24 August, 2007

Give me a soft loan, please !

Malaysian authorities said Wednesday they will investigate for possible corruption officials of the country's troubled port operator which has piled up over a billion dollars in debts.

As the extent of Port Klang's debt problems filters out in the local financial press, there has also been widespread speculation of a possible bail-out from the government of Prime Minister Abdullah Ahmad Badawi.

The bail-out, if pushed through, could become the biggest in Malaysia's history, said Shahrir Samad, chairman of government's powerful Public Accounts Committee.

Malaysia's debt-ridden port authority has been rescued by the government, with the transport ministry saying Friday that they would give them a soft loan to cover about one billion dollars of debt.

Port Klang, whose officials may be investigated for corruption, has spent 4.6 billion ringgit (1.3 billion dollars) since construction began in 2004, and local press have reported that the authority is riddled with mismanagement.

After meetings between the transport minister and Prime Minister Abdullah Ahmad Badawi late Thursday, the government agreed to the loan for the Port Klang Free Zone (PKFZ), a transport ministry spokesman said.

"Port Klang is our main port and we have much big plans for it. We cannot continue to let debt problems persist as it holds back all the plans to enhance this venture," the spokesman told AFP.

The 1,000-acre (400-hectare) PKFZ shipping area opened in western Malaysia last year, and costs have risen swiftly.

"With the high overall cost of the PKFZ in mind, the government has agreed to give the soft loan and details are being worked out on the repayment scheme. It will be a scheme that will help them to get back on their feet again."

The decision is likely to worry opposition leaders and corruption watchdogs, who have urged the government not to bail the port authority out without a thorough investigation into any corruption.

Opposition politician Lim Kit Siang gave notice to the Malaysian parliament that he would move an urgent motion to debate the matter on Monday, when it convenes after a two-week break.

"Everything must come out in the open," Lim told AFP. "The transport ministry is responsible to all Malaysians for losing public funds, and that money is no chicken feed. Someone has to answer and the government must react to it."

The government's powerful Public Accounts Committee said earlier this week that they would look into any financial mismanagement by the port, and insisted Friday that a full-scale investigation would still go ahead.

"We must continue despite the latest developments. These are public funds and we need to know if they have been used properly," said Shahrir Samad, chairman of the committee.

"It is up to government when to allow the police and the Anti-Corruption Agency to take the matter even further," he added.

Port Klang Authority remained positive Friday, insisting it would raise occupancy rate for the PKFZ to 80 percent in five years. So far, the zone has only filled 12 percent of its capacity.

"We are capable of repaying every single cent of the loan," Port Klang's business development manager Chia Kon Leong said.

In a statement issued late Thursday, the transport ministry said that Port Klang's debts were racked up during construction.
- AFP via Yahoo! News

Why this cost RM4.6bil

"Initially, the project was to be completed in two phases on just 500 acres, with development cost estimated at RM400 million.

"However, following advice from Jafza, the Port Klang Authority (PKA) developed the free zone in a single phase utilising 1,000 acres (250ha), at a total cost of RM1.845 billion," the statement said.

Other elements that pushed up the cost to an estimated RM4.632 billion were interest of 7.5% (on loan to buy the land, payable over 15 years), a 10% professional fee and a variation order capped at 20% (if effected).

The statement confirmed reports that 250ha were bought from Kuala Dimensi Sdn Bhd (KDSB) at RM25 per sq ft for development of the free zone, although government valuers had estimated put it at about RM10 psf.

The ministry explained that the RM25 price tag included improvement works such as reclamation and irrigation works, constructing a road, bridge and street lights, water supply and payment to utility companies.

Although the price tag was RM1.088 billion, the final cost would be RM1.807 billion considering that the payment would be made over 15 years, with interest at 7.5% per annum.

As the cost was high, the ministry said the government had approved a loan to the PKA as the PKFZ was a project to help spur economic growth, create job opportunities and offer ancillary support services and business activities.(Source)

Yes, I have been fair, I want to be fair, I’ll always be fair !
Goblok’ public will swallow what gov’t tells them.
Please stop taking umbrage on Negarakuku, and for your information, BMW said to have paid 93m euros for just one brand, go read this.



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