Greater Scrutiny Needed for UM/PPC-MINT-Glomac Venture

BY Bakri Musa

The proposal by the University of Malaya’s governing board to let a private entity, PPC-MINT-GLOMAC, develop 27 acres of campus land deserves greater scrutiny. The university’s press release of February 9, 2008 did not contain sufficient details for the public or government to make an informed decision.

I am supportive of our universities going into partnership with private entities to develop campus assets, real estate and others. That would conserve the universities’ limited financial and other resources which they could then focus on purely academic matters. Creatively and properly structured, such partnerships would benefit the university and its community, the government and thus the public, as well as the participating private companies. Handled less competently and it would result in the rapacious stripping of valuable public assets to benefit only the lucky few. God knows, Malaysia has plenty of such examples, with the boondoggle Port Klang Development Project being the latest and most expensive. Taxpayers will ultimately be left holding the multi billion ringgit tab; it is criminal that our leaders would let such scarce funds be squandered.

According to the press release, the university would stand to collect at least RM312M, or RM200M plus the profit from the project, whichever is higher. Profit figures are tricky; they can be subjected to highly “creative” accounting. Enron posted record profits the year before it filed for bankruptcy. At the other end, it is the job of smart accountants to “reduce” profits (at least on paper) especially when reporting to tax agencies. A quick and dirty maneuver would be to simply inflate your expenses by paying your executives, consultants and directors outrageous compensations. Another would be to “expense” what otherwise would be capital expenditures; meaning, charging the expense in one year instead of spreading them over many.

Also not stated in the proposal is whether those profits would be a one time payment as when the developers would sell their finished projects, or a steady stream with the developers maintaining and operating their projects. The latter would produce a smaller initial payout but the university would benefit from the steady and predictable stream of income.

One significant financial improvement would be to tie the payments not to profits but to revenues. Top Hollywood stars know only too well the difference when their compensations are tied to profits as in the old days. Thus today they all opt for a share of the revenue, not profits.

Yet another improvement would be not to sell but to lease on a long term basis (with renewal options) the land to private developers. Those are valuable pieces of real estate; its value can only go up in land-starved Klang Valley. By leasing instead of selling, the university would not lose future gains in value.

In subsequent separate statement, UM’s Deputy Vice-Chancellor Amin Jalaludin indicated that the university will maintain ownership (title) of the land. This must mean some sort of lease arrangement. The university owes the public a duty to declare the terms of that lease.
These are but some of the major financial considerations. Others more financially savvy could come up with other creative and innovative financing schemes.

Non Financial Considerations

While financial considerations are important and a major determinant of the viability of the project, an equally if not more crucial consideration is to ensure that such a development and partnership scheme would enhance or further the goals and activities of the universities. Unfortunately on this important point, both the university and developers are curiously silent.

For one, what does the university intend to do with the money it would get? If the funds were to go into the general revenue for running the campus, then the future benefits would be minimal and impact not noticeable. However if the university were to dedicate the new money for specific projects like funding a new center for science research, expanding the library, or making the campus wireless, that would be much more meaningful and the impact more lasting and readily appreciated. With the benefits so tangible and readily appreciated, that would encourage further similar beneficial partnerships.

Similarly with the developer; it is not forthcoming on what it wants to do with the precious property. The company’s development plans should interest the university and the public. If the developer plans for a convention center, then that would be positive as it would complement the university’s goals. The university could use the facility for its convocations and for hosting conferences. The same benefit would accrue to the university with the building of a Research and Development Park.

On the other hand if the developer plans to build exclusive high-end condominiums, that would not add value to or enhance the university’s goals or benefit its community. For one, none of its professors could afford to buy or live in one of the units. However if it is for modest and affordable flats, that could alleviate the campus housing problem.

So in addition to the financial arrangements, the university must also get a clear commitment from the developer and impose restrictions on the use of the property. These should the minimal factors the university governing board members must deliberate. Anything less and they would not be fulfilling their fiduciary and other responsibilities. Minister of Higher Education Dato Mustapa must ensure these conditions are met before considering the venture.

  1. #1 by twistedmind on Thursday, 21 February 2008 - 10:09 am

    Someone is making a killing from this pre-arranged deal.

    If UM really wants to get rid of excess land for cash, then just AUCTION the land to the highest bidder. Why these prearranged deals?

