By Amar Shah Mohsen
SHAH ALAM, March 4 — Menteri Besar Dato’ Seri Amirudin Shari has refuted a suggestion by the opposition that the Selangor State Development Corporation (PKNS) is saddled with massive debts, stressing that the state agency is in a good financial position at present.
Addressing the State Legislative Assembly, Amirudin said PKNS continues to generate profit, adding that its cash flow is also at a healthy level today.
This, he said, has allowed the company to settle its liabilities using income generated from its own operations, rather than seeking more loans and bonds.
“PKNS’ income sources from 2018 to 2022 consist of its operations, including building sales, land sales and privatisation efforts. Meanwhile, non-operating income is derived from rentals, among others,” he said today.
“During this period, the main income contributor was land sale, which accounted for 60 to 80 per cent of the overall revenue. This included the sale of old assets that previously failed to be offloaded before 2018.”
Amirudin said the relinquishing of its stake in the Shah Alam Expressway (Kesas) in 2022 has also contributed significantly to PKNS’ overall revenue.
He was responding to Hulu Kelang assemblyman Datuk Seri Mohamed Azmin Ali’s claim that PKNS currently has a staggering debt of RM5.7 billion.
The Selangor Perikatan Nasional chairman also sought clarification on the firm’s cash flow and financial position over the last five years.
According to Amirudin, the RM5.7 billion debt cited by Azmin was an old figure taken from last year.
He said that based on the latest data provided by credit rating agency, RAM Ratings, PKNS only owes RM3 billion in sukuk as of February this year, of which RM1.8 billion has yet to be redeemed.
“So, it’s not true to say we have a debt burden (of RM5.7 billion),” he said.
PKNS not taking shortcuts
Amirudin also dismissed Azmin’s claim that PKNS lacks the commitment to develop its lands and would rather sell them at low prices.
The state opposition leader cited a report by The Edge last week on PKNS’ decision to sell a leasehold land in Kota Damansara to property developer Tropicana Corp Bhd for RM224 million for a project with an estimated gross development value (GDV) of RM2.8 billion.
Azmin also noted that PKNS had sold its development rights for an office tower in the PJ Sentral commercial development area to Malaysian Resources Corp Bhd (MRCB) wholly-owned subsidiary, PJ Sentral Development Sdn Bhd (PJSD), for RM270 million.
In response, Amirudin said PKNS has made a near 100 per cent profit through the Kota Damansara land sale to Tropicana Corp, with the land estimated to be valued at RM130 million today, compared to the RM224 million it sold for.
“And if you’re talking about its potential GDV, this also requires cost,” he said.
“Take the PJ Sentral development, for example. PKNS would have had to bear RM800 million in cost (if we kept the development rights to build the office tower), with a GDV of RM1 billion. And you still have to wait 10 years to see results.
“By selling (our development rights), we recorded a profit margin of 27 per cent (for the PJ Sentral tower project).”
Amirudin added that PKNS is not “taking shortcuts” by offloading some of its assets, pointing out that the firm is forced to bear the burden for decisions made in the past when Azmin was in state power, including the PJ Sentral tower development rights.
“PKNS recorded losses for the first time because it made investments that did not yield returns. These decisions (to sell some assets) are to give some breathing space to PKNS, in terms of its cash flow.”
