PETALING JAYA: The Finance Ministry must explain why a prime 75-acre plot in Bandar Malaysia was locked in for up to 30 years, yielding returns of less than one per cent a year, before the deal was cancelled with RM46.6mil paid in compensation, says MCA president Datuk Seri Dr Wee Ka Siong.
He said the land – part of the 486-acre Bandar Malaysia development valued at about RM12bil – is a “strategic commercial asset” in the heart of Kuala Lumpur, near two MRT stations and only one or two stops from Bukit Bintang and the Tun Razak Exchange (TRX).
“This is not some plot at the edge of a forest. On a simple estimate, the 75 acres alone would be worth around RM1.8bil,” he said on TikTok on Tuesday (May 12).
Yet, Wee said, on Nov 1, 2023, the government, through the Finance Ministry, signed an agreement to lease the land to Singapore company Sim Leisure Group for 15 years, with an option for a further 15.
“Why was almost RM2bil worth of strategic land locked up for as long as 30 years when the projected annual return to the government was not even 0.8 per cent of the land value?” he asked.
Under the agreement, he said, the rent was set at a minimum RM3mil a year – inclusive of assessment and quit rent – or five per cent of the project’s gross revenue, whichever was higher.
“RM3mil a year for 75 acres works out to about 7.65 sen per sq ft per month. That is an absurdly low rate for strategic commercial land in Kuala Lumpur,” he said.
“What is even more puzzling is that the first 18 months were rent-free. The land was already tied up for the project but Bandar Malaysia received no rental at all.”
Citing Sim Leisure’s projections, Wee said the project’s first year of operations was expected to generate RM68.8mil in revenue, which meant Bandar Malaysia’s 5 per cent share would have been only about RM3.4mil – roughly a 0.19 per cent return on the land value.
“By year 30, revenue was forecast at RM283mil. Bandar Malaysia’s five per cent would be around RM14mil, still only about 0.76 per cent of the land value – not even 0.8 per cent a year,” he said, adding that the five per cent gross-revenue rate was lower than the current eight per cent sales and service tax.
He said it was therefore not surprising that the government eventually scrapped the deal – but the termination meant Malaysia now had to pay RM46.6mil in compensation barely a year after signing the agreement.
“The questions are obvious. Who negotiated this agreement? Who approved such terms? Why was land worth nearly RM2bil committed for such meagre returns?
“And why must Malaysian taxpayers now bear RM46.6mil in compensation arising from the Madani government’s own decision?” he said.
Wee said this was not a minor operational issue but a decision involving the Finance Ministry and must be thoroughly investigated. - THE STAR