was prepared to pay an upfront full payment for the asking price?
> Did the transacted price factor in any interest charges or projected land price appreciation over the next five years?
>
Is there any restriction or precondition between the state government
and the purchaser to discourage any sub-sales? If the purchaser were to
divide and resell some parcels of the land to other developers at a
higher premium, it may further drive up property prices on the island.
If such sales were allowed, is the state government entitled to a share
of the higher premium?
> It is understood that the government
would like to use the proceeds from Bayan Mutiara land to finance its
low-cost housing scheme in
Batu Kawan. While the low-cost housing scheme
is welcomed and encouraged, the state government needs to justify if
the sale of Bayan Mutiara land is the best option to help finance the
project.
> Lim said part of the RM500mil financing for the
housing scheme came from the state coffers. If this is the case, what is
stopping the state from raising money through external sources to fund
the entire project and carefully weigh all options to optimise the use
of the Bayan Mutiara prime land bank?
Bayan Mutiara is no longer
about selling above the current market value but the use of scarce prime
land on the island for the purpose of socio-economic transformation.
Ownership of prime land is very crucial for the state government to
drive the state’s economy.
We do not want a repeat of high
premium-reclaimed lands being sold to private developers who in turn
inflate property prices in Penang and raked in billions in profit at the
expense of the people.
Bayan Mutiara could be what the state
government needs to help transform the landscape of Penang and create
new attractions to boost its attractiveness as a tourism and cultural
destination and a services hub.
Time will judge if the current
state government has made the right decision on Bayan Mutiara and if the
proposed plan is not going to turn out to be just another expensive
commercial project by a private
property developer.
>
Khoo
Kay Peng is an independent policy analyst and a management consultant.
He was born and raised in Penang. Khoo can be contacted at kpkhoo@gfworld.com.my.
Poser over Penang Bayan Mutiara deal