  2. #2 by notanha on Thursday, 21 February 2008 - 10:18 am

    Some people said:

    1) “BN give a lot a lot of money to Chinese community, we must satisfy then we will be happy,”

    • Where does the money come from?
    • Aren’t we the citizen of Malaysia, entitled for having a school, universities, temples, mosques or churches?
    • Isn’t it that is the responsibility of the Money Keepers (Govt) to provide all these “ basic necessities” or are we “over demand”?
    • Is that right to ONLY give a lot a lot of money once every 3-5 years (during election?)
    • What mentality that we have by saying “we must satisfied” ?
    • Are we over demanding and materialistic by asking the Govt to build school, universities, temples/churches/mosques etc?
    • By building the above, any economic advantage (if we do not want to touch on spiritual and ethical advantage) for the country if we assess the return on Investment from monetary perspective?
    • Is that our basic needs and our rights as a Malaysian Citizens?

    2) “Don’t be too greedy, as greed bring sorrow, so don’t demand too much.”

    • First of all, I think we need to differentiate between the “Basic Needs” and “GREED”?
    • Is it true to say all GREED is bad? Or Negative Greed or selfish or sell fish is bad??
    • What is Basic Needs? Religion? Education? Food? House?
    • GREED? Spiritual and ethical development is a negative greed? Learning new knowledge is also a negative greed?
    • If you do not agreed with others view, is that what we mean by NOT CONTENTED and DEMANDING?

    3) “They built many schools, but they only demolished 1 or 2 chinese temples, then we complain, but we all havent compliment for the government = BN contribute to Chinese society! = We are all very bias??”

    • Are we clear of the purpose and functions of school/universities and temples/mosques/churches??
    • Is that what he means by once you have a school and you do not need temples/mosques/churches?
    • Building a School irrespective of Chinese, Malay or Tamil etc, isn’t it the responsibility of the government who is the custodian of our country wealth where every Malaysian has a share on it?
    • Are we so forgetful and can not remember what has been stated in our constitution? Is there a clause in our constitution on “FREEDOM OF RELIGION”??
    • What do we understand about the “FREEDOM OF RELIGION/TO BELIEVE”??
    • Approving the building of “Pu Zhao Temple” with ridiculous conditions is that what we mean by “Freedom of Religion”?
    • Are we Malaysian OVER DEMANDING and NOT CONTENTED?
    • Are we all “VERY BIAS”? and “UNREASONABLE” and DO NOT APPRECIATE/THANKFUL of what we have?

    4) “Oh!!! Ii might be influenced by Datuk XXXXX, because he …….

    • Are the schools and universities taught us to be easily influenced by others or blindly follow a leader?
    • Aren’t the schools and universities taught us to use our WISDOM to observe, to think, to analyze, and to decide?
    • Are we intentionally or unintentionally only wanted to remember what we want to remember, hear and see and forget what we do not want to hear or see?


  3. #3 by Short-sleeve on Thursday, 21 February 2008 - 10:37 am

    Happy Birthday, Kit

  4. #4 by revelation on Thursday, 21 February 2008 - 10:53 am

    Agreed with twistedmind comment.

    It really doesn’t take a genius to ASK the right questions. But apparently asking the right questions IS NOT a Malaysian culture nor does the current govt encouraging it.

    I do not know what is UM famous or speciliased for? Most renowned universities are specialising in something. Be it business, management, medical, architecture, heck even Lim Kok Wing university is known for its Arts & design.

    If I am the dean or VC of UM I would take this venture on lease term. Any project is to the benefit of UM like the examples given by Mr Bakri. Also insisted that UM student of architecture, business, law, computing department to be involved in the project as part of their work placement / dessertation criterion before graduating.

    Ok, stop dreaming! This is Malaysia…

  5. #5 by malaysia born on Thursday, 21 February 2008 - 10:57 am

    In the 1st place, I strongly believe that any universities (public or private) should hold on to their valuable land bank for any future expansion.

    This venture just simply tells me that our universities have NO plans whatsoever to expand their faculties. As a matter of fact, i really am wondering if there are any planning at all for the future.

    If we doesn’t do anything about this, sooner or later our universities will be reduce to 13-stories building!

  6. #6 by melurian on Thursday, 21 February 2008 - 11:08 am

    i for one sokong um land to move to sepang to make way for development (yeah, i’m very selfish man indeed). come on, um has already become irrelevant, no one will respect um grad as it used to be, even the many ppl rather opt to mmu where many ppl say best local univ.

  7. #7 by badak on Thursday, 21 February 2008 - 11:39 am

    This is Malaysia lahhhh.. corruption rules..Just kick this bunch of orang utan out.. correct correct correct correct.

