Wednesday, August 29, 2007

PKFZ - Some Unanswered Questions

PKFZ - satellite photo from Google Earth

That the Speaker would shoot down Lim Kit Siang’s bid to introduce an emergency motion to debate the PKFZ issue in parliament was a foregone conclusion. There have been a number of statements made by the Ministry of Transport but some questions remain unanswered:

> Lembaga Pelabuhan Klang (LPK) bought the land at RM25 psf when parcels of reclaimed land were going at between RM12 - RM15 psf depending on the size of the parcel. How did LPK arrive at the figure of RM25 psf? Who carried out the valuation of the property? Normally, the Government Valuers would have been called in to value this. Why were they not called? Is it true a Valuer linked to Kuala Dimensi Sdn. Bhd. carried out this valuation?

> LPK paid Kuala Dimensi Sdn. Bhd. RM1.088 billion for 999.5 acres of land at RM25 psf as against the advice of the Attorney-General and the KSU of the Ministry of Finance. Giving the benefit of the doubt, if we add RM3 psf for infrastructure, etc., the cost will be RM18 psf. This would have cost RM784 million minus encumbrances and LPK must have paid RM305 million extra!

> Free zone facilities such as warehouse, office complex and Customs complex - Nobody develops such ready-made facilities in Free Zones. One cannot pre-determine the needs of clients. Why were all these facilities built without knowing the needs of the clients?

> It is understood that the Board decided to develop the first 500 acres and gave the turnkey job to their friends, Kuala Dimensi Sdn. Bhd. for RM400 million. Who was the expert to decide as to what is the type of facilities to be developed i.e. the size of warehouses, business complexes, etc. Was there a survey done from the potential clients as to the needs? If there is a report on this, can it be made available? Everyone in the construction and engineering consultancy business know that turnkey projects cost 30% above open tender prices. Did LPK pay RM100 million more than it should?

> To add insult to injury, it was decided to proceed with the second 500 acres development. The cost ballooned to RM1.85 billion. It is understood this includes professional fees of 10% amounting to RM180 million and Variation Orders of 20% amounting to RM360 million. At the original cost of RM400 million for the development of the first phase and giving the benefit of escalation in price for the 2nd phase amounting to RM600 million, the total cost inclusive of professional fees should only be RM1 billion. What happened to the RM850 million?

> Assuming that the above figures are far from the truth (and I stand corrected), let us give the benefit of the doubt and add another magical 30% for miscellaneous costs which obviously must have included exotic cars for those who matter. Which means we are adding RM600 million to the total project cost which now hits RM2.65 billion. So what has happened to the RM2 billion?

> A little bird tells me that the general manager of LPK’s appointment has been extended for the third time past her retirement age - surely without precedent in the civil service. The same little bird tells me that the GM is also the chairman of the Free Zone. Takde orang lain yang sesuai lagi ke?

Monday, August 27, 2007

PKFZ - the DAP Factor

I met Opposition leader Lim Kit Siang and his small entourage from the Democratic Action Party (DAP) for a quick chat before he left for Ipoh yesterday. The venerable Yang Berhormat has been following my blogs and wanted to hear my views straight from the horse's mouth before he tables a motion to debate the RM4.6 billion Port Klang Free Zone (PKFZ) debacle in the Dewan Rakyat today.

Mr. Lim has no pretensions that he will be stopped in his tracks by the Speaker of the august house as has been done many times before, but he will plod on nevertheless. He has promised to keep bringing up the subject in the parliament at every available opportunity to force the issue out in the open.

I suppose as commented by Mr Bojangles in my previous blog posting: ".... if we let them know what we genuinely think of them in their stuffed faces, since they all seem to be in lala land like their big boss, it may hopefully engender some accountability - and make us less of hypocrites to boot."

Update: Malaysiakini reports Dewan Rakyat speaker Ramli Ngah Talib rejected the ‘urgent motion’ put by Opposition Leader Lim Kit Siang to debate the RM4.6 billion bailout of the troubled P. Klang Free Zone as Parliament resumes today.

Friday, August 24, 2007

PKFZ - Bail Out! Bail Out!

Lets call a spade a spade, eh?

After keeping mum all this while, NST, the Star and other mainstream press today finally gleefully headlined a 5 page statement handed out by the Ministry of Transport in Pulau Indah which glossed over the entire sickening RM4.6 billion affair. Port Klang Free Zone (PKFZ) new general manager for business development K.L. Chia, who happens to be an old friend of mine and barely a couple of months in his hot seat, had to do the honours while the minister and other Lembaga Pelabuhan Klang (LPK) officials were conspicuously absent.

