BATU KAWAN: Penang-based developer Aspen Group Holdings Ltd has come forward to explain the direct negotiation process for the acquisition of land in Bandar Cassia here, which was made 10 years ago in 2013.
This follows recent news reports linking Aspen's direct negotiation for the acquisition of land in Bandar Cassia to the current Penang Development Corporation's (PDC) land sale in the Batu Kawan Industrial Park 2 (BKIP2).
Aspen said the direct negotiation between PDC and Aspen back in 2013 was vastly different and under varied circumstances.
Its president and group chief executive officer Datuk M. Murly said it was not reasonable nor logical to compare the direct negotiation between Aspen and PDC in 2013 and linking the recent land sale of BKIP2, which fundamentally differs.
He said, a decade ago, the Batu Kawan land was a swampy area devoid of any development or proper infrastructure, and the construction of the second Penang Bridge was still underway.
He said, at that time, the state administration and PDC were eager to develop Batu Kawan and envisioned Batu Kawan as the third satellite city of Penang.
"However, due to its undeveloped condition, finding interested developers or investors was a significant challenge. PDC was actively seeking a commercial catalyst that can bring in business opportunities for Batu Kawan, specifically the Ikea store, as a key commercial catalyst.
"Aspen, in collaboration with Ikano Retail (the franchisee of IKEA) as its joint venture partner, engaged in negotiations with the state government and PDC in 2013 and since then became the pioneer developer in Batu Kawan.
"The necessity of direct negotiation arose because they were not required to participate in any tender exercise as there were no direct or indirect competitors available for PDC to compare if an open tender were initiated with an IKEA store being the mandatory requirement.
"The negotiations focused specifically on the IKEA store serving as the catalyst, along with an integrated shopping centre and a mixed-use development comprising residential, commercial, and other mixed-use components on a 245-acre land in Bandar Cassia, which is now Aspen Vision City (AVC)," he said.
Elaborating, Murly said Aspen acquired the land at the then prevailing market price, equivalent to the average rate of RM45 per square foot for a total consideration of RM483,951,600 (245 acres) in 2014 compared to BKIP2 that was reportedly sold at RM26.53 per square foot for a total consideration of RM646,020,000 (for 558.96 acres) in 2023.
He said, as part of the negotiation with PDC, Aspen was obligated to develop the land in partnership with its joint venture partner.
"Furthermore, under the Purchase and Development Agreement (PDA) with PDC, Aspen was restricted from disposing the land without the consent of PDC, including any other catalyst developments within AVC, such as Columbia Asia Hospital, currently under construction, which required the prior approval from PDC, to which Aspen duly complied and obtained the necessary approvals from PDC.
"Aspen was also restricted from changing its shareholding structure without the consent of PDC and has not changed its shareholding structure to this day. Furthermore, Aspen did not flip the land or sell the shares of the company to any third parties.
"Aspen is headquartered in Penang and the majority shareholders and directors are locals. 99 per cent of Aspen's employees are based in Penang and they contribute to the economic growth and wellbeing of the state.
"More importantly, Aspen as the pioneer investor has fulfilled PDC's aspirations to build a more resilient economic growth for the state, especially the Seberang Prai district and contributes immensely to the accelerated growth of Batu Kawan as the third satellite township," he added.
Presently, Murly said, Aspen together with its joint venture partner, has effectively completed the pivotal components of AVC, notably the IKEA store, which has been operational since 2019.
He said, as of to date, Aspen has fulfilled all the mandatory requirements of PDC and has settled the land consideration.
"Above all, Aspen has also invested over RM500 million on earthworks, land improvement, infrastructure works such as drainage, roads, a 25-acre Central Park and other public amenities. This investment has significantly increased the overall land cost, bringing it close to RM1 billion.
"We have spearheaded the development of Batu Kawan as a pioneer developer and transformed AVC into a thriving satellite city and vibrant commercial hub. The success of developers in the adjacent industrial area can be primarily attributed to the substantial investments made by Aspen and its joint venture partner in the early days, breathing life into what was once a swampy terrain in Batu Kawan.
"Implying that our joint venture, AVC, is equivalent to PDC's new land sale through direct negotiation is not a fair and equitable comparison and it should be avoided at all costs. Aspen's AVC project should not be juxtaposed with PDC's other ventures, given the vastly different circumstances and goals of PDC then and now.
"We emphasise in accordance with the PDA, that we have fulfilled our obligations, including land payment, infrastructure development, and the successful operation of the IKEA store, and completion of the first phase of the mixed-use development. We reiterate our commitments to continue to develop the balance of undeveloped parcels in accordance with the terms of the PDA entered with PDC. We envisage the AVC township in Bandar Cassia, Batu Kawan to be a thriving commercial hub of Penang's third satellite township," he stressed.
The Penang government was recently embroiled in a controversial land sale and had defended the sale of a PDC-owned land in Byram, in the Seberang Prai Selatan district, to UMECH Construction Sdn Bhd (UMECH).
Chief Minister Chow Kon Yeow said UMECH had been chosen as PDC's collaborative partner to develop the new industrial area, and that the private company's participation was a result of promotion done during the 2020 Dubai Expo.
He said the selection of UMECH was done according to 'due diligence' procedure.
Chow had also defended the direct negotiation project as one of the methods to get the best offer.
He said, based on the record, the developments of the Aspen project on a 245-acre site and university development by Paramount Property Sdn Bhd in Bandar Cassia were also through direct negotiation.
"All the projects have succeeded in changing the landscape of the development of Bandar Cassia and are categorised under high-impact, catalyst projects," he was quoted as saying.
Chow had said this when responding to queries from the Penang Chinese Chambers of Commerce (PCCC) on the awarding of the project through direct negotiations and why local companies were not given the opportunity in the project.
There were also questions raised that the land could have been transferred to a developer.