BarisaThe scandalous RM4.63 billion Port Klang Free Zone

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4th Police Report 
by Ronnie Liu Tian Khiew
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(Shah Alam, Saturday) : The Transport Ministry yesterday (24 Aug 2007) responded to reports over the bailout of the Port Klang Free Zone (PKFZ), explaining how the project cost ballooned to an estimated RM4.63 billion. It did not answer all pertinent questions raised by me (on behalf of the DAP) and various newspapers in earlier reports, the five-page statement partly attributed the huge cost to advice from the Jebel Ali Free Zone Authority (Jafza), which was managing the PKFZ until it decided to sever ties on July 18.

 "Initially, the project was to be completed in two phases on just 500 acres, with development cost estimated at RM400 million." However, following advice from Jafza, the Port Klang Authority (PKA) developed the free zone in a single phase utilising 1,000 acres (250ha), at a total cost of RM1.845 billion," the statement said.

It's not right to put the blame squarely on the Dubai consultant. A consultant is only a consultant. At the end of the day, the Transport
Minister of Malaysia made the decision. Our next question is, the stated development cost of RM1.845 billion was too high. We want the police to investigate and to check if there was any hanky-panky and who has pocketed the "extras".

The statement also stated that other elements that pushed up the cost to an estimated RM4.632 billion were interest of 7.5% (on loan to buy the land, payable over 15 years), a 10% professional fee and a variation order capped at 20% (if effected). The statement confirmed reports that 250ha were bought from Kuala Dimensi Sdn Bhd (KDSB) at RM25 per sq ft for development of the free zone, although government valuers had estimated put it at about RM10 psf.

The ministry explained that the RM25 price tag included improvement works such as reclamation and irrigation works, constructing a road, bridge and street lights, water supply and payment to utility companies. Although the price tag was RM1.088 billion, the final cost would be RM1.807 billion considering that the payment would be made over 15 years, with interest at 7.5% per annum. As the cost was high, the ministry said the government had approved a loan to the PKA as the PKFZ was a project to help spur economic growth, create job opportunities and offer ancillary support services and business activities.

"Details of the loan are being ironed out."

To begin with, PKA should not have bought the 1,000 acres of land from Kuala Dimensi. All it needed to do was to apply land directly from the Selangor state government. The owner of Kuala Dimensi is Bintulu MP Tiong King Sing. What kind of relationship between the then Transport Minister Ling Liong Sik and Tiong King Sing?

Even if it needs to buy land from Kuala Dimensi, why should it be so costly? Ling Liong Sik should know that Kuala Dimensi bought the land from the Pulau Indah Malay Fishermen Cooperatives for a price ranging from RM 1.9 to RM2.9 psf just a few years earlier.

On the fallout with Jafza, the ministry re-iterated the authority's press statement on July 18 that Jafza was looking at business
opportunities where it could hold equity. Where the PKFZ was concerned, the PKA held 100% equity." However, this does not affect
future cooperation between Jafza and and PKA," it said, adding that the free zone has been in operation since Nov 1 last year and has 30
investors who pumped in RM725 million. The project was completed on Oct 31 last year, with additional works to be finished at the end of this year.

The PKA will continue operating the free zone through its subsidiary, PKFZ Sdn Bhd. It said the PKA has established a one-stop committee to help investors to get speedy approvals, among others.

On the fallout with Jafza, we want to know why they have left abruptly? And was it true that the chief consultant Noel Gulliver was
expelled from Malaysia because PKFZ refused to apply for a work permit for him?

It added that the PKA will embark on trade missions to woo investors, with the help of Mida/Matrade and foreign marketing firms to attract markets in Europe, China and India. "We are confident of an 80% occupancy in five years," the statement said.

Our question is, why builds so many units of warehouses and leased office blocks when there was no taker? Why was there no effort to find investors before we lodged police reports this year? And where is confidence of getting 80% occupancy stems from (or just a figure plucked from thin air)?

My other questions include:

Why build a 4-star hotel with 215 rooms here?
Why build a dedicated highway here?
Why buy 1,000 acres when you only need 500 acres?
Why appoint the same lawyer for the seller (Kuala Dimensi) and buyer (PKA)?
Why appoint Chor Chee Heong as the chairman of PKA when he is already the deputy chairman of Wijaya Baru/ Wijaya International (owner of Kuala Dimensi)?
Why extend O C Phang's service as the GM for PKA for 5 times?
Why appoint O C Phang as the CEO of PKFZ when she is already the GM of PKA?
Why Chan Kong Choy, the Transport Minister, still keeping quite when the PM has already asked him to explain to the public about two weeks ago?
Who were responsible for changing the minutes of meetings as alleged by Jafza?
Was it true that there were attempts to evade tax as alleged by Ernst & Young?
Was it true that there was a plan to demolish all the 512 units of warehouses because they were of wrong design and not practical?
Was it true that the accumulated loss of PKA has exceeded RM 3 billion?
Was it true that PKFZ needs to pay more than RM500 million for the loan beginning from this year for 15 years? Wouldn't these will add up to more than RM7.5 billion in 15 years down the road.
What were the roles played by the two former PKA chairperson, Ting Chew Peh and Yap Pian Hon?
Was there a breach of trust both by the former and current Transport Minister?

The PKFZ scandal has tarnished the image of Malaysia and certainly has seriously affected the confidence of investors both overseas and locals.

This is my 4th police report. There was no action taken by the police for all my three reports, one in 2004 and two in 2007. Stop
disappointing a concerned citizen who acts on public interest.        

(25/8/2007)