By Khairul Khalid
The Selangor government is disputing Eco World’s RM1.2 billion land purchase in the state, while the developer claims that it is a just a misunderstanding. Is a storm brewing between Selangor and former SP Setia chief Liew Kee Sin’s new vehicle?
When is a RM1.2 billion land purchase not a reason to celebrate? Perhaps when it puts you in the crosshairs of the state government. Which is precisely what happened to property developer Eco World last week.
On Sept 22, Eco World Development Group announced that it had purchased 2,198 acres of land in Ijok, Kuala Selangor in a deal worth RM1.2 billion. The transaction, made through Eco World’s subsidiary Paragon Pinnacle Sdn Bhd (PPSB), involved five separate sale and purchase agreements (SPAs) for 26 land parcels from four separate vendors.
Liew Kee Sin
So far, so good. Eco World is the brainchild of former SP Setia chief Liew Kee Sin. Although the magnitude of the deal took some by surprise, many business analysts felt that the land bank purchase was good news.
Eco World’s plans to develop into a township, with a gross development value of RM15 billion, could contribute to the company’s earnings growth in many years to come.
Then, things took a strange turn.
Barely 24 hours after Eco World’s announcement of the land purchase, Selangor’s state investment arm Menteri Besar Selangor Inc (MBI) issued a strong statement, saying that it would contest Eco World’s RM1.2 billion transaction,
“The management of MBI will explore any legal relief or remedies that MBI may have under the law or equity, including but not limited to the possibility of make application for an injunction due to action made by the relevant vendors,” said MBI.
Why was the state government swiftly disputing Eco World’s land purchase in Kuala Selangor?
The Selangor government claims that some parcels that Eco World’s intends to buy are located in the planned township of Alam Mutiara, “which is the subject matter of the intended acquisition by the Selangor state government that is currently involved in ongoing legal proceedings in court.”
A day later, Eco World responded to MBI, claiming that it was just a misunderstanding by the state government. The Selangor government may be getting its land parcels mixed up and could be mistakenly referring to “a separate parcel north of the parcels Eco World bought”.
“We will be arranging to meet with MBI to clarify this and also to address any concerns they may have in relation to the proposed acquisitions,” said Eco World.
In its defence, Eco World also said that the deal is conditional upon the state’s approval regardless.
“As part of the conditions precedents, the vendors are required to procure the approval of the state authority of Selangor for the transfer of the lands to PPSB and also to ensure that any legal disputes with the state authority of Selangor are satisfactorily resolved before the SPAs become unconditional,” said MBI.
Another point of contention is Eco World’s plan to divest as much as 70% of its shareholding in PPSB to raise funds for the RM1.2 billion land bank acquisition.
“It is the practice of MBI, in line with proper governance, to enter into clear, well defined arrangements on an arm’s length basis and targeting long-term gains which take into consideration not only economic gains to MBI and its partners but also the social well-being of the state and the people, holistically,” said MBI.
It was a perplexing sequence of events, to say the least. At the time of writing, the matter has yet to be resolved between the Selangor government and Eco World.
In a brief text to KINIBIZ yesterday, MBI said that it will be updating the public on the situation soon.
Was it really a mix-up by the Selangor government, a case of mistaken identities as Eco World is implying? Or is it an infringement on legally disputed land, as MBI is claiming?
Either way, the most puzzling thing about the whole thing is that both parties could have avoided the public embarrassment of tangling over the RM1.2 billion land deal by simply meeting up or communicating with each other before issuing statements and counterclaims.
The Selangor government, with the state machinery and resources at their disposal, could surely eliminate any doubt in this dispute. On the other hand, Eco World, with its experienced and market savvy management team, could also have communicated any misunderstandings to the Selangor state better and cleared things up immediately.
Instead, the rising property developer is putting itself in a potential collision course with the state government. If the matter leads to a prolonged legal wrangling, it could sour relations between Eco World and the Selangor government, potentially jeopardising the developer’s future projects in the state.
Time will tell whether big trouble is brewing for Eco World in Selangor, or it is just a storm in a teacup.
GRRRRR!!!
You must be logged in to post a comment.