KUALA LUMPUR (March 19): The Public Accounts Committee (PAC) attributed the loss of RM3.19 million in land lease revenue from The St Regis Langkawi Hotel to the Langkawi Development Authority's (Lada) failure to conclude the land lease agreement with the operator of the property.

PAC chairman Datuk Mas Ermieyati Samsudin said in a statement, following the tabling of the PAC report on its proceedings into Lada on Nov 30 and Dec 13 last year, that the committee found unresolved issues concerning the lease of The St Regis Langkawi Hotel, involving Lada and the hotel's operator, INR Sdn Bhd.

She said that the land's leasehold status, approved by the state government for The St Regis Langkawi Hotel's development, has hindered the completion of the lease agreement, as the original shareholders' agreement required freehold land status.

"Due to the lack of a signed land lease agreement, Lada was unable to collect the annual lease fee of RM660,000 for almost five years, resulting in a total loss of RM3.19 million," she said in the statement released Tuesday.

Lada is a government agency under the Ministry of Finance (MOF). The proceedings summoned the secretary general of Treasury Datuk Johan Mahmood Merican, deputy secretary general of Treasury (Investment) Datuk Shahrazat Ahmad, and deputy chief executive officer of Lada Wan Kamarul Faisal.

Mas Ermieyati further noted the PAC's surprise in finding that Lada owned a 30% stake in INR Sdn Bhd, with the Minister of Finance (Inc) holding another 30%, and the remaining 40% held by Rajawali Group from Indonesia, making the MOF the main shareholder with a 60% stake.

The failure to complete the land lease agreement had also resulted in a non-performing loan (NPL) issue with Bank Pembangunan, as INR Sdn Bhd failed to repay the instalment payments for 24 months of overdue financing amounting to RM27 million up to June 30, 2021.

INR Sdn Bhd had taken loans from Bank Pembangunan amounting to RM246.54 million and a loan from the government amounting to RM20 million for the construction of this hotel, according to Mas Ermieyati.

"The MOF plans to start the process of selling The St Regis Langkawi Hotel to settle the debt of INR Sdn Bhd. However, there are difficulties in finding potential buyers as long as the status of the land is still pending," Mas Ermieyati said.

Meanwhile, Mas Ermieyati also noted that Lada was negligent in allowing Maju Holdings Sdn Bhd (MHSB), the company mandated to undertake the Tok Senik Resort Village Development Project, to collateralise the land to Perwaja Terengganu Sdn Bhd (PTSB), putting Lada at risk of losing ownership of the land.

To address the issues, the PAC has urged MOF and Lada to promptly finalise the land status to enable the conclusion of the lease agreement. The PAC also instructed MOF to present a comprehensive rescue plan for The St Regis Langkawi Hotel to PAC, covering debt restructuring, hospitality management, and the hotel's future.

"Lada must also enhance project management competency to ensure projects are completed on time, with the desired quality and returns, while also ensuring proper management of future tourism development plans to maintain Langkawi's status as a premier destination.

The MOF must also improve monitoring and regulation of the Minister of Finance Inc to prevent negligence and ensure profitability in alignment with their established principles," she said.

Mas Ermieyati added that the PAC would hold a working visit and proceedings regarding this issue in June in Langkawi to find out Lada and the MOF's response to the recommendations.