By Lee Wei Lian
KUALA LUMPUR, July 22 — UDA Holdings Bhd sale of 3.6 acres of prime land in the capital was rejected by the Ministry of Finance because the buyer, public-listed company Nadayu Properties, failed the ministry’s Bumiputera test, says agency chief Datuk Nur Jazlan Mohamed.
The UDA chairman felt that the ministry’s decision would reinforce its image as inconsistent, potentially affecting investor and business sentiment at a time when it is trying to ramp up private-sector participation in the economy in an effort to transform Malaysia into a high-income nation.
“We wanted to sell the land to a listed company but it was not Bumi enough according to their rules,” he said when contacted by The Malaysian Insider. “The goal posts keep changing. The government does not operate with such restrictions (on land sales) but imposes restrictions on UDA.”
The ministry’s decision to veto the UDA board over the sale of land to Nadayu comes soon after it had apparently also overruled another government-owned entity, infrastructure builder and operator Syarikat Prasarana Negara Berhad, in their decision to award the LRT extension project to Ingress Corp-Balfour Beatty Rail.
Jazlan said he thought the government was being inconsistent as it recently sold land via open tenders in line with efforts to maximize revenue but was blocking UDA from selling land to a listed company that was about 54 per cent controlled by bumiputeras and that had offered the best price.
He pointed out that the MMC-Gamuda consortium had been appointed main contractors for the mammoth KL MRT project even though the two listed companies were not fully bumiputera controlled and that the Najib administration was preaching reform and liberalisation to attract investors.
“The inconsistency will affect sentiment,” the two-term Pulai MP said. “Businesses want certainty.”
Questions will now arise on whether the ministry will overturn UDA’s decision to rope in a foreign investor to develop the former site of the Pudu jail into a new commercial area.
Jazlan said that UDA had no immediate plans to sell the KL land located along Jalan Sultan Ismail, to another buyer, adding that the bumiputera development agency did not have the financial resources to develop the land itself.
He said that the Sultan Ismail land was sold to help raise funds to pay for the land premium due on its Pudu jail land that is slated to be developed into the proposed Bukit Bintang City Centre.
The Pudu jail land premium, which has been outstanding since the 1990s, now amounts to RM104 million and is due in September. If the premiums were not paid by September, Jazlan said that it could go up significantly as the valuation of the site next to KL’s main shopping district would have risen much higher since the 1990s.
He noted that if UDA had to go to a bank to raise funds for the land premium, it would result in encumbrances on the land, which UDA wanted to avoid.
UDA and Prasarana are not the only wholly owned government companies frustrated by interference from civil servants.
A Financial Times report in May said that the government’s investment holding company Khazanah Nasional Berhad was burdened by conflicting mandates and limitations imposed by the government on top of political interference.
When reporting on the finance ministry’s interference in the award of the LRT extension project, the Singapore Straits Times quoted political analysts and industry executives as saying that the “behind-the-scenes intrigue shows how opaque and non-transparent practices that have long characterised large public-sector contract awards remain the order of the day in Malaysia.”
It also said that the LRT deal was “a strong test case” for the Najib administration and the decision to override Prasarana was “likely to dull Kuala Lumpur’s efforts to attract much-needed foreign investment”.
Nadayu Properties, formerly known as Mutiara Goodyear Development, had bought the 3.6-acre plot of land along Jalan Sultan Ismail from UDA Holdings for RM215.5 million on July 12.
In earlier reports, Jazlan said Nadayu won the bid as the company had emerged with the best price, offering over RM1,400 psf compared with the market price of RM800 psf.
Nadayu had planned to build a 30-storey service apartment building, an eight-storey podium car park and a three-storey retail shopping complex on the site, next to the city’s entertainment zone, under the Greater KL development plans.
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