Penang Wants To Meet 1MDB On Plans For Vast Ayer Itam Land

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GEORGETOWN, Nov 18 – Barely one week after Penang crushed any hope for 1Malaysia Development Bhd (1MDB) to build profit-making luxury properties in Ayer Itam, the state government now wants to meet the sovereign wealth fund on its plans for the 234 acres of land there. Chief Minister Lim Guan Eng (pic) said today that the state is seeking a meeting with 1MDB to learn about its plans on the land it had purchased last year for RM1.38 billion.

He said the state wants accountability for what 1MDB plans for the land, as well as on the RM41.9 billion loans that it has incurred. During Barisan Nasional’s (BN) election campaign last year, Prime Minister Datuk Seri Najib Razak, who is BN chairman, had promised to build 9,999 units of public and affordable housing on the land where thousands of squatters currently reside.

Lim said with losses from the Ayer Itam project now estimated at RM1.3 billion, 1MDB had indicated its intention to recoup its losses by developing other profit-making projects on the land. “This is contrary to the earlier assurances that the land is solely utilised for building public and affordable housing,” he said in a statement.

Lim had on November 11, dismissed the possibility that 1MDB would be allowed to develop profit-making luxury property on the Ayer Itam land. He stressed that the state would not allow 1MDB to build any other project there, except public low-cost and low-medium cost housing as well as affordable housing. He had said the state was aware that the company may be looking at “earning big money” by developing high-end units on the land which was originally earmarked for affordable and public housing.

Lim today added that even though 1MDB chairman Tan Sri Lodin Wok Kamaruddin had a media briefing on 1MDB’s finances yesterday, he had left questions unanswered on the extent of the Federal government’s liability, including the letter of support it gave for a US$3 billion (RM10 billion) loan issue and for other loans. “Whether 1MDB possesses the funds to repay its loans and interest and remain solvent when its assets include public assets of the highest priority given in trust for national economic development and public interest, is a critical question of national importance,” Lim said.

1MDB’s asset base increased to RM51.4 billion, compared with RM44.6 billion in the financial year for 2013, with borrowings rising from RM36.2 billion to RM41.9 billion, Lim said. Its total revenue increased by 50%, from RM2.6 billion last year to RM4.3 billion this year. This caused 1MDB to suffer a loss of RM665.3 million in the financial year ending March 31, 2014, mainly due to finance costs of RM2.4 billion, compared with RM1.6 billion for the previous financial year, he added.

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