GEORGE TOWN: If debt-saddled 1Malaysia Development Bhd (1MDB) is looking to turn its fate around by building luxury properties on its vast 234-acre (98ha) “prime site” land bank in Air Itam here, then it better start looking elsewhere.

The Penang state government has made its unequivocal stand yesterday that it would not allow the sovereign wealth fund to do so as the tract of land there has been originally earmarked for affordable and public housing.

“We know that 1MDB is trying to turn its losses into profits by doing other projects [there], other than the affordable housing that has been announced. Don’t dream. That we will not allow,” Penang Chief Minister Lim Guan Eng told reporters at the state assembly yesterday.

Guan Eng, who is also the DAP assemblyman for Air Putih, said the state’s firm stand was in line with its commitment to not allow federal agencies Penang Regional Development Authority (Perda) and JKP Sdn Bhd to include luxury-priced units on lands that have been acquired for affordable and public housing.

“We have to be consistent. You are set up to do affordable housing. Do affordable housing,” he said of Perda, which had plans for luxury residential units valued at RM1.85 million each in Teluk Kumbar.

Guan Eng was commenting on reports by The Edge weekly on 1MDB’s debt, which stood at RM41.9 billion as at end-March.

The weekly, in its latest edition (Nov 10-Nov 16), said 1MDB has largely funded its growth with debt rather than fiscal surpluses, operational cash flow or cash reserves. Hence, its liabilities have ballooned to RM48.97 billion in over half a decade.

On Sept 21, Guan Eng had asked the federal government if it was going ahead with its highly-publicised affordable housing project following 1MDB’s purchase of more than 234 acres of land at a reported cost of RM1.38 billion around the Air Itam area.

The purchase was made just before the 13th general election last year and was for the stated purpose of building 9,999 affordable units, which Prime Minister Datuk Seri Najib Razak himself had announced with much fanfare when campaigning for Barisan Nasional  near the Rifle Range flats on April 30 last year.

Guan Eng described the land in Air Itam as a “prime site” and noted that there are tens of thousands of people currently occupying the land.

“That area is very dense and concentrated. It is not an easy issue. You must get the consent of the residents [to move out before development starts]. But do not dream that you will get the approval to try to make some money back, because we will defend the rights of the residents,” he added.

This article first appeared in The Edge Financial Daily, on November 12, 2014.