PKFZ Convention Centre

It boggles the mind that the Ministry of Transport has deftly side stepped the issues of accountability and good governance but instead hinted darkly that the Jebel Ali Free Zone Authority (JAFZA) which had cut short its 15 year management contract, was mainly responsible for the huge cost overruns. It would be interesting to hear what JAFZA will have to say about this. From what I hear their parting of ways was far from amicable and that the 'strategic' reasons JAFZA purportedly gave is a lot of bull crap.

TheSun newspaper today also questioned why didnt Kuala Dimensi Sdn.Bhd. develop PKFZ itself if the project was seen to be viable and a potential goldmine. The rakyat must be told who are the people behind all this. The fact that LPK is now bordering on insolvency and has to be bailed out with a dubious 'soft loan', the terms of which are still fuzzy leaves much to be desired. This will surely be the nation's biggest bail out to date.

It appears it is now left to the parliamentary Public Accounts Committee (PAC) to act and call for a probe into 'possible' corruption in the entire sordid affair. Malaysiakini also reports that Opposition leader Lim Kit Siang will make it the first order of business when the Parliament reconvenes on Monday to discuss the bailout, if he has his way that is.

Wednesday, August 22, 2007

PKFZ - An Open Letter

I am very honoured indeed to have received a copy of an open letter today from my former boss Datuk M. Rajasingam, former General Manager of the Lembaga Pelabuhan Klang (LPK) or Klang Port Authority. His letter traced the history of Port Klang and the many trials and tribulations every port worker went through the last couple of decades, leading to the port becoming one of the top 20 container ports in the world. He has also expressed his unhappiness over the financial mismanagement of LPK and the sad state of affairs vis-à-vis the Port Klang Free Zone (PKFZ).

Since his retirement in 1997, Datuk Rajasingam has been busy providing consultation services on port operations and management on behalf of the Asian Development Bank, the World Bank and several other institutions in many countries including India, Pakistan, Bangladesh, S. Africa and elsewhere.

To read his letter, click here.

Update: Malaysiakini reports that PAC chairman Dato Shahrir Samad has called for a probe on corruption on the PKFZ RM4.6 billion bailout, here.

Tuesday, August 21, 2007

PKFZ - Inelegant Silence

Singapore newspapers and other media have been going to town with the story. The parliamentary Public Accounts Committee (PAC) is now worried that the Port Klang Free Zone (PKFZ) scandal may affect the confidence of foreign investors, in particular from Singapore and Dubai in the Johor Iskandar Development Region (IDR). But I believe we can kiss the IDR goodbye. We will face funding problems now that our reputation sucks big time.

I had asked a retired former port colleague of mine who is now a consultant to a major logistics company and a number of other organisations, to do some number crunching for me and he has sent me this very interesting email :

Capt, here are some figures for you to chew on.

The PKFZ total land area is 999.5 acres, purchased at RM25 per square ft.
Hence total cost of land is 999.5 x 43,560 x 25 = RM 1,088,455,500.

Assuming that only 80% of the land can be gainfully deployed, the average cost per acre is RM 1,360,570 or RM31.23 per sq. ft.

Say that one wants to lease the PKFZ land to construct a warehouse
Utilizing 3 acres of land would cost 3 x 1,360,570 = 4,081,710
Building a 60k sq.ft Whse at RM 100.00 per/sq.ft = 6,000,000
total RM = 10,081,710

Assumptions of 'holding cost'
i. interest at 8% p.a.
ii. repayment 8% of cost
iii. basic O/heads 4 % total 20% or RM 2,016.342 per/year
or RM 168,028 per/ mth
or RM 2.80 per sq.ft / mth

Compare, say with Northport Free Commercial Zone (FCZ) warehouse rental is RM 1.50 to RM 2.00 p.sq.ft/mth. Please bear in mind that the inter terminal transfer (ITT) cost to the PKFZ is said to be RM180.00 per TEU and in Northport it is only RM85.00 per TEU. Hence if one handles say 6,000 TEUs a year (or 500 boxes a month), the difference will be RM 570,000 !

On the other hand, if the total cost is spread out to the 800 acres of land available, then each acre would cost RM 5,750,000 or some RM132 per sq.ft! (Even the lots in Persiaran Raja Muda Musa sell for only $100 per/sq ft !)

