Flashback: KL Eco City – SP Setia’s deal with Umno foundation raises questions


This is something I wrote on 7 August 2011, for your information:

Cadangan S P Setia untuk mengambil-alih 40 peratus baki saham dalam KL Eco City dari Yayasan Gerakbakti Kebangsaaan (YGK) dengan nilai RM75 juta telah menimbulkan beberapa soalan. 

S P Setia already owned 60 per cent of KLEC, which had obtained a 25-acre plot of prime land opposite Mid Valley City from Kuala Lumpur City Hall (DBKL) on an 80:20 profit-sharing basis with DBKL.

Mengikut The Edge, YGK, ialah sebuah “yayasan yang dimiliki Pemuda Umno yang telah ditubuhkan dengan tujuan menguruskan dana untuk membasmi kemiskinan dan meningkat kebajikan di kalangan kaum miskin”.

Edisi 1 Ogos The Edge telah mengemukakan beberapa soalan:

  • Could S P Setia have saved the RM75m?
  • What was the rationale for having YGK as a joint-venture shareholder? Apakah peranan YGK?
  • Did YGK have the means to fulfil its end of the deal? Or was it just an interim shareholder to cash out after the DBKL deal was secured?

And the 1 August print edition of The Edge (1 August 2011) notes that “getting RM75m in S P Setia shares seems like a fantastic deal for YGK, whose investment in KLEC is probably just 40 per cent of the latter’s current paid-up capital of RM100000, and this is even before a single brick has been laid in the project”.

Such transactions, said The Edge, “do not say much for transparency in dealing with government land”.

This is Bursa’s query and S P Setia’s response:



Reply to query
Reply to Bursa Malaysia’s Query Letter – Reference ID






Query Letter


We refer to your announcement dated 25 July 2011, in respect of the aforesaid
Proposed Acquisition.In this connection, kindly furnish Bursa Malaysia Securities Berhad with the
following additional information for public release:-(1) Justification for the premium paid for the Purchase Consideration over the
range as appraised by CIMB.
(2) Justification for embarking on the new issuance of shares rather than other
available option.
(3) The following or a negative statement:-
(i) Number of units in the commercial and residential development
of the KL Eco City Project;
(ii) Total development cost; and
(iii) Expected profits to be derived.Please furnish Bursa Securities with your reply within one (1) market day from
the date hereof.Yours faithfullyKHOO KAY KWAN
Head, Issuers
Listing Division
cc: General Manager & Head, Market Surveillance Department, Securities
Commission (via fax)
Announcement Details/Table Section :(Unless otherwise stated, all definitions and terms used in this announcement shall have the same meanings as defined in the announcement dated 25 July 2011) Reference is made to the announcement dated 25 July 2011 in relation to the above matter. On behalf of S P Setia, we set out below additional information on the Proposed Acquisition as requested by Bursa Securities via its letter dated 26 July 2011. 

  1. 1.             Justification for the premium paid for the Purchase Consideration over the range as appraised by CIMB 

The premium paid for the Purchase Consideration over the valuation range reflects the Board’s confidence in the prospects of the KL Eco City Project after taking into consideration, amongst others, the development potential and strategic location which is next to an established commercial and retail hub near the affluent Bangsar area and its ease of accessibility.  

  1. 2.             Justification for embarking on the new issuance of shares rather than other available option 

After evaluating various alternatives to fund the Purchase Consideration, the Company is of the view that the issue of the Consideration Shares for the Proposed Acquisition would be most appropriate as it will allow the Company to conserve cash for the development of projects and also enable YGK to participate in the equity of the Company, as negotiated between the parties, which shares are traded on the Main Market of Bursa Securities.   

  1. 3.             The following or a negative statement: 

(i)            Number of units in the commercial and residential development of the KL Eco City Project 

The proposed KL Eco City Project consists of: 

(a)           Three (3) blocks of residential towers ranging from 44 to 56 storeys;

(b)           Three (3) blocks of corporate office towers ranging from 32 to 42 storeys;

(c)           Three (3) blocks of boutique office towers ranging from 15 to 17 storeys;

(d)           One (1) block of strata office tower of 31 storeys;

(e)           One (1) block of service apartment of 46 storeys; and

(f)            One (1) four-storey retail podium.  

