PETALING JAYA: The Economic Planning Unit (EPU) has rejected Gadang Holdings Bhd’s proposed acquisition of a 21-acre plot of land in Kwasa Damansara over the Bumiputera equity ownership requirement.
In a bourse filing today, the construction group cum property developer said it will appeal to the EPU, which falls under the Prime Minister’s Department, for a waiver of the Bumiputera requirement.
It confirmed that the EPU had rejected its proposed acquisition on Monday as it did not meet the 30% Bumiputera equity ownership requirement.
In November 2023, Gadang via a subsidiary had inked an agreement with Kwasa Development (3) Sdn Bhd (KD3) to acquire the land for RM114.78 million to be developed into a residential project.
Kwasa Land Sdn Bhd, the parent of KD3 and master developer of the Kwasa Damansara township, had awarded the development rights of the land to Gadang in 2017.
It had already paid RM76.40 million to KD3 as part of the development rights agreement. The remaining RM38.38 million had yet to be paid, pending the EPU’s approval, it said in a filing on April 1.
KD3 had granted the group an extension of one month to pay the balance purchase price with a late payment interest of 7% per annum.
Gadang is not the only developer to see its land acquisition deal fall by the wayside as a result of the EPU’s enforcement of the long-standing Bumiputera equity ownership.
In early January, Scientex Bhd was dealt a similar blow by the EPU when its second attempt to buy 960 acres of prime land in Tebrau, Johor Bahru, from SP Setia Bhd fell through.
The plastics manufacturer cum property developer had first attempted to acquire the land in 2021 for RM518.1 million. However, the deal was nixed in March 2023, after its subsidiary failed to obtain a waiver of the Bumiputera equity condition.
A new deal was struck with SP Setia in July 2023 at a higher price of RM548 million after Scientex formed a joint venture with a Bumiputera businessman, but to no avail.
It had earmarked the land to be developed into a township with 12,000 affordable houses, with an estimated gross development value (GDV) of RM8 billion.
Win-win solutions
Property consultants have previously urged the federal government and EPU to actively engage with property developers to ensure projects are not derailed over Bumiputera equity policy compliance.
KGVI International Property Consultants (Johor) Sdn Bhd executive director Samuel Tan said the government and property companies should seek “win-win solutions” that enable property projects to be implemented for the people while complying with the Bumiputera policy.
He said dialogue and collaboration between the authorities and private sector are crucial to ensure a transparent, practical and implementable Bumiputera equity policy.
“It is important to gather all the feedback to ensure policy guidelines would not inadvertently affect the good intention to build affordable housing that benefits the rakyat,” he told FMT Business.
Gadang’s shares ended half-a-sen or 1.28% higher at 40 sen, giving it a market capitalisation of RM283.8 million. - FMT
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