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Lim explains why Taiyo Resort got contract to manage BJCC

GEORGE TOWN: Island Golf Properties Bhd (IGP), a subsidiary of the state-owned Penang Development Corp (PDC), which operated the Bukit Jambul Country Club (BJCC), suffered heavy losses and barely made profits over the past few years, which prompted the state government to outsource the management and operations of the club.

Chief Minister Lim Guan Eng today (April 15) revealed the financial performance of BJCC and also showed comparisons between the terms and conditions of the Japanese company, Taiyo Resort (KL) Bhd, which has been awarded the contract to manage the club, and the RM2 company L & L Golf Management Sdn Bhd, which was endorsed by the previous IGP chairman Datuk Seri Zahrain Hashim. Zahrain was appointed chairman of IGP in late 2008.

The refusal of Lim to endorse L & L Golf Management is said to have upset Zahrain, who had threatened to quit as early as last year.

IGP's profits after tax fell from RM2.559 million in 2005, to losses of RM1.799 million in 2006 and RM868,473 in 2007.

It was back in the black with profits after tax of RM730,160 and RM206,875 in 2008 and 2009 respectively.

Taiyo has guaranteed RM80 million in returns to IGP over the next 20 years.

"In the principle of competency, accountability and transparency, the state government is revealing why L & L's proposal was rejected by the PDC board even though it was fully endorsed by Zahrain.

"I fail to understand why when the tender was called by Zahrain, only one company, L & L, which had been set up just months before the tender was called, had applied while the second tender called by the PDC board attracted over seven applications”, Lim said.

He said even though Zahrain had insisted that the PDC board endorse L & L for the outsourcing, after perusing the terms and conditions, the PDC board decided to retender the contract since L & L had no experience and financial backing to undertake the contract.

"With Taiyo taking up the contract for 20 years, the returns to PDC will be guaranteed with RM1.3 million annually for the first 10 years while the L & L deal was for a contract period of 10 + 5 years with guaranteed rental of RM218,00 for the first year and over 10 years would be RM7.721 million.

"L & L was also proposing to raise RM10 million via membership sales out of which 70% would go to IGP and the rest to L & L while Taiyo would not be carrying out membership sales.

"While Taiyo had guaranteed capital investments of RM30 million for the first 10 years and RM21 for the next 10 years, L & L had proposed a capital investment of RM2.55 million while clubhouse upgrading of RM200,000 would be utilised from IGP's sinking fund," Lim explained.

He added that while Taiyo had the experience from running the Kajang Hill Golf Club, L & L had no prior experience whatsoever.

Another factor in Taiyo’s favour is that it planned to retain existing staff under IGP. L & L had proposed for all IGP staff to be retrenched and pay RM1 million for the cost of retrenchment. Retrenched staff, if reabsorbed, would also have to take a 20% reduction in their salaries.

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