PKFZ: A Nation's Trust Betrayed


This book is a comprehensive documentation of the sordid affairs of the Port Klang Free Zone (PKFZ) which began in the early 1990s with a co-operative that comprised primarily of ordinary people living on Pulau Indah near Port Klang. The co-operative, led by a few high state level officials from Selangor Umno, successfully obtained 1,000 acres of land from the Selangor state government to be developed purportedly for the benefit of its members.

A few years later, however, this piece of land was sold to Kuala Dimensi Sdn Bhd (KDSB) for a total price of RM96mil. KDSB went on to resell this same piece of land to the federal government at a hefty price of RM1.088bil. This was when the Ministry of Transport, along with the Port Klang Authority (PKA), decided to develop the land into the PKFZ in a bid to enhance the competitiveness of Port Klang as a major transshipment hub in the region.

What started as a noble goal is as yet unrealised. Instead, what has unfolded before the public today, more than a decade since PKFZ’s inception, is a tragic tale of conflicts of interest, an inept bureaucracy, opaqueness in the award of contracts (instead of transparent, open competitive bidding), abuses of power, an ineffective board at the helm of the PKA and many imprudent decisions.

One of these was the Cabinet’s decision to allow PKA to purchase the land directly from KDSB, instead of asking relevant agencies to acquire it. The latter decision would certainly have been more rational and justifiable, since the land would be used for the development of a major public utility with huge positive externalities coming after a long gestation period. The nature of such an investment would certainly fall within the public domain and be a good target for compulsory acquisition. Besides, costs would have been considerably contained had compulsory land acquisition been resorted to. For the PKFZ, cost savings could have been to the tune of several hundred millions of ringgit.

What was most shocking was that among the more vociferous opponents of land acquisition was a member of the then State Executive Council, who happened also to be a member of the board of PKA. I say shocking because one would expect political leaders to place public interests above private ones. Alas, this was not to be! Another imprudent decision was that contracts for development works were not openly tendered for, but repeatedly given to the same company.

Procedures were also not followed. For example, agreements were signed even before formal Cabinet approval was obtained. The frequent practice of the federal government in appointing political retirees, without considering their technical suitability to helm the boards of statutory bodies, also leaves much to be desired. One consequence is the ineptness of some of these boards. All these details and more are to be found in the book so comprehensively written by Lee Hwa Beng, assisted by Lee Siew Lian.

Lee, a trained accountant by profession, was a three-term state assemblyman for Subang Jaya, while Miss Lee was, for a long time, a journalist covering news in economics, commerce and business. Lee was appointed chairman of the PKA in April 2008, a position he held for three full years. In the course of his term, he uncovered many irregularities and even outright corruption. These had been raised earlier, however, by politicians including Lim Kit Siang, Teng Chang Kim, Ronnie Liu and Tony Pua.

It took Lee’s courage and commitment to unravel and divulge the many details of a scandal that would bleed the nation of many billions of ringgit in cost overruns. As he said, “Writing this book will thrust me into the limelight again, which may bring controversy and perhaps danger.” Despite the risks to his own personal security and perhaps even to his family, he still went ahead to write it, without fear or favour.

The result is that readers will now know a lot more about the PKFZ scandal than they otherwise would. The non-disclosure of important details by the state is deliberate, for how else does one explain the initial reluctance of the Prime Minister to divulge details of the review report on the PKFZ scandal prepared by Pricewaterhouse Coopers to the general public? To add strength to this suspicion is the delay in the coming out of its report by the Special Task Force headed by the Chief Secretary to the Government. Despite promising to get to the bottom of the scandal and to produce a report on this by April 2010, this task force, which was set up in September 2009, has till today failed to deliver, a delay of more than two years!

Such a deliberate delay is understandable since the state is a protector of the interests of business and commercial elites that have close ties to it. The Malaysian state is, after all, a capitalist state whose elites seek to use state power at their command. The many lucrative contracts given to those in Umno or their allies for highway construction, privatisation of ports, airports and hospitals, procurement and cattle breeding are good examples of political business alliances that now characterise Malaysian capitalist social formation.

I would have wished Lee to have devoted some space to amplify this class-biased nature and role of the Malaysian state. Be that as it may, PKFZ: A Nation’s Trust Betrayed is a useful addition to the literature on the political economy of Malaysia. I strongly recommend all to read it.

Toh Kin Woon is a senior research fellow at the Penang Institute.

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