  8. #8 by grace on Thursday, 21 February 2008 - 12:10 pm

    I do not agree with MU forming partnership to develop the land.
    First and foremost, MU do not have the expertise to develop the land. To depend on partner to do the development is just like gifting the partner with the land .
    (2) Assuming that MU managed to get the profit.The profit ould dissapear into thin air in no time.
    (3) The land could be used for future development of the Universdity. Since land around MU is very scarce.

  9. #9 by cheng on soo on Thursday, 21 February 2008 - 12:17 pm

    bn don’t give money to chinese or tamil schools, bn is only paying their debt to chinese n tamil schools, even then such payments will be collected back after GE by NAIK HARGA petrol, tol, taxes, gas, etc

  10. #10 by helpless on Thursday, 21 February 2008 - 12:35 pm

    To Bakri Musa,

    Based on the historical records, which public project could prove efficiency in utilising public’s hard earned tax revenue? The sad question is who has the power to scrutinise? ACA ? Public Audit Committee ? Ministry of Finance ?

    All the policy makers and persons with the ability to influence the decision with dignity have a tough time to prove innocent. It can’t wipe out the public and to the rest of the world the impression of ‘Guilty until prove otherwise’.

  11. #11 by smeagroo on Thursday, 21 February 2008 - 12:52 pm

    UM is going to the dogs anyway so makes no difference if the piece of land is turned into a slum. Suits the new ranking they achieved.

  12. #12 by Jimm on Thursday, 21 February 2008 - 1:56 pm

    UM have lost it’s existence eversince policy makers design special priviledges to Ketuanan in order to keep rakyat believe in government. It’s like a space provider to create Jaguh Kampung.
    In real business world, it’s all about making the fast bucks and who gets it first.
    Since non of the key people involved are coming from UM and their school of thoughts are mainly on business values rather than historical based.
    Let they proceed with the intention as they were “protected”

  13. #13 by yuking on Thursday, 21 February 2008 - 4:51 pm

    I just wish to sort out whether English medium schools will guarantee the success of Malaysia.

    According to some debate, the ‘killing off of English medium schools’ laid the foundation for the current deteriorating racial relations. I find this point of view very naive, superficial and unconvincing. Do people discriminate and hate against other races simply because they don’t speak the same language?

    Ethnic French, German and Italians speak their own languages in Switzerland with three official languages but has anyone heard of racial riots in Switzerland? I suppose the current deteriorating racial relations here is due to the institutionalised racism and racial inequality rather than the language people speak.

    Does a good English proficiency guarantee employment upon graduation? Is the English proficiency of our graduates being over-emphasised with regards to the unemployment problem?

    Malaysia and Philippines general populations have a better English proficiency than Korea and Taiwan, but the former two can in no way compete (whether in competitiveness, GDP or technology) with the two newly industrialised countries although we actually started better off than them after our independence.

    Korea and Taiwan never had English medium schools and yet their high school students always top the list for the world’s mathematics and physics Olympiad.

    The success of Hong Kong and Singapore as regional financial and trade hubs rests entirely on their competitive business environment, good governance and highly efficient administration. English is just an added advantage, not the sole sufficient condition for their success.

    The so-called globalised world is always misunderstood in that everything has to be in English in order to succeed. Again, I find that naive, simple-minded and superficial. Globalisation demands for a broader worldview, critical thought and understanding of more cultures and languages rather than a monotonic all-English mantra.

    Shortsighted policies such as not having vernacular schools will eventually kill off Malaysia rich diversity of culture that is supposed to be a strong advantage amid the rise of China and India as the world cultural and economic superpowers.

    If one ever notices, upon gaining power after independence, elites of Third World Countries (including Malaysia) trained by the colonial education system usually tend to look to their former colonial masters, rather than global models as their reference in running a country.

    Summing up my point of view, thinking that English medium schools will solve all our problems and help us succeed is simply too naive and simple-minded.

  14. #14 by susmaryosep on Thursday, 21 February 2008 - 5:18 pm

    Dear LKS,
    I just read the business report in The Star today—-> ARE WE LOSING THE UNIVERSITY MALAYA HERITAGE TO SCOUNDRELS?
    and I can’t help feeling that we are losing the fight to preserve our Heritage. I remember the letter that I wrote to The Star and the NST on the 17th June 2007, commending the PM for his assurance that the UM will remain as one of our proud heritages to be preserved for our future generations. (reproduced here)

    “…..Dear Sir,
    I would like to wholeheartedly thank the Prime minister for stating firmly that that the University Malaya will remain and will not make way for a multi billion dollar commercial development. It is timely that the Government demonstrate some morality in its pursuit of economic and social development of our country. By allowing the UM to stay, we are saying that we value history, culture and our tradition. It will be a sad day indeed, if everything that represents our history and cultural heritage is destroyed, because a businessman thinks he can make billions out of the land on which our history stands. In no time at all, all our playing fields, forest reserves, historical buildings, and even low cost apartments will make way for “development” as the lands are worth billions for commerce and business. We must not let a few utterly selfish individuals destroy Malaysia’s soul.. Thank you Dato Seri, the citizens will appreciate you for this commitment, for now, and for the future….”

