By Danial Dzulkifly
SHAH ALAM, March 6 — The Selangor State Development Corporation (PKNS) was forced to divest projects which no longer aligned with its interests, said Dato’ Seri Amirudin Shari in defence of some of the state agency’s recent business decisions and its current fiscal position.
This is after state Opposition leader Datuk Seri Mohamed Azmin Ali accused PKNS of acting as an entity that helped to bail out troubled private companies, straying from its core mission of providing affordable homes, and its overall poor financial state.
Addressing the State Legislative Assembly session today, Amirudin said PKNS had incurred losses for the first time in 2020 due to past agreements which bound the state government to an office tower development project in PJ Sentral and the Datum Jelatek project in Kuala Lumpur.
This subsequently resulted in PKNS spending millions of ringgit a month solely for maintenance.
The current state administration has largely rectified PKNS’ fiscal position, which had been hindered by the agreements signed by his predecessors, including Azmin and the late Tan Sri Abdul Khalid Ibrahim.
“The term ‘bailout’ (to describe PKNS) is misleading and unfair. I have outlined the steps taken to address these issues, some of which you are well aware of and remained unresolved despite your knowledge.
“What actions did you take? You continued the RM10 million monthly cost payments to the Datum Jelatek project, which did not resolve any issues,” he said to Azmin, prompting a terse response from the Opposition bench.
Amirudin was speaking during his wind-up speech on the royal address during the opening of the First Meeting of the Second Session of the 15th State Legislative Assembly.
The Menteri Besar added that PKNS had to divest these underperforming assets and terminate agreements which no longer served its interests to redirect its focus towards preserving current and future developments.
“Among the strategies we implemented was resolving ongoing legacy issues where we continued to incur costs without any positive returns from our investments.
“Is Datum Jelatek the best public housing project that you had approved and even defended in this very assembly? Of course not, but we must cut our losses,” he said.
Amirudin spent nearly 40 minutes explaining PKNS’ current fiscal position, during which time he was persistently interrupted by Azmin, who repeatedly questioned the state agency’s fiscal consolidation efforts.
Among other things, the Hulu Kelang state assemblyman questioned PKNS’ decision to sell leasehold land in Kota Damansara to property developer Tropicana Corp Bhd for RM224 million, for a project with an estimated RM2.8 billion in gross development value (GDV).
Azmin also questioned why PKNS had sold its development rights for an office tower in the PJ Sentral commercial development area to Malaysian Resources Corp Bhd’s (MRCB) wholly-owned subsidiary PJ Sentral Development Sdn Bhd (PJSD), for RM270 million.
The Perikatan Nasional lawmaker even alleged that PKNS was bailing out these developers, suggesting it would be better for the agency to consider adopting a GDV-sharing model instead of outright asset sales, which could potentially yield higher profits.
“If we examine the project in Kota Damansara, for example, its GDV is valued at RM2.8 billion and could potentially increase further as it matures.
“If PKNS were to adopt a GDV-sharing model, holding a stake of, let us say, between 15 to 17 per cent, then it could potentially earn more than RM400 million,” he said.
In response, Amirudin said there is no guarantee of dividends if PKNS were to engage in such a strategy, highlighting the risk of significant incidents like the pandemic, which could lead to further losses for the state government.