Assuming that a 3 acre-plot is already inclusive of a 60,000 sq. ft warehouse,
The total cost would be 3 x RM 5.750 million = RM 17.250 million
At this cost, using the 20% factor, the 'holding cost ' per year would be RM 3,450,000.
Again based on the 60k sq ft warehouse, cost per sq. ft/mth would be RM4.79 ! So looking from all angles, the projected cost is definitely beyond current commercial rates, unless of course if Klang Port Authority wants to subsidize this project until doomsday.

It is note worthy to compare the project cost announced by Sembcorps of Singapore who has indicated that the cost to develop 750 hectares of land for similar purpose in Vietnam is only US$ 103.5 million or approx RM 357.075 million or an average of RM 192,264 per acre which equals RM 4.42 p/sq. ft.. Of course , it was not reported what was the land cost, but common sense will tell it won't be RM132 per sq.ft!

How do one expect our local company to compete say, in regional logistics hub with such a price tag?

Sunday, August 19, 2007

Where's the fire?

To quote an old friend, in simple language, if you see something which needs to be done, something which affects you, your family, and even your country, you are not going to think, ah, what will the neighbours or your friends think. You are just going to do it. And when you see your child drowning in the water, you do not tell him, hold on, I will telephone the bomba, they are the right people; nor are you going to tell him, this is divinely ordained, qadak and qadar, and I do not want to interfere in your destiny, I respect your freedom to drown! No, you are just going to dive right in.

(Likewise, if si Luncai, whatever his faults, were to terjun dengan labu labunya in the water, I for one cannot say, "Biarkan, biarkan!". Under the International Laws of the Sea, I am obliged and duty bound to rescue him!)

OK, so where is the fire?

More than 2000 years ago, Plato the Greek said, "One of the penalties for refusing to participate in politics is that you end up being governed by your inferiors." Hmmm. Perhaps he was being a little harsh and elitist here, but there is much to be said about this quote. Of late we are seeing the country going to the dogs with greedy politicians, corrupt police and judiciary, racial disintegration, religious bigotry and worse, an apathetic and a very gullible citizenry. Our founding fathers must surely be turning in their graves right now.

So all hands on deck for we cannot remain on the sidelines forever, on the outside looking in, nor can we just engage in ad hoc fire fighting. The proverbial ball, as they say, is in our court. The time and the place, my friends, is here and now ...

Friday, August 17, 2007

PKFZ - PAC Hearing

PKFZ Business complex

With the complete embargo on news about the PKFZ by government controlled newspapers, the Sun reported yesterday that the parliamentary Public Accounts Committee (PAC) will call for a hearing on the debacle. It quoted the chairman Datuk Shahrir Samad who said that news reports about the Port Klang Free Zone (PKFZ) has raised serious questions. PAC will look into two concerns:

> Will it involve any government bailout; and

> Will it affect foreign investors' confidence in other projects in Malaysia, like the Iskandar Development Region (IDR) in Johor and other developments?

"The IDR encourages domestic and foreign investments. Although the IDR is not a free zone, I am worried some foreign investors might pull out following the fallout (between JAFZA and PKA)," Shahrir told the Sun. It is interesting to note that a total of RM4.3 billion under the Ninth Malaysia Plan has been allocated to develop the infrastructure and facilities for the IDR, while RM4.6 billion has already been spent on the PKFZ with nothing much to show.

(By coincidence, Shahrir Samad was one year my junior and my younger brother Kassim's classmate at MCKK. His PAC vice chairman, DAP's Dr Tan Seng Giaw also happens to be my regular early morning walk companion at a public park near where I live. Perhaps apologies are in order for this rather shameless and constant name dropping on my part, but what the heck, I reckon I might as well tap on my 'old boy' network if this can get things moving ...)

Thursday, August 16, 2007

PKFZ - Damage Control

Now why wasnt I surprised.

Malaysiakini reported yesterday that " the minister of transport evaded questions of the scandal ridden Port Klang Free Zone (PKFZ) today, saying 'a statement will be issued soon' ”. I bet there are many now in Putrajaya and Port Klang having sleepless nights trying to do damage control*, finding excuses and looking for scapegoats.

I was at the Perdana Leadership Foundation in Putrajaya yesterday to listen to a talk by former prime minister Tun Dr Mahathir (TDM) to bloggers and writers, organised by the Majlis Prihatin Malaysia (Prima). (Read fellow blogger Big Dog's take on the talk, here. Malaysia-Today also carried a report by Singapore's The Straits Times correspondent Hazlin Hassan, here).

