PDC opens tender for Batu Kawan Industrial Park 2 after axing controversial deal with Umech Land

• According to media reports, Penang Chief Minister Chow Kon Yeow said a pre-qualification request for the RFP was advertised from Feb 8 and the tender will continue to be advertised in mainstream media and PDC’s website for six weeks until March 21.

KUALA LUMPUR (Feb 15): Penang Development Corp (PDC) has called for a request for proposal (RFP) from experienced companies to co-develop the Batu Kawan Industrial Park 2 (BKIP2), following the termination of the controversial joint development agreement (JDA) with Umech Land Sdn Bhd in October last year.

According to media reports, Penang Chief Minister Chow Kon Yeow said a pre-qualification request for the RFP was advertised from Feb 8 and the tender will continue to be advertised in mainstream media and PDC’s website for six weeks until March 21.

"The RFP is to invite industry players to be a strategic partner in developing phase one of BKIP2 with PDC,” Chow was quoted as saying at a press conference in Penang on Thursday.

PDC, the Penang state government's development agency, had entered into a JDA with Umech Land last year, effectively selling a parcel of land in Byram measuring approximately 226 hectares, which is part of the BKIP2, for RM646 million, to be disbursed in instalments by Umech Land via internal funds within 48 months.

However, the JDA came under fire from all sides including the Penang Chinese Chamber of Commerce (PCCC), who questioned why PDC did not undertake an open tender. It commented that the price tag of RM646 million, or RM27 psf, significantly undervalued the land.

As the wave of criticism grew stronger, the board of directors of PDC decided to terminate the JDA. It said the change in majority shareholders of Umech Land’s equity structure, which was done without informing PDC and without PDC’s approval, was “a serious issue and cannot be accepted by the board of PDC”.

This was referring to the fact that Sunway Bhd had emerged as a majority shareholder of Umech Land only two days prior to the announcement of the JDA by injecting RM23.33 million into the company, thus diluting the shareholding of the original shareholders — Karen Cheng Pui Kwan to 21% and Nathaniel Rajakumar to 9%.

Before Sunway's cash injection, Umech Land was 70:30 owned by Cheng and Nathaniel.

Following the termination, PDC was required to fully refund the deposit paid by Umech Land amounting to RM64.60 million.

Although it was acknowledged that the deal was done through direct negotiations, the board of PDC maintained that the selection process of Umech Land was transparent and in line with PDC policy. 

Chow, who is also PDC chairman, added that there were no weaknesses or mistakes made in the sale of the land to Umech Land.

He said the sale was conducted through direct negotiations following promotional efforts by PDC at the Dubai Expo 2020, and Umech Land was the only company that showed serious interest in doing business in Penang.

In another update, Chow said PDC is developing three more industrial parks in the state involving a total investment of RM3.2 billion, including for infrastructure development, in a bid to stimulate the industrial sector’s growth.

The three industrial parks are Bandar Cassia Technology Park, Batu Kawan Industrial Park 3 (BKIP3), and Penang Science Park South.

Chow added that these industrial parks in South Seberang Perai are expected to be fully completed in 2031, after development started in 2022.

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