KUALA LUMPUR: The Public Accounts Committee (PAC) today submitted five recommendations to the Ministry of Finance (MOF) and the Langkawi Development Authority (LADA) to be implemented to resolve the leasing issue with St. Regis Langkawi Hotel and Tok Senik Resort Village project.
PAC chairman Datuk Mas Ermieyati Samsudin said the first proposal was for MOF and LADA to take immediate action to clarify the status of the St Regis Langkawi Hotel land so that the lease can be finalised and LADA can collect a lease value of RM3.19 million.
As for the second recommendation, she said MOF must submit to the PAC a comprehensive recovery plan for the St Regis Langkawi Hotel which includes debt restructuring, hotel management and the way forward for the hotel as well as Deloitte's status as receiver and manager (R&M).
"Thirdly, LADA needs to improve its project management expertise to ensure that ongoing projects are completed according to schedule, quality and targeted return on investment," she said in a statement today.
Fourthly, LADA should ensure that all future development and tourism promotion plans are well managed to maintain Langkawi as a world-class destination.
Mas Ermieyati said the fifth suggestion was for MOF to monitor and supervise the Ministry of Finance (MOF Inc) companies more effectively to prevent negligence that could jeopardise the government's interests.
"MOF must also ensure that MOF Inc companies are able to generate profits and operate in line with the establishment of the company," she said.
The PAC today tabled its report on the Langkawi Property Development Management under LADA and MOF after questioning several witnesses on Nov 30 and Dec 13, 2023.
The witnesses included the Treasury secretary-general Datuk Johan Mahmood Merican, deputy secretary-general (Investment) Datuk Dr. Shahrazat Ahmad, and LADA deputy chief executive officer Wan Kamarul Faisal Wan Kamardi.
Mas Ermieyati said PAC had found that the lease agreement to formalise the ownership of the St Regis Langkawi Hotel land between LADA and the hotel operating company INR Sdn Bhd could not be signed because the land status obtained was a leasehold, while the terms in the shareholders' agreement stipulated that the land status must be a freehold.
According to Mas Ermieyati, due to the continued existence of this unsigned agreement, LADA was unable to collect a lease value of RM660,000 per year for a period of four years and ten months, totalling RM3.19 million.
She said MOF planned to initiate the sale process of the hotel to settle INR Sdn Bhd's debt to the development bank, but there were difficulties in finding potential buyers while the land status was unresolved.
INR Sdn Bhd's inability to settle loan instalments to the bank for 24 months has led to become a non-performing loan, and it became more critical when the country was hit by the COVID-19 pandemic crisis. As of June 30, 2021, the outstanding amount is RM27 million," she said.
On the Tok Senik Resort project, she said Maju Holdings Sdn Bhd (MHSB) has not taken any action to register the ownership of 30 per cent stake in Kampung Tok Senik Resort Sdn Bhd, which is worth RM8.3 million, with LADA.
"LADA's negligence allowed MHSB to mortgage the land to Perwaja Terengganu Sdn Bhd (PTSB), causing LADA to lose ownership of the land," Mas Ermieyati said.