The company had to purchase the land from the owner, Kuala Dimensi Sdn Bhd, at the prevailing market prices because it could not obtain it through the Acquisition of Land Act 1960.

The land was issued with a development order and it therefore had economic value. Land acquisition under the Act can only be made for public purposes whereas the company had earmarked it for economic purposes. The land, therefore, could not be acquired under the Act, said PKFZ Sdn Bhd executive chairman Lim Thean Shiang yesterday, clarifying media reports published on Monday.

On Sunday, Transport Minister Datuk Seri Ong Tee Keat released the PKFZ chronology to the media.

Lim said PKFZ Sdn Bhd agreed in 1999 to a price of RM25 per sq ft, a total of RM1.088bil, for the land with its development order and with infrastructure that is now completed.

The total cost of the PKFZ project, including this land cost, office complexes and other construction costs, is RM4.6bil.

The payment terms, somewhat similar to that of private finance initiative or PFI, are to be paid over a 15-year period. The payments are made to bondholders, mainly financial institutions.

Lim said that so far, PKFZ Sdn Bhd had paid RM1.38bil to bondholders under the scheduled payment terms.

That leaves a balance of about RM3.22bil to be paid under the schedule.

PKFZ Sdn Bhd funds this projectthrough a long term soft loan at an interest rate of 4% from the Ministry of Finance.

On the termination of Dubai-based Jebel Ali Free Zone International (Jafza) as the manager of PKFZ last year, Lim said it was over differences of its corporate policies and Malaysia’s tax regulations and national interest.

Jafza proposed tax incentives for 50 years but Malaysia’s tax regulations allow for such incentives if approved by the Ministry of International Trade and Industry, for 10 years only, Lim said.

Jafza’s role at that time was to promote and market PKFZ which was then modelled after the Jebel Ali Free Trade Zone in Dubai. Following the parting of ways, PKFZ Sdn Bhd took over that role for the zone in Port Klang.

PORT Klang Free Zone Sdn Bhd (PKFZ), which manages and markets the RM4.6 billion free zone in Pulau Indah, Selangor, has begun a campaign to allay negative perceptions about it and its operations.

It is in talks with potential investors and working with trade associations to win them over after being recently hit by controversies surrounding the project, a senior PKFZ official said.

Critics of the project had questioned the project’s development cost which had ballooned from an original estimate of RM100 million to RM4.6 billion, including land acquisition.

“When investors ask me about the controversies (involving the cost of developing the project), I ask them whether they are a politician or a businessman … because invariably a businessman will see the viability of the development,” PKFZ general manager for business development Chia Kon Leong told Business Times yesterday.

He was speaking after a visit by the Public Accounts Committee (PAC), which is investigating the PKFZ project’s operations following recent controversies.

A 16-member delegation comprising members from the Audit Department, the Finance Ministry and PAC headed by Datuk Shahrir Abdul Samad, had toured the PKFZ site earlier.

Shahrir, after the meeting, questioned why a provision had been made in the PKFZ project for additional expenditure of 20 per cent to be factored into the RM2.8 billion development cost.

“We are curious about this 20 per cent provision.This has been factored into the RM2.8 billion development cost,” he added.

He said the Port Klang Authority, which owns the free zone, has agreed to get back to the PAC with an explanation for the provision.

Shahrir said the PAC was satisfied with explanations so far, but he added: “We are not finished with PKFZ. We will have a briefing with the Attorney General.

“Then we will look at other areas before we table a report to the Dewan Rakyat.”

“We are not a group of anti-development people. We are interested in the financial procedure. We want to know how the cost overrun occurred in a government project,” he said.

The project first raised eyebrows when PKA bought 405ha in Pulau Indah in 2002 for RM1.088 billion, or RM25 per sq ft from Kuala Dimensi Sdn Bhd.

The land purchase was followed by RM1.845 billion in costs for the development of the zone.

In July, the then zone operator Jebel Ali Free Zone Authority withdrew from a contract to manage the PKFZ.

Last month, the Transport Ministry said the government had agreed to extend a loan for an unspecified amount to PKA to help cover the cost of the project which had ballooned to RM4.6 billion.

To date, PKFZ has 32 confirmed investors, taking up 31.2ha of open land for development and investing some RM725 million into the free zone.

Chia said there are another 12 customers that have booked 98 acres for
construction.

These investors are in the process of obtaining licensing, but have not signed any agreement or put up a deposit with PKFZ.

A MEETING between the Public Accounts Committee and Port Klang Authority (PKA) officials has raised more questions than answers.

PAC chairman Datuk Shahrir Abdul Samad said the committee was “unsatisfied” with how the meeting went.

