He was explaining why state agency Penang Development Corporation (PDC), which owns the Batu Kawan Industrial Park 2 land, had rejected a proposal by a consortium formed by IJM Properties and Aspen Vision.
PDC previously claimed the consortium’s proposal was rejected due to multiple reasons, but Chow today said that while the consortium had offered the highest price, it would have placed a financial burden on the state.
“They made an offer with a higher price, but if you were to minus the extra (conditions requested), it comes down to about RM500 million. About the same as the Umech offer,” he said, referring to Umech Construction Sdn Bhd.
The below-market price land deal with Umech was dropped as it had bypassed an open tender process.
The IJM-led consortium offered RM818 million for the land last December, but claimed its proposal was rejected without any opportunity for further negotiations.
Chow said among the reasons the IJM-led consortium’s proposal was nixed was the extra expenditure by PDC to fulfil the conditions requested, including RM150 million in infrastructure costs to ensure connectivity for the proposed project on the land.
The consortium also suggested converting the land from leasehold to freehold, which would require state approval and involve a premium of RM144 million.
Another request was to use nearby PDC land in Batu Kawan as a quarry, which Chow said carried an opportunity cost of RM25 million.
The consortium also sought a first right of refusal for 500 acres of adjacent land, potentially limiting PDC’s ability to develop it freely.
Finally, it wanted the freedom to change company shareholding and transfer land without PDC’s consent, Chow said.
Lim Guan Eng (PH-Air Putih) argued that PDC should have kept the door open for negotiations, claiming that the consortium was robbed of a chance to clarify or revise its offer.
“This is a request for proposal (RFP) by open tender, not a closed tender. After the best offer is picked for the RFP by open tender, there will be discussions and negotiations, all part of the process,” Lim said.
He cited the consortium’s Dec 2, 2024 statement, which said that it had “earnestly requested the opportunity to present and explain its submission, but this was not granted”.
Lim also said the consortium had made it clear that the request for freehold status and other enhancements were optional and should not have been treated as conditions.
PDC board has final say
Chow, who is PDC chairman, replied that any major decisions must be approved by the corporation’s board, and that all proposals must comply with good governance standards.
“If the terms go against that, we cannot accept it,” he said. However, he did not explain why PDC had refused further negotiations with the consortium.
PDC is currently reviewing bids under a fresh tender exercise for the same plots of land.
Chow said if no acceptable bids emerge, the agency may consider developing the land itself.