Penang to sell state land through tender to increase revenue, says chief minister

Penang Chief Minister Chow Kon Yeow speaks during a press conference at Komtar in George Town October 1, 2020. ― Picture by Sayuti Zainudin
Penang Chief Minister Chow Kon Yeow speaks during a press conference at Komtar in George Town October 1, 2020. ― Picture by Sayuti Zainudin

GEORGE TOWN, Oct 19 — The Penang government plans to sell its land bank by tender as one of the ways to increase state revenue, said Chief Minister Chow Kon Yeow (DAP-Padang Kota) at the state legislative assembly today.

He said this is one of the steps the state will take to manage the annual deficit budget so that it will not cut into the state’s consolidated reserve funds. 

“Currently, the sale of state land is conducted directly by certain applicants and the sale price is according to the land value set by the Valuation and Property Services Department but we can now consider selling state land through tender,” he said in his winding-up speech today.

He said through open tender, state land can be sold to the highest bidder but this process will also be conducted in accordance with land sale regulations.  

The second way to raise the state’s revenue would be to transfer the state’s dormant industrial land to Penang Development Corporation (PDC), he said.

“At this time, we have industrial land that is dormant until we sell it to suitable investors interested in the land,” he said.

He said the state was not getting any revenue from the dormant industrial land so the state could create a mechanism to transfer the land to PDC. 

“Through this method, the state government can obtain revenue in terms of taxes consistently from this land bank,” he said.

Chow said the third method would be to reclassify rural land as urban land because development has changed the landscape of some rural areas, turning them into towns. 

“We need to reclassify rural land as urban land because it is unavoidable that these areas have developed into towns,” he said while stressing that this activity does not include villages. 

He said the reclassification of such land involved existing townships such as Bukit Mertajam and new satellite towns like Bayan Baru. 

He said if these areas were not reclassified, it would not be fair to the residents living in town areas that have been gazetted.

“We can look at Bayan Baru and Bayan Lepas as examples. Bayan Lepas areas are classified as urban land, while Bayan Baru is classified as rural land despite rapid development in the township that far surpasses Bayan Lepas,” he said.

He said with the reclassification of the land, the quit rent rates of rural land will be switched to urban land rates.

Chow said the quit rent rates for urban land have not been increased for 26 years since 1994 even though they were supposed to be reviewed every decade.

Finally, the fourth strategy the state will undertake to increase its revenue would be to replace all interim register land titles where the titles are unclear.

He said there are tens of thousands of interim register land titles that were not switched to land titles in accordance with the National Land Code 1965. 

“From these thousands of land titles, a portion of it was for land titles that were not clear as to the land ownership,” he said.

He said it will take between three and five years to complete the process of replacing the interim register land titles.

“It is possible that the state will stand to gain in terms of land being returned to the state during this process and this land can be sold off,” he said.

Earlier, Chow said it was unavoidable for the state to present a deficit budget of RM403.8 million for 2021. 

He said the state had a choice to present a surplus budget but chose not to as it had allocated a large sum of the budget towards protecting the people’s welfare in facing a challenging economy. 

“The state government has been presenting a deficit budget every year but at the end of the year, the state has always recorded a surplus except in 2018,” he said.

He said the state’s revenue was also affected by the Covid-19 pandemic as one of the highest sources of revenue for the state was from the entertainment and tourism industry. 

“Before the crisis, the state collected entertainment duty at an average of RM16 million a year but due to this pandemic, the state only collected RM4.76 million as of September this year,” he said.

He also said the state could have increased the quit rent which had not been revised since 1994 despite a provision under the National Land Code 1965 that allowed the state government to increase the quit rent every 10 years. 

However, he said the state government decided not to burden ratepayers by increasing the quit rent so the state had to look at other ways to increase its revenue.