“The problem with the Port Klang Free Zone is far bigger than what the papers have reported,” he said yesterday.

“Far too many questions were left unanswered.”

When asked whether he was satisfied with the discussion, Shahrir said: “Look at us (the committee members). You can see from our body language that we are not.”

The two-hour meeting was meant to allow the PAC to question PKA officials on the RM4.6 billion Port Klang Free Zone (PKFZ) project.

The project first raised eyebrows when PKA bought 405ha in Pulau Indah in 2002 for RM1.088 billion, or RM25 per sq ft, from Kuala Dimensi Sdn Bhd. The land purchase was followed by RM1.845 billion in costs for the development of the free trade zone.

In July, port operator Jebel Ali Free Zone Authority (Jafza) withdrew from a contract to manage PKFZ.

Last month, the Transport Ministry said the government had agreed to extend a loan of an unspecified amount to the heavily-indebted PKA to help cover the total cost which had ballooned to RM4.6 billion, including interest and other charges.

Shahrir referred to the auditor-general’s report on PKA for the 2005 financial year, showing PKA’s liquid assets to be inadequate in financing its capital obligations.

“According to the report, PKA’s liquidity as of December 2005 was RM231.75 million, while the tax surplus was RM26.63 million, so PKA would need additional financing to meet its capital obligations of RM4.11 billion.”

Those present at the meeting included PKA general manager Datin Paduka O.C. Phang and Transport Ministry secretary-general Datuk Zakaria Bahari.

KLANG: Kos bagi projek pembangunan Zon Bebas Pelabuhan Klang (PKFZ) di Pulau Indah, Selangor meningkat kepada RM4.632 bilion selepas Lembaga Pelabuhan Klang (LPK) memutuskan untuk memajukannya serentak bagi keseluruhan kira-kira 400 hektar kawasannya.

Kementerian Pengangkutan dalam kenyataannya menjelaskan, mulanya PKFZ dicadangkan untuk dilaksanakan dalam dua fasa membabitkan sebahagian tanah seluas kira-kira 200 hektar dengan kos pembangunan dianggarkan sebanyak RM400 juta.

Bagaimanapun, atas nasihat Jebel Ali Free Trade Zone (Jafza) yang ketika itu bertindak sebagai pengurus zon bebas berkenaan, LPK membangunkannya secara serentak membabitkan keseluruhan 400 hektar kawasan dengan kos RM1.845 bilion.

“Selepas mengambil kira kos pembelian tanah, kos pembangunan bersama dengan kos faedah 7.5 peratus, yuran profesional 10 peratus dan kos-kos lain yang hanya dihadkan kepada 20 peratus jika digunakan, jumlah kos keseluruhan PKFZ adalah dianggarkan berjumlah RM4.632 bilion,” katanya.

Mengenai kos keseluruhan pembelian tanah, kementerian itu berkata, harga RM1.088 bilion atau RM25 sekaki persegi yang dibayar LPK kepada Kuala Dimensi Sdn Bhd (KDSB) bagi 400 hektar tanah tapak PKFZ itu adalah berdasarkan penilaian Jabatan Penilaian dan Perkhidmatan Harta selepas mengambil kira kerja-kerja prasarana yang dilaksanakan di tanah berkenaan.

Kerja prasarana itu termasuk penambakan tanah, perparitan, pembinaan jalan masuk dan jambatan, penyediaan lampu jalan, bekalan air serta bayaran kepada agensi utiliti.

Selepas mengambil kira bayaran kadar faedah 7.5 peratus kerana tempoh pembayaran kepada KDSB bagi pembelian itu dibuat dalam tempoh 15 tahun, jumlah keseluruhan kos pembelian tanah ialah sebanyak RM1.807 bilion.

Memperincikan kos pembangunan PKFZ, kementerian itu berkata, sejumlah RM1 bilion dibelanjakan bagi membina kemudahan utama merangkumi empat blok bangunan pejabat lapan tingkat untuk sewaan, 512 unit bangunan untuk industri ringan, pejabat Pihak Berkuasa Zon Bebas serta pejabat kastam dan laluan pemeriksaan, sebuah pusat pameran, tempat meletak kereta bertingkat serta bangunan keselamatan.

Sebanyak RM845 juta pula dibelanjakan bagi menaik taraf simpang masuk dan jalan raya, kerja infrastruktur elektrikal, pembinaan hotel kelas perniagaan, kerja penanaman kabel sepanjang 42 kilometer, dan kerja elektrikal lain.