    Now, I cannot understand why 27.5 acres of UM’s main campus will be developed into a gated community of condominiums and villas. Pray tell us common citizens how a gated community of snobbish and arrogant ‘elites’ will contribute to the education and intellectual development of our future children, and will having a gated community smack in the middle of the UM main campus will propel UM to be among the top 100 universities in the world? Does the assurance of the Prime Minister mean nothing but just hot air? The public must be given the right to express an opinion on this imminent project, which I repeat, if allowed to proceed, will destroy the soul of UM. Take heed, all ye UM graduates!

  15. #15 by bystander on Thursday, 21 February 2008 - 5:22 pm

    being in the property industry, believe me , this is one sure scam way to siphon money into one’s pocket.

  16. #16 by raven77 on Thursday, 21 February 2008 - 7:05 pm

    This is a scam doctored by Anuar Zaini and co and delivered to the public by a small boy called Amin and a fat lady called Rafiah……the selling of UM is akin to the state of the Malaysian economy…..the husband must now sell the wife because he gambled away all his money………….tomorrow it will be parliment….and personally speaking I think Muzium Negara, the old KL railway station, National Mosque and the Sultan Abdul Samad building should all go because they are just simply occupying valuable space……

  17. #17 by Godfather on Thursday, 21 February 2008 - 7:57 pm

    UMNOputras and their cronies have been eyeing the Lembah Pantai land for the past 30 years, but fortunately for many, the trustees for Universiti Malaya have always remained firm against “selling” the land or going into joint-ventures – until now.

    Nothing is sacred anymore with this corrupt Badawi regime – stealing public money in broad daylight. Soon they will privatise the EPF so that they can get their hands on the contributors’ money too.

  18. #18 by waterfrontcoolie on Friday, 22 February 2008 - 11:50 pm

    Surely, UM has enough EGG-HEADS to figure out a more profitable way to develope the land? With their plan/s surely the banks can give them the loans to start off. Why do the U needs 3rd party’s expertise? This can only happen in our BOLEH LAND. They are suppose to provide the country with all the engineers, architects and what have you[?] to help to develope the country! and they need some politically connected businessmen to help out!! What a shame. This is one of those PIRATIZATION model again.
    To BN, everything seems to have a price! It has no desire for history which will eventually expose all their ill gotten plans!!

  19. #19 by shortie kiasu on Sunday, 24 February 2008 - 2:14 pm

    University Malaya campus land should left intact and preserve for the unibersity purposes only. It should not be developed in whatever way to collect so-called profit!

    Taxpayers are paying for the development of university and education. Why this fuss for profit from develop the land of the campus? Profit ending up in whose pockets?

    No No!

  20. #20 by mbazly on Tuesday, 26 February 2008 - 2:19 pm

    THE RULING GOVERNMENT OF BARISAN NASIONAL is the only coalition party that can bring Malaysia to greater heights…..What DAP, PAS and PKR can do ???!! when they are not even having the same dreams while sharing the same pillow. Your struggles merely to become a check and balance agent on the goverment policies and actions. NOT MORE THAN THAT……

    Malaysian will never allow DAP, PAS and PKR (very loose coalition) to have a taste of ruling the goverment not even a minute…!! Your coalition is only based on the marriage of convenience rather than deep understanding of common objectives.

    You are championing for plural society Malaysian Malaysia, but your actions, your words in ceramah and your party’s representatives failed to reflect the multi racial ingredients.

    Dont waste your time, energy and money in trying to change the government of today by offering your alternative front(DAP, PAS & PKR)….Because you will never ever achieve that…

    You look at what BN is doing….You can see that the goverment is making progress in becoming more transparence, giving more freedom for rakyat to express their grouses (legal means but not through illegal and stupid street demonstrations), reducing corruptions and many more. Of course do not expect that everyting can be changed overnight. You also cannot do that…

    So if you want to continue fighting for election victory in one or two states and parlimentary seats…You can go ahead but dont even dream to win 12th and furture general elections when you and your very own partners do not reflect the MUHIBBAH spirits…

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