KUALA LUMPUR: There will be no end to the Kampung Baru saga as the offer on the table is impractical and not carefully thought out, said former second finance minister Datuk Seri Johari Abdul Ghani.
As a result, he said, the project might not take off because the Federal Territories Ministry had insisted that it required the consent of all landowners, apart from the nature of the bid that forces landowners to take 15 per cent of the RM1,000 per sq ft in shares.
Johari said to make matters worse, the special purpose vehicle (SPV) under which the shares will be parked was unclear.
‘When you give an offer, you must be sincere on how you are going to get 100 per cent of them (5,000-odd landowners) when 15 per cent of their land value is tied up in shares’
He questioned which company would be willing to make a huge financial commitment.
‘And who is this SPV Tabung Haji or Permodalan Nasional Bhd? Also, if the SPV is under a government agency, has it received an approval from the Finance Ministry for a government guarantee? Which bank is going to give you funding when there is no SPV?
‘You can’t play around by giving hope to the people without clarifying these matters,’ he told the New Straits Times in an interview here recently.
The former Titiwangsa member of parliament wondered how a funding to such a tune could be pulled out of the hat.
‘Barisan Nasional was practical because we knew we couldn’t spend money to that tune just for the land and leave out the development (aspect).
‘The land compensation is valued at RM10 billion and if that is only 10 per cent of the cost, where are you going to go for the rest of the 90 per cent, or RM90 billion, in construction (of the development project)?
‘If you want to make a general offer to a public listed firm, you must get your funding ready.’
He said while he had nothing against the offer by the government, he said it should not get involved in such an ambitious redevelopment plan, but instead focus on acquiring land for public use, such as building Mass Rapid Transit stations.
He suggested the conversion of the largely residential parcels to commercial, raising the plot ratio to 1:10, creating connectivity by providing public transport facilities and solving flood woes.
He said the ministry should pay landowners who wanted to accept the offer immediately, instead of waiting for all of them to agree to it.
He said developing the land in parcels could build confidence and this would encourage others to follow suit.
The government had offered landowners RM1,000 per sq ft in another bid to secure a deal.
The offer is limited to a maximum of RM850 in cash, with the remaining amount to be delivered by way of shares in a SPV that will be set up to facilitate redevelopment.
Federal Territories Minister Khalid Abdul Samad said the price was the government’s final and best offer.
The project covers a 120ha area in the heart of the city, with 80ha earmarked for redevelopment. Of the 80ha, 62ha is privately owned.
However, the sheer number of landowners and the fact that some are unregistered, have died or are embroiled in small estate disputes, have complicated matters.