Kementerian itu berkata, berikutan kos keseluruhan PKFZ membabitkan kos yang tinggi, kerajaan bersetuju meluluskan pinjaman mudah kepada LPK bagi membolehkannya membiayai kos pembangunan PKFZ dengan butirannya sedang diuruskan.

“PKFZ adalah projek nasional membabitkan penyediaan infrastruktur untuk membantu pertumbuhan kargo di Pelabuhan Klang, menjana pertumbuhan ekonomi negara, mewujudkan peluang pekerjaan dan perkhidmatan, serta aktiviti sampingan,” katanya.

Kementerian Pengangkutan juga berkata, kerajaan menghormati keputusan Jafza mengundur diri daripada perjanjian pengurusan zon bebas itu yang dimeterainya dengan LPK pada Oktober 2003. Tindakan itu bagaimanapun tidak akan menjejaskan kerjasama dan peluang perniagaan antara JAFZA dengan LPK pada masa depan.

LPK dan Jafza menamatkan kontrak pengurusan dan pentadbiran bagi zon bebas itu atas persetujuan bersama pada 18 Julai lalu berdasarkan perubahan dasar semasa syarikat berpangkalan di Dubai itu.

Projek PKFZ sebelum ini dilaporkan dikritik peserta industri logistik yang mengatakan ia berdepan risiko untuk menjadi projek gajah putih. Mereka juga mempersoalkan bagaimanapun kos pembangunannya meningkat begitu tinggi.

Turut mendapat perhatian ialah harga bagi pembelian tanah bagi tapak zon bebas itu yang dikatakan terlalu tinggi. Laporan sebelum ini menyebut, kerajaan negeri memberikan tanah berkenaan kepada Koperasi Pembangunan Pulau Lumut (KPPL) yang kemudian menjualnya kepada KDSB pada harga RM95 juta atau RM3 sekaki persegi.

INFO

PKFZ

* Konsep berdasar model Zon Bebas Jebel Ali di Dubai tetapi disesuaikan dengan persekitaran tempatan dan serantau

* Kedudukan strategik bersebelahan Westports di Pulau Indah

* Pembangunan di kawasan 400 hektar dengan kemudahan bercampur.

* Beroperasi November 2006

* Sebanyak 30 syarikat dalam dan luar negara menyertainya.

KUALA LUMPUR: The Public Accounts Committee (PAC) will find out whether the government loan extended to the Port Klang Authority (PKA) for the RM4.6 billion Port Klang Free Zone (PKFZ) constitutes a “bailout”.

PAC chairman Datuk Shahrir Samad said that although public sentiment was convinced the loan was a rescue operation, investigations had to be carried out before such a conclusion could be reached.

“We have to investigate the matter first. Once an investigation has been made, I will meet other PAC members and get to the bottom of this,” he said.

According to sources in the PAC, the parliamentary watchdog’s upcoming meeting on the PKFZ controversy will focus on two questions: Whether the soft loan amounted to a government bailout and whether the pullout by the Jebel Ali Free Zone Authority (Jafza) has affected foreign investor confidence in Malaysia.

Jafza withdrew from a contract to manage the PKFZ last month.

The project first raised eyebrows when PKA bought the 405ha in Pulau Indah in 2002 for RM1.088 billion or RM25 per sq ft from Kuala Dimensi Sdn Bhd.

The land purchase was followed by RM1.845 billion in costs for the development of the free trade zone.

On Thursday, the Transport Ministry said the government had agreed to extend a loan of an unspecified amount to the heavily-indebted PKA to help cover the total cost of RM4.6 billion, including interest and other charges, for the PKFZ.

The ministry maintained that the PKFZ was a national project which would enhance Port Klang as a loading centre, stimulate the economy, create spin-off activities and provide jobs.

Kalangan ahli ekonomi dan komuniti perniagaan sepakat bahawa penyediaan prasarana logistik yang lengkap seperti pelabuhan dan zon perdagangan bebas berkelas dunia akan membantu meningkatkan daya saing dan kedudukan Malaysia sebagai negara perdagangan.

Penasihat Majlis Pelaksanaan Kebangsaan, Datuk Dr Zainal Aznam Yusof, berkata pembangunan pelabuhan dan zon bebas seperti Zon Bebas Pelabuhan Klang (PKFZ) adalah pendekatan serampang dua mata bagi memperkukuhkan rantaian eksport import merangkumi kemudahan tapak perniagaan dan gudang serta pelabuhan.

“Sebagai negara perdagangan, kita perlu sokongan prasarana dan sistem logistik yang mantap. PKFZ akan membantu pelabur menikmati keberkesanan kos menerusi operasi eksport import yang lebih pantas dan tersusun,” katanya ketika dihubungi di sini, semalam.

