GEORGE TOWN: Taiyo Resort (KL) Bhd, which also manages the Kajang Hill Golf Club, has been awarded a 20-year contract with a value exceeding RM80 million to manage the state-owned Bukit Jambul Country Club (BJCC).
Chief Minister Lim Guan Eng, who is also Penang Development Corp's (PDC) chairman, said the PDC board agreed on Tuesday, April 13 after certain conditions were set, to outsource the management of the club's operations to Taiyo, a Japanese company with a paid up capital of RM5 million.
BJCC is run by Island Golf Properties Bhd (IGP), a subsidiary of PDC.
"The guaranteed returns to the PDC for the first 10 years is RM13 million, the next five years is RM7.4 million and the following five years RM8.6 million, totalling RM29 million.
"The capital investment for the first 10 years will be RM30 million and for the second period of 10 years RM21 million, totalling RM51 million over 20 years," Lim added.
The capital investment for the first 10 years would include golf course and club house upgrading -- both to take place within the first three years, the replacement of buggies with 110 new machines every three years and the maintenance of the golf course and club house at a cost of RM100,000 every month.
The company was among seven that submitted bids for the contract, which was retendered by the PDC after only one RM2 company made its bid for the contract during the first tender exercise in 2008.
PKR-turned-independent MP Datuk Seri Zahrain Hashim was the IGP chairman then, which decided to award the contract to the RM2 company. This move was rejected by the PDC board on Feb 10, 2009, as the company had no track record of managing a golf club.
Lim's move to retender the outsourcing proposal incurred Zahrain's wrath, which led to a strained relationship between the duo.
Lim said Taiyo would appoint the new chairman for BJCC but IGP would remain a wholly owned subsidiary of PDC.
According to the terms of the contract, instead of Taiyo acquiring the majority of the issued and paid-up capital of IGP, PDC agreed to appoint 11 Taiyo representatives out of the maximum 15 directors allowed on the IGP board.
All profits and loss made from the operation and management of BJCC will be borne by Taiyo.
Taiyo is also required to organise at least one international tournament, preferably the Malaysian Open, once every three years upon the completion of the upgrading works on the golf course.
All existing staff under IGP shall be retained and retrained by Taiyo.
Lim said with the management being outsourced, BJCC would be "professionalised".
"Previously, the BJCC suffered losses without much profits and with outsourcing, there is a guaranteed contract value of RM80 million over the next 20 years.
"This tender would allow us to get a birdie and eagle at the same time," Lim said.
He hoped that with Taiyo's involvement, as the company is affiliated with golf courses in Japan, there would be renewed interest from Japanese golfers towards Penang.