Financial Problems
Controversy began when the Malaysian Parliament's Public Accounts Committee met with the Port Klang Authority (PKA), because of dissatisfaction with huge cost overruns amounting to RM 3.5 billion (USD 1.0748 billion) associated with the Port Klang Free Zone. The original cost of setting up the integrated free zone was supposed be RM1.845 billion but increased to RM4.6 billion when the project was completed four years later.
PKA purchased 1,000 acres (4.0 km2) of Pulau Indah land from Kuala Dimensi Sdn Berhad at RM 25 per square foot for a total consideration of RM 1.8 billion (inclusive of interest). Kuala Dimensi made a capital gain of RM 993 million because it had purchased the land from Pulau Lumut Development Cooperative Berhad for only RM 95 million (at RM 3 per square foot). Moreover, the Minister of Transport saw it fit to reject the Attorney-General's view that the land could be acquired for "public purpose" under the Land Acquisition Act at RM 10 per square foot.
In 2007, the Malaysian Government gave a soft loan of $1 billion to Port Klang Free Zone. In the press release, The Ministry of Transport, Malaysia put the blame on the previous regional industrial park management company of Port Klang Free Zone, JAFZA for mismanagement. The PKFZ initial plan was to develop in two phases, covering 500 acres (2.0 km2) at the cost of RM 400 million. However, the JAFZA advised PKFZ to develop the entire project in a single phase, costing RM1.845 billion.
In 2008, Price Waterhouse Coopers was asked to conduct an audit in response to financial irregularities.
Read more about this topic: Port Klang Free Zone
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