Beliau mengulas mengenai kewajaran pembinaan PKFZ bernilai RM4.632 bilion di tapak seluas 400 hektar di Pulau Indah, Selangor. Projek itu mencetuskan kontroversi kerana pelbagai pihak mendapati kos pembinaannya terlalu tinggi, selain mempersoalkan kurangnya aspek ketelusan dalam pembinaan projek itu.

Zainal Aznam berkata, meskipun negara memerlukan kemudahan prasarana seperti PKFZ bagi memperkemaskan sistem logistik negara, tetapi perhatian mesti ditumpukan terhadap daya saing kos pembinaan kemudahan itu.

“Bagi membolehkan kita menjadi pengendali dan penyedia perkhidmatan yang berdaya saing, kos pembinaan mestilah munasabah,” katanya.

Pengerusinya, Datuk Shahrir Samad, berkata pihaknya sedang mengumpul maklumat mengenai setiap aspek berkaitan, termasuk bagaimana kos projek itu boleh meningkat sehingga kerajaan terpaksa meluluskan pinjaman mudah kepada LPK.

Beliau berkata, PAC tidak terburu-buru bertemu dan mendapatkan keterangan LPK mengenai kontroversi berkenaan sehingga selesai penyelidikan dan memperoleh semua maklumat berkaitan.

“Memang banyak perkara nak dibincangkan dengan LPK, tetapi sebelum itu kita perlu buat persiapan rapi, termasuk mengumpul maklumat dan penyelidikan terperinci supaya memudahkan kita apabila bertemu mereka.

“Kita kena kaji setiap perkara sebelum kita dapat mengemukakan pelbagai soalan, termasuk mengapa terpaksa membuat pinjam daripada kerajaan dan bagaimana kos pembinaan boleh melambung naik,” katanya ketika dihubungi di sini semalam.

Kelmarin, Kementerian Pengangkutan berkata, kos bagi projek PKFZ di Pulau Indah, Selangor beroperasi November tahun lalu, meningkat kepada RM4.632 bilion selepas LPK memutuskan untuk memajukannya serentak bagi keseluruhan kira-kira 400 hektar kawasannya.

Jumlah kos keseluruhan PKFZ itu, termasuk kos pembelian tanah, kos pembangunan bersama dengan kos faedah 7.5 peratus, yuran profesional 10 peratus dan kos lain yang hanya dihadkan kepada 20 peratus jika digunakan.

Shahrir berkata, pihaknya belum menetapkan tarikh untuk memanggil pengurusan LPK dan bukannya syarikat lain berkaitan termasuk Kuala Dimensi Sdn Bhd (KDSB) kerana ia adalah syarikat persendirian.

“We will issue a statement soon on that,” said its minister Datuk Seri Chan Kong Choy at his post-Cabinet press conference in Putrajaya yesterday, without going into specifics.

The statement is expected to answer all questions raised about the deal, including why the Government approved a free trade zone project from one costing RM1.1 billion to one costing RM4.6 billion, and then awarded it to a company without even putting it to tender.

Chan said he has already handed a report to Prime Minister Datuk Seri Abdullah Ahmad Badawi.

On Tuesday, Abdullah was reported as saying that he has asked Chan to explain why alleged concerns by Jafza International, the operator of Dubai’s Jebel Ali Free Zone, addressed to Chan over the progress of the PKFZ were not entertained.

THE government will step in to rescue troubled companies only if it is in the long-term national interest to do so, a top government official said, amid growing speculation a RM4.6 billion lifeline may have been thrown to the Port Klang Authority’s free trade zone project.

“We don’t see the government going out and bailing out failed entrepreneurs. That’s not our policy … has never been our policy.

“But sometimes we put money in to create confidence for the overall economy, and we will do that,” Second Finance Minister Tan Sri Nor Mohamed Yakcop told reporters in an interview yesterday.

However, he declined to comment on media reports that the government had already approved a RM4.6 billion soft loan for the PKA’s Port Klang Free Zone (PKFZ) facility in Pulau Indah.

The media highlighted recently that the project has seen huge cost overruns, resulting in the development cost ballooning to RM4.6 billion from original estimates of about RM1.1 billion.

The government has in the past bailed out several financially-distressed companies such as the UEM Group, Bank Bumiputra, Perwaja Steel and Malaysia Airlines.

However, Nor Mohamed points out that the government rescued those companies in the interest of their minority shareholders and the public in general.

“We didn’t bail out the major shareholders, we just created value for the minority shareholders, really. So in that sense, it’s not a bailout of the majority shareholders … it’s a ‘bail-in’ of the general public and the minority,” he said.

