State govt behind sale of island plot

GEORGE TOWN: The sale of the state’s hold on the only piece of development land in Pulau Jerejak to a private developer was engineered by “key people” in the state government.

It is learnt that the developer was asked to “step in” after state investment arm Penang Development Corporation (PDC) had difficulty working with majority joint-venture partner UDA Holdings.

PDC tried to gain control of the JV company between 2010 and 2012 but failed, and this led to an unhappy relationship with UDA, said a source in the state administration.

The source said that in 2012, the state even tried to take back the land because the sale price of RM12.95mil was not fully settled yet.

UDA paid up the remaining RM10.6mil promptly after that.

The source said after ties with UDA became too strained, key people in the government asked a local property developer to take over PDC’s stake.

PDC has divested its 49% share in Tropical Island Resort Sdn Bhd (TIRSB), the Pulau Jerejak JV company, to Ideal Property Group for RM156mil, to be paid over eight years. The group’s subsidiary in the JV is Q Islands Development Sdn Bhd.

TIRSB’s earlier attempt to develop a resort and spa in Pulau Jerejak resulted in a loss of RM40mil after 12 years.

UDA agreed to the transfer and said in a statement that it will eventually have 100% ownership upon completion of the novation agreement.

This public-listed company began as the Urban Development Authority, a government agency founded under the Public Enterprise Ministry in 1971.

The 32ha land was awarded to TIRSB in 2001 on a 60-year lease (expiring in 2062).

Pulau Jerejak covers 362ha and is a boat ride of less than 10 minutes from Penang island.

Reclamation in the Bayan Lepas area has narrowed the gap between the islands in the last 10 years.

Historically, the island was known for housing “untouchables”.

It was a quarantine centre for migrants between the 1800s and 1900s, a leper colony and tuberculosis treatment centre around WWII, a penal colony, a British political detention camp, a contagious diseases hospital, a drug rehabilitation centre and a prison for hardcore criminals.

Plans to develop the island into an eco-tourism destination only began in 2000.