BERITA DAILY LETTER: From Eric See-To, via e-mail
Newspaper headlines have reported that the DAP Penang state government said they have not paid a single sen to the contractors for the Penang Tunnel project so far.
While technically true as the payment was not in cash, it ignores the fact that payment has indeed been made by the Penang state government in the form of state land given to the contractors.
This was then confirmed by the Penang Chief Minister who said that the payment was done by transferring state land to the developers – totalling 3.7 acres (1.49ha) with at a value of RM1,300 per sq ft which he claimed is above market price.
Market value is also a function of what development plans have been approved by the state government. Such approvals including conversion of land and development density can greatly increase the market value of the land after it was given.
That is why land prices such as high as RM3,000psf and RM4,000psf are regularly transacted in Kuala Lumpur.
These two pieces of land given as payment by the Penang government are prime seaside freehold land at the exclusive Seri Tanjung Pinang.
The land payments have already been made despite the full RM305 million feasibility reports are yet to be completed and not a single road or tunnel construction has yet to start.
On the first piece of land measuring 3.67 acres, the Penang government had already granted a development approval shortly after giving the land to the contractors which increased the development density to 156 units per acre from the 30 units per acre limit that had previously been in effect in that area several years ago – a move that significantly increased the market value of the land.
As a result, sales and construction has already started in the year 2015 on two 39-storey condominium blocks with a Gross Development Value of RM800 million where the developers have gone on record to say they will make RM200 million in gross profits – a profit margin of 25%.
If the land was indeed over-priced then the developers would not have been able to develop a project of this value and with such a good profit margin.
The Penang government should not pre-empt or interfere with MACC’s investigations by issuing statements that will confuse the people.
Let MACC do its job. If there is nothing to hide, there is nothing to fear.
Eric See-To is deputy director of Barisan Nasional Strategic Communications.