KUALA LUMPUR: The wheels have been set in motion for 1Malaysia Development Bhd’s (1MDB) Kuala Lumpur International Financial District (KLIFD) project, along Jalan Tun Razak, to start although compensation issues that have yet to be ironed out may throw a small spanner in the works.
Documents for pre-qualification tenders under KLIFD’s masterplan, which is being finalised by 1MDB, were released last Wednesday. However, traders operating in Pasarakyat, which occupies a piece of land acquired by 1MDB for the KLIFD project, have refused to move until they have been compensated.
It is learnt that a meeting between the representatives from the traders, 1MDB, a minister from the Prime Minister’s Department and Bukit Bintang Member of Parliament Fong Kui Loon was scheduled to take place last Thursday, but has been rescheduled to another date that is yet to be determined.
When asked, 1MDB declined comment on the subject of compensation.
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Late last year, Pasarakyat Sdn Bhd, the operator of the market known as Pasarakyat, issued a letter to the tenants telling them that 1MDB had on Dec 6 notified Ladang Impian 1 Sdn Bhd it is now the registered proprietor of the Pasarakyat land and it wished to terminate the lease. Ladang Impian holds the lease to the land on which Pasarakyat is built.
The letter from Pasarakyat added: “Consequently, we are forced in turn to terminate your (the traders) licence. Notice is hereby given pursuant to Paragraph 10 (v) of the Licensing Agreement to terminate your licence. You are requested to remove all your items and belongings and to peaceably yield up the allocated premises in good and reasonable condition at the expiry of three calender months from Jan 31, 2011, to April 30, 2011.”
Pasarakyat sits on one of the few pieces of land that will make up the 30.35ha (75 acres) for the development of KLIFD, a project initiated by the government to unlock the value of the last big plot of land in the KLCC vicinity by transforming it into a thriving financial hub.
The RM26 billion KLIFD development will include office buildings, retail and entertainment space, residential components, a park and a business university. It is to be co-developed by the government’s special purpose vehicle 1MDB and Abu Dhabi’s Mubadala group via a strategic partnership.
Prime Minister Datuk Seri Najib Razak had said at the signing of agreement between Mubadala and 1MDB last year that KLIFD would also provide significant stimulus for the construction industry.“There is no objection to the KLIFD but the traders (at Pasarakyat) must be relocated properly. They have built up the good name of the place, so to chase them out without any compensation is unfair,” Fong, the Bukit Bintang MP, told The Edge Financial Daily.
The much-publicised Pasarakyat was opened on Jan 31, 2002, by the then-prime minister Tun Dr Mahathir Mohamad as a farmers’ market where farmers could sell their produce directly, eliminating middlemen. But the farmers market didn’t really catch on and in subsequent years, Pasarakyat also doubled up as a bus terminal for Singapore- and Genting Highland-bound buses.
It is learnt that the nearby Bukit Bintang Market, where 200 hawkers and traders are operating, also faces a similar fate because of the KLIFD, but Dewan Bandaraya Kuala Lumpur (DBKL) has promised to find a new location for the traders.
“There is to be no compensation for the traders but from my discussion with DBKL, a new location will be found for them,” said Fong, adding that he has suggested that a new market with a multi-storey car park be built nearby.
He said there are about 42.5ha of government land in the area, of which 30.35ha have been given to 1MDB for the KLIFD development.
“There are still 12.14ha. Just allocate about two to four acres of land for the market and multi-storey carpark,” added Fong, who had also tabled an emergency motion in Parliament on March 10, on the issue of the relocation and compensation for the traders and hawkers.
However, the motion was denied by deputy speaker Datuk Ronald Kiandee as it was understood that 1MDB is currently seeking a solution to ensure all stakeholders involved are taken care off.
Pasarakyat was envisaged to be a farmer's market to eliminate the roleof the middlemen.
According to Fong, there are other businesses, including a few restaurants, that had leased land from the government in the area and they may now face eviction as well. Meanwhile, private land owners who own small plots of land surrounding the KLIFD site may also demand compensation as the development of KLIFD affects their property. These are issues that 1MDB needs to resolve.
Market observers said any compensation relating to the KLIFD project affects not only 1MDB but potentially the mass rapid transit (MRT) project as well. It is learnt that an underground MRT station will be built on the Pasarakyat location to serve the KLIFD.
With the MRT project expected to commence work in July, and scheduled for completion in 2016, it is imperative that the development schedule of the key components of 1MDB also move in tandem so as to deliver the desired impact on the government’s Greater KL Master Plan. Indeed, according to information from the 1MDB website, work on KLIFD will begin in mid-2011, while the MRT is expected to begin construction on July 16.
How 1MDB deals with the compensation issue could be a test case for Syarikat Prasarana Negara Bhd, the promoter of the MRT, as the government-owned transport entity will soon commence land acquisitions to build the rail system.
Prasarana’s challenge is expected to be even tougher as it involves acquiring various parcels of land from private parties. The government is expected to acquire 473 lots of land totalling 97ha for the MRT’s Sungei Buloh-Kajang line.
The MRT and major development projects such as KLIFD are catalysts to promote the further growth of Kuala Lumpur, said analysts.
Land valuations of the KLIFD area, between Jalan Tun Razak, Jalan Sultan Ismail and the Putrajaya elevated highway, are expected to rise upon the completion of the project. According to market sources, the land is valued at RM1,000 to RM2,000 per sq ft currently. DBS Group Research Equity had in its report in January said that land prices in the KLIFD area are expected to double within the next five years.