The deal was called off, this project is removed from the PR white elephant list!
The Edge Financial Daily had reported yesterday that Boustead would be allowed to reclaim an area along the coast, south of the Penang Bridge “very much less” than 100 acres between the existing Penang Bridge and the Penang Second Crossing (P2X) in Batu Maung. The reclamation will be carried out south of Bayan Mutiara which the state government recently tendered out to be developed.
The 100 acres land reclamation concession by PR state government is to compensate Boustead for downsizing its 12-floor hotel to 5-floor after the former BN Penang government approved the project without considering the building height limit set by Unesco and MPPP.
Why I condemn LGE again, didn’t I know the hotel plan was approved by Koh’s BN government? Did I have a personal grudge with him?
Read my analysis first before you jumping up an down like a DAP wild monkey.
LGE should fight the case in the court first and argued that MPPP canceled Bostead Royale Bintang hotel is to safeguard Georgetown world heritage status and national interests.
Signing off hotel plan by previous BN government could be a technical error for overlooked the world heritage guidelines.
If state government loses the case, then compensate Boustead at an amount determined by the court. LGE is selling off reclaimed land rights without a fight.
This is his typical excuse for another PR project. I will still salute LGE even he loses the case, but not without a fight in the court.
Downsizing to 5 floors compensation will not cost the state government another 100 acres of prime land.
RM 75 million is a reasonable amount if we let the court to decide the compensation. Court may decide a smaller amount if our national interest is considered in the judgment.
Why I am whining again?
The same size of Bayan Mutiata reclaimed land in Pantai Jerjak was sold to Ivory Land for RM 1 billion by PDC.
Assuming 100 acres (new data is awaiting to be released by Penang state government) land reclamation concession for Boustead is a fire sale under the name of compensation for its hotel downsizing plan.
In other word, Penang PR state government and Penangites may losing RM940 million due to this land reclamation concession!
More shocking revelation is Boustead only asked for RM50-60 million compensation, but LGE is so generous to handover this land reclamation concession to them with a potential market value of RM 1 billion and more.
I hope BN opposition files a lawsuit against PR state government if this deal is sealed regardless the huge losses for the rakyat.
This is my estimation based on the best assumptions on how much is reasonable compensation for Boustead in case state government loses the case in court.
- 1 floor got 27 rooms, and 7 floors have total of 189 rooms.
- Penang hotel average occupation rate is 80%.
- Profit margin per hotel room is 30%.
- Average room rate is RM500
With a quick computation,
- 1 room earning per year = 1 X RM500 X 30% X 292 = RM 43,800
- 189 room total earning per year = 8.28 million
Total earning for 15-year = 124 million.
After minus 40% corporate income tax, the net profit is 74.4 million.