If you follow Mahathir’s logic then the Selangor Govt lost RM21 billion

(LSS) – Mahathir accused the govt of losing RM5 billion when it sold 70 acres of land to 1MDB for RM64.00 psf for the TRX project. He said the land is actually worth RM7,000 psf

This is despite the fact that the govt had sold land to itself since 1MDB is 100% govt-owned.

The Selangor Govt sold 1,172 acres in Canal City (next to Kota Kemuning) to privately-owned Tropicana Corp in April 2013 (less than one month before the general election and was actually illegal since the state govt at that time was dissolved).

This land was much sought-after as it is covered by six different highways and is immediately viable.

The land was sold for just RM587 million at a value of RM18.50 per sq ft payable in 12-year instalments, with the state govt entitled to 5% GDV share and 3% profit share, amounting to a total of RM1.3 billion payable over 20 years.

This means the developer only needed to pay the Selangor Govt RM1.54 psf per year or 12.9 sen psf to buy the land – even cheaper than many of us pay for condo maintenance.

Not only is it a great deal but within months of signing, Tropicana then sold 1/4 of the land to Eco World for almost double the price at RM35 per sq ft or RM470 million – despite only having paid RM50 million installment so far.

With this sale, Tropicana has covered the installments for the next 10 years due to Selangor Govt while still keeping 3/4 of the land.

(When ex-MB Khalid Ibrahim heard about this sale, he immediately froze the entire project – until he was removed by Azmin who then allowed the project to proceed).

With this kind of super-friendly payment terms, you should really ask why Selangor’s state owned developers like Shah Alam Properties or PKNS did not develop this land themselves of preferring to benefit private developers.

Now, the 3/4 of the land or 853 acres still held by Tropicana has become the Tropicana Aman project with a Gross Development Value (GDV) of RM13 billion. They have launched Phase 2 which are 2-storey and 3-storey link homes priced between RM850,000 and RM1 million.

The 1/4 remaining land or 319 acres now owned by Eco World has become the Eco Sanctuary project with GDV of RM8 billion at price of RM700 psf.

Using Mahathir’s twisted logic, the RM18.50 psf land is now worth RM700psf – hence the RM587mil received should instead be RM21.9 billion – meaning the Selangor Govt has lost RM21.3 billion to private companies (as opposed to Federal Govt losing to themselves since 1MDB is 100% govt owned).

Mahathir-type calculations are exaggerated but this deal is definitely an incredibly lop-sided deal with super-friendly payment terms found nowhere else and at least RM10 billion profit for private developers.

But current MB Azmin is happy to let the project continue – lifting Khalid’s ban. Read this: http://www.malaysia-today.net/abu-abu-abu/

And you really thought that PKR and DAP are angels in Selangor?