GEORGE TOWN: Barely one week after Penang crushed any hope 1Malaysia Development Bhd (1MDB) could build profit-making luxury properties in Air Itam, the state government wants to meet with the sovereign wealth fund to discuss its plans for the 234 acres (94ha) of land there.

Chief Minister Lim Guan Eng said yesterday the state is seeking a meeting with 1MDB to learn about its plans for the land it had purchased last year for RM1.38 billion. He said the state wants accountability for what 1MDB plans for the land, as well as the RM41.9 billion in loans that it has incurred.

During Barisan Nasional’s (BN) election campaign last year, Prime Minister Datuk Seri Najib Razak, the BN chairman, had promised to build 9,999 units of public and affordable housing on the land where thousands of squatters currently reside.

Guan Eng said with losses from the Air Itam project now estimated at RM1.3 billion, 1MDB had indicated its intention to recoup its losses by developing other profit-making projects on the land. “This is contrary to the earlier assurances that the land [would be] solely utilised for building public and affordable housing,” he said in a statement.

On Nov 11, Guan Eng dismissed the possibility that 1MDB would be allowed to develop profit-making luxury property on the Air Itam land.

He stressed that the state would not allow 1MDB to build any other project there, except public low-cost and low- to medium-cost housing as well as affordable housing.

He had said the state is aware that the company may be looking at “earning big money” by developing high-end units on the land which was originally earmarked for affordable and public housing.

Guan Eng said yesterday that even though 1MDB chairman Tan Sri Lodin Wok Kamaruddin had a media briefing on 1MDB’s finances on Monday, he had left questions unanswered on the extent of the federal government’s liability, including the letter of support it gave for a US$3 billion (RM10.05 billion) loan issue and for other loans.

“Whether 1MDB possesses the funds to repay its loans and interest and remain solvent when its assets include public assets of the highest priority given in trust for national economic development and public interest, is a critical question of national importance,” Guan Eng said.

1MDB’s asset base increased to RM51.4 billion, compared with RM44.6 billion in the financial year 2013, with borrowings rising from RM36.2 billion to RM41.9 billion, Guan Eng said.

Its total revenue increased from RM2.6 billion last year to RM4.3 billion this year. This caused 1MDB to suffer a loss of RM665.3 million in the financial year ending March 31, 2014, mainly due to finance costs of RM2.4 billion, compared with RM1.6 billion for the previous financial year, he said. — The Malaysian Insider

This article first appeared in The Edge Financial Daily, on November 19, 2014.