KUALA LUMPUR, Oct 17 — The Penang Development Corporation (PDC) board has announced today the termination of a joint venture agreement with UMECH Land Sdn Bhd for the development of Batu Kawan Industrial Park 2 (BKIP2), also known as Byram Industrial Park.

In a statement, the board said the majority change in UMECH Land’s equity structure without PDC’s official approval was serious and unacceptable by the board.

"However, the change in the majority of the equity structure of UMECH Land Sdn Bhd to the extent that there is a change in the party controlling and leading the project that is implemented without notifying and obtaining PDC's official approval is an issue that is taken seriously and cannot be accepted by the PDC Board,” it said.

"Therefore, the PDC Board decided to terminate the joint venture agreement with UMECH Land Sdn Bhd by giving a three-month notice based on clause 19 of the PDC-UMECH Land Sdn Bhd Enterprise Agreement,” it said.

Upon the termination, it said that the corporation was advised to advertise using the media channels through a Request For Proposal (RFP) for a proposed collaboration with PDC to develop Batu Kawan Industrial Park 2.

It said that the RFP will be soon advertised by PDC to attract interested investors.

Similarly in the statement, the board also declared transparency in the selection process of the UMECH Land Sdn Bhd and it was aligned with the PDC policy.

The board said that it includes the determination of cash contributions and the payment schedule to the corporation.

The board further highlighted that the collaboration with UMECH Land had underlined a positive impact on the PDC cash flows, which included the commercial aspects and benefits to the development in Penang.

Last week, Penang Chief Minister Chow Kon Yeow said that PDC acquired the land in Byram for RM500 million before branding it to BKIP2 and there were collaborations involving Sime Darby Sdn Bhd as the owner part of the land as well.

However due to the high cost of infrastructure, the collaborations did not materialise and the development of the land was paused for some time before the land was promoted at Expo Dubai 2020, where UMECH Construction had shown interest.

The issue of the Byram Industrial Park’s direct award to UMECH Land was initially raised by the Penang Chinese Chamber of Commerce (PCCC), in which its president Datuk Seri Hong Yeam Wad demanded an explanation on why the deal was not settled through open tender.

He had also alleged that the land was sold to UMECH for RM646.02 million which the chamber claimed was significantly below the value of the land.

The Penang lawmaker further reiterated that it was not a land sale, but a collaboration with PDC, where the corporation had the role to make sure the development company developed the land, following the terms and guidelines of the agreement.