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This article first appeared in The Edge Malaysia Weekly on September 17, 2018 - September 23, 2018

SYNERGY Promenade Sdn Bhd, the developer of the 20-acre tract belonging to the Federal Land Development Authority in Jalan Sultan Yahya Petra, had kept mum despite being in the news for allegedly taking control of FELDA’s land in an improper manner. But it has broken its silence now and is studying its options. The following is an interview with the company via email.

 

The Edge: Was there a tender process for the development of the Semarak land owned by FELDA? If so, are you at liberty to share with us the names of the other bidders, or details of the process?

Synergy Promenade: Way back in 2013, Felda Investment Corp Sdn Bhd (FIC) had the intention to develop four projects in Kelana Jaya, Jempul, Ipoh and Kuala Lumpur, which is the Semarak land. We were invited to participate in the Semarak project but we were not informed if there were other bidders for the same project.

We were invited to participate based on our proven track record in completing another project (for FELDA) ahead of schedule. As for the process, FELDA is best placed to answer questions relating to it.

 

Could you share a little on the background of the project?

Back in 2014, Synergy Promenade entered into a development agreement with FELDA subsidiary FIC to develop land in Jalan Semarak (now Jalan Sultan Yahya Petra).

FELDA granted us power of attorney as the developer and we agreed that it would receive a minimum of RM500 million or 10% of the gross development value, whichever is higher. We made a payment of RM10 million to FELDA as part of our consideration.

Sometime in June 2016, FELDA requested that we develop three towers. We initially obtained a development order from Dewan Bandaraya Kuala Lumpur (DBKL), which approved a plot ratio of 1:7 but we appealed and obtained a plot ratio of 1:10, which enhanced the value of the project to around RM8.3 billion.

FELDA was to receive about RM830 million as part of the development agreement, much higher than the value of the land, estimated to be around RM150 million to RM200 million.

To develop the complex requested by FELDA, we requested a need statement (which establishes the focus and rationale for a proposal or project) but only part of the said need statement was furnished. We also requested full vacant possession of the land but were given vacant possession of only one of the 24 parcels.

 

What was your plan?

Our group of companies has been involved in property for more than 20 years, mainly in Shah Alam, but not as big as this. But we were confident that with our vast experience in business and our relationship with our business associates, locally and internationally, we were capable of developing the project.

We will be exploring options to maximise returns on the development, including collaboration with partners.

 

But do you have the capability to handle a RM8.3 billion GDV development?

We have been in business for more than 65 years in various industries, especially manufacturing, property and construction. With our vast experience and track record, coupled with our prudence in making decisions, we have been able to sustain our business until today.

We have confidence in our team, that we can manage this mega project. We have done a thorough study assessing the economic landscape. Yes, there will be challenges but we are ready to face them. The increase in the plot ratio from 2 to 10 by the authorities demonstrates our capability to manage this project.

We have been in construction and fitouts since 1986, including projects in the Middle East. Locally, we have even done work at Istana Negara.

 

A lot has been said about the transfer of the land. Can you clarify what transpired?

Since we require financing to complete the development project, we transferred part of the land to our name to obtain financing, to be secured by first-party charges over such land. This is because the financial institutions that we approached requested first-party charges as security.

There have been allegations of corruption, fraud and wrongdoing in connection with the transfers. However, we transferred the land within the four corners of the agreements entered by us, FELDA and FIC.

We notified FELDA about the transfers at the relevant times but it was only several months later that it called us for a meeting. At the said meeting, we explained to FELDA the reasoning behind the transfers. However, it refused to accept our explanation and demanded the return of the land and chose to publicise its demands in the media.

Since we are sincere in our desire to proceed expeditiously with the development project, we proposed various options to FELDA but it rejected everything, which caused an impasse.

 

The picture FELDA officials have painted is that they were unaware of what was going on ...

Before the land was transferred, our lawyers notified their lawyers and at that point in time, they had not contested the sales and purchase agreement on the transfer of the land. We cannot speak for FELDA and, in particular, its internal governance process. But based on all our correspondence, it is clear the top officials were in agreement and fully aware of this project.

 

Why then did you enter into a memorandum of understanding (MoU) to retransfer the land to FELDA?

We agreed in order to proceed with the development and to retransfer the land to FELDA. Since the six months stipulated in the MoU for negotiations have expired, the MoU has lapsed and is terminated.

In addition, we have noted an unlawful abuse of power during the course of the retransferring.

 

These issues with FELDA happened late last year. Why did you take so long to come up with your side of the story? And why now?

We had an MoU to honour but it lapsed on July 15. We wrote to FELDA countless times, requesting feedback and response to move forward. Until now, we have not received any. This prolonged delay has not only caused us losses but also affected investor confidence in us.

We are planning to take all the relevant legal action available to us against FELDA and/or FIC in order to seek compensation for our losses.

 

 

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