GEORGE TOWN, Oct 3 — A proposed Byram Industrial Park project was awarded to a company without an open tender due to a business matching exercise in EXPO Dubai 2020, Penang Chief Minister Chow Kon Yeow explained today.
Responding to questions by the Penang Chinese Chamber of Commerce (PCCC) about the lack of an open tender for the project located in South Seberang Perai, the Penang lawmaker admitted that the deal was completed through direct negotiation.
“A direct negotiation project is one of the ways to get a good offer for this project,” he said in a statement issued today.
He said UMECH Construction Sdn Bhd was selected as a collaborative partner with Penang Development Corporation (PDC) to develop a new industrial park as a result of the project being promoted at the EXPO Dubai 2020.
Chow said PDC had promoted the proposal to develop the land in Byram into an industrial park at EXPO Dubai 2020 to attract interested investors in developing the land.
He said the land is located near the Pulau Burung landfill so the costs of developing the land with amenities and infrastructure to turn it into an industrial land will be costly and challenging.
“Due to these challenges, efforts to attract investors were difficult,” he said.
He said the state delegation led by the then state exco Datuk Abdul Halim Hussain had promoted the project through the media and the Malaysian Investment Development Authority (Mida) to bring in high impact investors with a target investment of RM1 billion.
“During a business matching session in EXPO Dubai 2020, UMECH had voiced their interest to invest in the project and they arranged a discussion with the funder involved,” he said.
He said as a result of the discussion, UMECH convinced PDC that it could implement the project with the support of the funder in Dubai.
“The selection of UMECH was according to procedures and due diligence was conducted carefully,” he said.
He said a special committee was also formed to study the proposal by UMECH and a discussion on the project was held on November 28 last year.
He said a proposed collaborative with UMECH was brought up to the PDC board meeting for approval on February 9 this year.
He said previously, the Aspen development covering 245 acres and the university development by Paramount Property Sdn Bhd in Bandar Cassia were also both conducted through direct negotiations.
“All those projects have successfully changed the development landscape in Bandar Cassia and is now categorised as a catalyst or high impact project,” he said.
He said the current for Bandar Cassia Technology Park in Batu Kawan is RM80 per square feet as it is ready land completed with infrastructure.
Therefore, the price for the Byram raw land is based on an “as is where is” basis so it will not be at the same rate, he added.
He said it was estimated that UMECH may have to fork out costs of about RM500 million to get the land ready by building infrastructure such as land works, electrical wiring, sewage treatment plant, road works and others.
While the industrial land price for Byram is yet to be fixed in the collaboration with UMECH, Chow said PDC has fixed an instalment payment schedule while taking into account the appreciation of the land value according to the year of payment.
“Using this method, PDC will not lose opportunity cost and at the same time, is able to monitor the performance of the project implementation by UMECH,” he said.
The land in Byram covers a total 1,235 acres but the collaboration with UMECH only involved 500 acres of the land.
Chow also said UMECH has a paid-up capital of RM10 million and based on a CTOS search, it does not have any debts and was not on any blacklist.
He also said UMECH is yet to sell any of the lots in the industrial park as the land ownership is yet to be transferred to UMECH.
“PDC believes that UMECH had conducted a feasibility study to get market reactions to the project and that they found this project to be feasible so they went ahead with the collaboration with PDC,” he said.