KUALA LUMPUR: The government should explain the hefty discount for the RMAF Sungai Besi land that was given to 1Malaysia Development Bhd (1MDB), the member of Parliament (MP) for Petaling Jaya Utara, Tony Pua, said yesterday.

The DAP MP claimed that the Sungai Besi land was valued at RM1.6 billion or only RM74.20 per sq ft in the transfer that was agreed between 1MDB and the government in June.

“If true, then this prime land was sold without any tender to 1MDB at a ridiculously low price at the expense of the taxpayers,” Pua said in a statement.

This compares to the privatisation in 2009 of the Matrade land in Jalan Duta here for an expo centre, where the land was valued at over RM200 million.

However, to date there are still few details known about the Sungai Besi land project, including the exact cost of relocation and building of a new air base — all of which is to be borne by 1MDB.

When contacted, 1MDB officials declined to comment on the matter, which was reportedly brought up during a Public Accounts Committee (PAC) meeting.

1MDB has entered into a sale and purchase agreement with the Federal Land Commissioner for the transfer of 200.3ha of the Sungai Besi air base land.

1MDB is the master developer of the Sungai Besi land and has roped in the Qatar Investment Authority (QIA) to take on the project. QIA has proposed to invest some US$5 billion (RM15.9 billion) in this and other real estate projects in the country.

1MDB has been mandated to develop the Sungai Besi land into a residential, commercial and recreational area to be called Bandar Malaysia.

1MDB is also responsible for facilitating the relocation of the RMAF air base to a 303.5ha site in Sendayan for Negri Sembilan Mentri Besar Inc.

Sources said it was also revealed at the PAC meeting that 1MDB was granted another RM1.1 billion to help relocate the RMAF air base.

Pua argued that  the government should explain why it had valued the land at such a low price when it could derive better pricing for the plot.

For instance, he said the Penang government was able to derive a value of RM1.07 billion or RM240 per sq ft (psf) for 101 acres via a open tender. He noted that in the Penang development, about 65% of the area still needs to be reclaimed.

“There can be no doubt that the land in Sungai Besi surrounded by developed infrastructure will be worth well in excess of the market price of land in Penang, given its unbeatable location in Kuala Lumpur.  

“At RM240psf, the Sungai Besi land should already be worth a whopping RM5.2 billion. Despite its high potential valuation, the government has chosen to transfer the land to 1MDB for only RM1.6 billion or RM3.6 billion less,” he added.

This article appeared in The Edge Financial Daily, November 24, 2011.