Mindef incurs RM10.3m losses in rental revenue


WEAK management of revenue from land and building rental has been identified as the cause behind losses of RM10.3 million in rental revenue incurred by the Ministry of Defence (Mindef), according to the Auditor-General’s Report Year 2020.

According to a report released yesterday, Perwira Niaga Malaysia (Pernama), which occupies 139 Mindef premises to conduct retail business in military camps, failed to pay a total of RM1.31 million in rent after the lease period of the premises expired on May 31, 2014.

“The calculation of the rental income was made from June 1, 2014 to Dec 31, 2017 based on the lease payment claim by Mindef to Pernama dated Dec 20, 2000.

“Apart from that, the audit also obtained a rental assessment from the Valuation and Property Services Department for the calculation of rental revenue for 2018 to 2020 period, involving Pernama, amounting to RM8.99 million,” the report said.

The report also said that the lease agreement signed by Pernama with the Federal Land Commissioner (PTP) on May 5, 2010 for 139 premises on Mindef lands nationwide is for a period of 15 years from June 1, 1999 to May 31, 2014.

The report recommended that a proposal be made with PTP to obtain approval for the lease of land and buildings used by Mindef, to enable the process of preparing rental agreements for all premises occupied by Pernama to be expedited.

Apart from that, the report also found that a total of RM178,658 from the rental of 36 shoplots at the Air Force Base for 2019 and 2020, which was not credited as government revenue but instead was put into the Air Force Unit Welfare Fund.

“This occurred because the Air Base management had used a letter from the Ministry of Finance dated June 8, 1985, as the basis for crediting the rent for the 36 shoplots to the Unit Welfare Fund,” according to the report.

According to the report, such action contradicted Paragraph 2 of the Finance Ministry’s letter dated June 8, 1985, which agreed that the revenue collected from the Armed Forces canteen operators be approved for the payment of the Armed Forces canteen rebate only.

Therefore, the report recommended that the Mindef’s Development Division monitor all rental agreements managed by the service management headquarters to ensure that all rental collections should be accounted for as government revenue.