This was revealed in a May 2006 report of the Auditor-General on PKA for the financial year ended Dec 31, 2005.
Based on various media reports and statements by PKA, malaysiakini had earlier placed the PKFZ price tag at RM2.4 billion: RM1.09 billion to acquire the 405ha of land on Pulau Indah, and at least RM1.3 billion to build it up.
For that amount, eyebrows were already raised in view of the project’s questionable viability. The Selangor Freight Forwarders & Logistics Association described PKFZ as an example of a mega-project into which a lot of money, but not enough thought, was put.
Six months after its completion, PKFZ resembles a ghost town, with only about a dozen tenants instead of the anticipated crush of clients.
A May 2004 report of the Auditor-General revealed, however, the purchase of the land to have been higher at RM1.81 billion (inclusive of 7.5 percent interest) by RM720 million.
The report also said that while the development cost agreed upon in 2003 was RM519 million, this was raised to RM1.3 million following a “supplementary agreement” with the developer, Kuala Dimensi Sdn Bhd. The increase in development cost was not explained.
The report also said PKA then did not have sufficient financial resources to meet the RM2.9 billion obligation after having already paid an initial RM208.85 million (RM108.85 million for the purchase and RM100 million for the development of the land).
The Auditor-General’s subsequent remark that PKA “informed that the financing of the project will, from the year 2007, be under the 9th Malaysia Plan or through the formation of Malaysia Ports Commission (MPC)” fueled speculations that the derelict project was slated for a major government bailout.
Industry sources, when contacted, described as “scandalous” the use of the proposed MPC – while in principal a sound idea given the need for a central national port authority – to bail out a troubled public authority such as PKA.
The Auditor-General’s May 2006 report on PKA left out any mention of the MPC. He adds, however, that the Authority “is planning to obtain loans from financial institutions with the guarantee of the government of Malaysia as well as requesting grants to finance the project.”
To pay from 2007 to 2017
The Auditor-General also revealed that in 2005, the development cost increased by RM1.21 billion to RM2.51 billion due to “additional development works, professional fees and interest.”
Following the payment that had already been paid by PKA to Kuala Dimensi, the balance of RM4.11 billion shall be paid from 2007 until 2017 with an annual payment ranging from RM130 million to RM733 million, reads the report.
The initial payment for the land and development amounting to RM510 million shall be paid this year.
The Auditor-General also revealed that, as PKA’s liquidity at December 2005 consists of cash in bank and fixed deposits amounting to RM231.75 million and its surplus after tax was RM26.63 million, the Authority “needs to look for sources of financing to meet its capital obligation.”
Commenting on the matter today, Opposition Leader Lim Kit Siang said the whole project raises a question mark on the “viability, feasability, and integrity” of the whole project.
During a visit to the PKFZ this morning, the DAP supremo told reporters that the authorities and figures behind the project must explain its state of affairs. This, said Lim, includes the Transport Minister Chan Kong Choy and PKA chairperson Chor Chee Heung.
Both Chan and Chor have to explain how the latter’s appointment in view of Chor’s position as deputy chairperson of Wijaya Baru Global Bhd (WBGB) – which is behind the sale and development of PKFZ.
Lim also invited WBGB chief executive officer Tiong King Sing – who has claimed there is no connection between his company and Kuala Dimensi – to give a full disclosure on the matter.
Malaysiakini had earlier reported Chor as saying the issue of conflict of interest does not arise.
‘There is no connection’
According to records in the Companies Commission of Malaysia (CCM), Kuala Dimensi is owned by an investment holding and management firm Wijaya Baru Holdings Sdn Bhd (WBHSB).
At the same time, in WBGH’s 2006 annual report, Kuala Dimensi is listed as an “associate company” from which it derived “contract revenue”.
CCM documents show Tiong to be a director and shareholder in both WBGB and WBHSB, but he maintained that “there is no connection” between these companies either.
WBGB, WBHSB, and Kuala Dimensi occupy the same premises at Wisma Wijaya in Petaling Jaya, Selangor.
In September last year, WBGB was actually slapped with a “public reprimand” by Bursa Malaysia Securities Bhd for failing to make an announcement to the Exchange in relation to “the disposal of the Pulau Indah Land”.
WBGB had failed to send a circular to its shareholders pertaining to the transaction and obtaining the approval of its shareholders prior to the transaction being completed, said Bursa Malaysia Securities in a statement.
Bursa Securities said, however, that it has not found any of the WBGB directors to have caused or permitted the breach of the Bursa Securities Listing Requirements (LR) and only directed WBGH to “maintain appropriate standards of responsibility and accountability”.
PKA general manager OC Phang – who is also PKFZ managing director – did not respond to requests for comments.