I have never really been a great fan of TDM. There is also this stark realisation that perhaps many of the nation's current ills are just part of his legacy and he is now busy trying to do some damage control himself. I would have dearly loved to ask him during question time what he thought of the PKFZ debacle and the goings-on in Pulau Indah and Westport, which was his 'baby'. But I didnt have the opportunity since there were too many others with very frivolous and even personal questions, including a nut who came all dressed up in songkok and baju melayu, claiming to be a long lost rightful heir of the "Sultan of Singapore".


* From Wikipedia: Damage control is the term used in the Merchant Marine, maritime industry and navies for the emergency control of situations that may hazard the sinking of the ship. (The italics are mine).

Monday, August 13, 2007

PKFZ - Disaster Zone?

PKFZ Empty Warehouses

Well, this may sound a bit harsh and in my book, the real disaster is when the powers that be allow the perpetrators go unpunished. In any case, this is the front page headline in today's The Sun newspaper. The Sun further allege "red tape, political meddling, inaccurate minutes and attempted tax evasion real reasons PKFZ deal collapsed." in reference to the JAFZA pullout. (Read fellow blogger Rocky Bru's take on this, here. Raja Petra's Malaysia Today has also carried a Singapore Straits Times story, here)

Oboyoboyoboy. The first three reasons I was aware of, but 'tax evasion'? Sheeesh. And trying to 'fix' the Arabs for not being 'cooperative' is dirty poker indeed. The culprits have already been named and much as I hate to get personal, some of them are people who are known to me. I believe Saturday 11th NST - Business Times (I stopped reading NST a long time ago) also wrote: "RM4.6b white elephant? Port Klang Free Zone faces cost issues, say critics." Costs? Real comedians, indeed. Haven't they ever heard of the other C word?

It is corruption, stupid.

It is no more pure conjecture since there are ample proof abound so nothing short of a Royal Commission of Inquiry, I say, after all the RM2 billion BMF scandal of the 80's had one and we are talking about RM4.6 billion here. So Pak Lah, stick to your promises, stop monkeying around and get your ass in gear.

(Some national leaders may think its OK for them to fail occasionally or make a few mistakes here and there, but in my book, for them FAILURE IS NOT AN OPTION. The Japanese will go commit harakiri for less, for crying out loud).

Friday, August 10, 2007

PKFZ Fiasco - An Update

PKFZ Hotel

Well, the shit has now begun to float to the surface. Malaysiakini today and yesterday highlighted wrong doings in the Port Klang Free Zone (PKFZ) debacle but there was nothing in other mainstream newspapers except for the Sun and the Edge. (Fellow blogger Rocky's Bru has also pointed this out, here).

How come no one seems bothered? The overinflated sum of RM4.63 billion for the development of PKFZ is actually more than the costs of developing both Pelabuhan Tg. Pelepas (PTP) and West Port combined! The fact that well connected politicians in the guise of businessmen are thumbing their noses and seem to be getting away with murder speaks volumes of the state of the nation. Like an opposition politician who recently made a police report on this, I have a good mind to do likewise but now that our police and judiciary have already become international laughing stocks I believe this will just be a waste of time.

The much respected Jebel Ali Free Zone Authority (JAFZA) of Dubai did not care to sit out their lucrative 15 year management contract and left in a hurry. Sources told me that there were discrepancies in minutes of meetings etc., which suggested of deliberate attempts to mislead the government and JAFZA was not willing to be made a patsy. The good name of Port Klang, the country's premier port, must surely now stink to high heaven in international maritime circles.

This will surely be Pak Lah's first major bail out using tax payers' money. Whatever happened to all the promises made? Many people I know are getting pretty cheesed off, and I for one am sorely tempted to quote Oliver Cromwell: "You have sat too long for any good you have been doing lately. Depart, I say; and let us have done with you. In the name of God, go!"

Monday, August 06, 2007

Missing *

Fellow blogger Ibu of Cerita Ibu has alerted me on the disappearance of Salhi Khaiessa Ahmad, 26 (photo) who has been missing since July 13 with only RM3.50 in his pocket. Other blogging friends who have joined the fray in the search include Nuraina Samad, Pi's Twist and Pokku.

Salhi is schizophrenic and may be without his medication. This is not the first time he went missing. He is also an ex MCKK boy who was a straight A's student. So to all budak koleq out there and others reading this, please keep a sharp lookout and help spread the word.

A special web site has also been started to help in the search: here .

Contact numbers are as follows:

En. Ahmad at 09-786 6040, 017-970 3227 or 012-296 2642.

* Latest update Wednesday, 8 Aug 2007: Salhi has been found in Kuantan, Pahang. Many thanks to Pi Bani and Pak Idrus for this good news.