He explained that in the big scheme of things, certain companies or industries – like the UEM Group in the past – had to be given a helping hand because of their linkages to the national economy.

“Every country does it,” he said, citing the recent subprime mortgage crisis in the US which led to some European central banks having to pump in large amounts of money into their respective banking systems to avert a crisis.

“In a way it’s a bailout because they’re putting in money … if they don’t do that, the economy could collapse,” he noted.

THE RM4.6 billion Port Klang Free Zone (PKFZ) project is facing criticism, with players in the logistics sector saying that the 405ha facility in Pulau Indah risks becoming a white elephant.

PKFZ is owned by the Port Klang Authority (PKA).

Port Klang Free Zone Sdn Bhd’s (PKFZSB) newly-appointed general manager of business development, Chia Kon Leong, said as manager and marketeer of PKFZ, the company was working overtime to make sure that the free zone is a success.

“PKFZ will not be a white elephant as has been said of Westports and Port of Tanjung Pelepas (PTP) in the past (when they were newly set up). Jafza International (Jafza) took about 10 years to get its (Jebel Ali) free zone going, and today investors are queuing to get in. With our free zone better positioned, our journey (to success) will be shorter,” said Chia via the short message service.

Jafza is operator of the Jebel Ali Free Zone but the company recently pulled out of a 15-year contract to manage PKFZ, citing a change in business strategy.

Critics of the project, however, have raised numerous issues, with some saying that it is overly ambitious. It comprises building 512 warehouses of 5,487 sq ft each, 2,000 covered parking bays, four eight-storey office buildings, a three-storey exhibition centre and a four-star hotel.

They also questioned the project’s development cost which has ballooned from an original estimate of RM100 million to RM3.6 billion.

“How did they (PKA) decide to invest that amount (RM3.6 billion)? Why 512 warehouses? Did PKA conduct a feasibility study to determine what type of infrastructure would be required before starting construction? As it is, the take-up rate for space at PKFZ remains low,” an industry source told Business Times.

The source pointed out that other free trade zone operators in the country usually build their facilities based on demand to reduce risk.

“For example, PTP will only develop the land in its Pelepas Free Zone when there is investment.

“To date, the port has spent some RM300 million to develop infrastructure in Pelepas Free Zone which is similar in size to PKFZ,” the source added.

Eyebrows were first raised when PKA bought the land in 2002 for RM1.05 billion or RM25 per sq ft from Kuala Dimensi Sdn Bhd, a subsidiary of Wijaya Baru Global Bhd, as many said the land was over-priced.

It has been reported that Kuala Dimensi bought the land in 1999 from the Pulau Indah Malay Fishermen Cooperatives for RM95 million or RM3 per sq ft.

Concerns were also raised over the government body’s move into property
development and free zone operations.

PKA further infuriated the industry with its decision to appoint Kuala Dimensi as a turnkey contractor to develop the PKFZ.

According to sources, Kuala Dimensi had issued bonds to finance the development costs, but is now having difficulty repaying its first bond payment totalling some RM570 million, which is due this year.

“The Government initially approved a cost of RM100 million to develop PKFZ, after which any additional cost had to be approved first by the Ministry of Finance. However, Kuala Dimensi has flagged a RM3.6 billion in cost overruns since starting the project in 2003,” said a source close to the matter.

“About one-and-a-half months ago, the company had asked the Government for a soft loan amounting to RM3.6 billion, being the sum spent to develop PKFZ.

“It is understood that the Government has approved it, which brings the total project cost to RM4.6 billion, including for land acquisition,” the source added.

Since its soft launch in November last year, PKFZ has attracted RM468.3 million worth of investments from six companies for prepared land to build manufacturing facilities, eight companies for the light industrial or warehouse units and seven companies for the leased business complex.

Norway’s Aker Kvaerner, Salarium Argentum Inc and Pantech Group Holdings Bhd are among the companies that have or are setting up their base there.

However, industry executives are still not so optimistic.

“Even if they get the investors, how are they going to recover the RM4.6 billion spent? Now they (PKFZ) are probably giving very low lease rates just to fill up space, sparking a price war among free trade zone operators in the country,” said one industry source.

Northport (Malaysia) Bhd managing director and chief executive officer Datuk Basheer Hassan Abdul Kader said so far, Northport has yet to get much benefit out of the development of PKFZ, which is situated in close proximity to Westports.

He said instead, the project might pose a threat to Northport’s own free commercial zone.

“So far, we are competitive (in terms of rates offered among free zones), but we are watching (with the entry of PKFZ),” he said at a media workshop on Thursday.