‘Government risks losing RM379 mil in Langkawi deal’

KUALA LUMPUR (March 15): The government risks losing some RM379.24 million from its collaboration with Indonesian tycoon Tan Sri Peter Sondakh of the Rajawali Group in the St Regis Langkawi luxury resort and the Langkawi International Convention Centre (LICC), according to PKR lawmaker Mohd Rafizi Ramli (pictured).

Based on the projects’ reported losses so far, it is doubtful the joint venture could pay the interest on its loan, the Pandan member of parliament said in a statement yesterday.

The collaboration involves the injection of RM421.04 million by the government and Sondakh into two entities — Integrated Nautica Sdn Bhd and Garuda Suci Sdn Bhd.

Integrated Nautica was established to build and operate St Regis Langkawi while Garuda Suci was set up to build and operate LICC.

Of the total investment, Mohd Rafizi said the government injected a capital of RM379.24 million and Sondakh provided the remaining RM41.8 million.

“This is a capital injection ratio of 90% by the government and 10% from Sondakh. In exchange, however, the government merely gets a shareholding of 60% in each company while the remaining share is controlled by Sondakh,” he said.

Citing financial statements obtained from the Companies Commission of Malaysia, Mohd Rafizi said Integrated Nautica’s and Garuda Suci’s accumulated losses since their incorporation in 2013 are RM8 million and RM4 million respectively.

“Although the St Regis hotel could use the excuse that it has not yet become fully operational since its completion in 2015, it raised the question as to whether the company could generate sufficient income to repay its loan interest to Bank Pembangunan of as much as RM9.88 million per annum,” he said.

“LICC’s performance is even worse because it has been open for business for the Asean Summit 2015 conference. With such a financial performance, there is a large probability that it would not be able to repay its RM100 million loan, the interest on which would be around RM5 million per annum.”

Mohd Rafizi warns that the two projects’ failure could become a burden on taxpayers.

This article first appeared in The Edge Financial Daily, on March 15, 2017.

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