The initial gross development value for Phase 1 of the KL Eco City Project comprising three (3) blocks of boutique office towers and one (1) block of strata office tower is estimated at about RM1.1 billion. 

(ii)           Total development cost and expected profits to be derived 

The detailed development costs and the expected profits of the KL Eco City Project cannot be ascertained at this juncture. 


This announcement is dated 27 July 2011.

READ MORE:  Penang government rejects FOI request for access to SRS' RM50bn transport proposal
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  1. Go read the latest cover story of The Edge regarding the China Conundrum in Malaysia. BN is counting on China to repay 1MDB debt and is giving lots of concessions to PRC firms.

  2. What else are you waiting for, Najib?
    (Note: Before you read on,
    this is my observation- Is Malaysia turning to one lender after another lender just to pay its mounting debts?
    No different from a desperate fella borrowing from one ah long after another ah long to pay a mounting debt.

    COMMENT Now that the cat is finally let out of the bag, what else does Prime Minister Najib Abdul Razak have to say about China’s involvement in bailing out 1Malaysia Development Berhad (1MDB) from the US$6.5 billion sought for by the International Petroleum Investment Company (IPIC)?

    Most Malaysians were already half-expecting this piece of news to emerge, despite the assurances that the government would not bail out 1MDB.

    One can only cross one’s fingers to hear what cabinet ministers would say in another alleged big cover-up the way we have seen with the 1MDB scam and the RM2.6 billion donation into Najib’s private accounts?

    At least Finance Minister II Johari Abdul Ghani has come forward to claim that he knew nothing about the arrangement with China, as alleged by the United Kingdom’s Financial Times (FT), but is he doing anything about it? Johari was the one who promised that 1MDB would not be bailed out by the government.

    If Johari did not know, and 1MDB CEO Arul Kanda Kandasamy is unable to articulate anything intelligent about the arrangement with China, who else would know about it? Arul was not with the contingent that visited China recently.

    I also wonder if Paul Low would continue to blow the trumpet about integrity of the man himself, now that more truths have been told about the infamous Malaysian Official No 1 (MO1).

    Malaysia’s international reserves are now at an eight-month low in November, and investors are fleeing the equity market.

    If it is not a serious thing, why does Jho Low’s family now try to battle the US Department of Justice’s (DOJ) civil suit in court? Why, instead of the family, doesn’t Low and Najib’s own stepson, Riza Aziz, pick up the case themselves to claim the money back?

    They should be bold enough to appear before the American court; after all, Najib is a golfing buddy of the president-elect, Donald Trump, and both Low and Riza should be safe.

    I believe that even when Trump takes over, he will not interfere with the civil suit; and if he did, against the world’s expectations, he may face impeachment. The suit would have to proceed and the money recovered back on behalf of the Malaysian people. The DOJ can certainly not be wrong when it made a strong remark about the kleptocrats and within the context of the suit, pinpointed the role played by MO1.

    Ask Rahman Dahlan who MO1 is.

    Digging a bigger hole

    Just like the loan from IPIC, which was used as a bailout deal, now the money from China is not going to come for free. In fact, it has already made Malaysia, and Najib for the matter, to become a beggar of sorts, going around looking for money to cover one loan after another.

    This cannot keep going on the way it appears to be going without the greater consequences of Malaysia becoming another rogue nation.

    I want to know if Bank Negara, Finance Ministry or the cabinet are even aware of the arrangement that was made with China. More information has to be released to the public, since it will further impact the country’s economy and investors’ confidence.

    The arrangement with China, which I believe to be yet another loan which has to be paid back, will surely attract a higher interest. If the allegations by FT are not true, Najib should take the news agency to task, but till today, Najib has shunned any idea of suing either Sarawak Report or the Wall Street Journal.

    If we continue going on a merry-go-round to borrow money from one source to cover the loan from another, we will end up being an impoverished nation in no time. Eventually, we will have a much bigger hole to deal with.

    By then, Najib may be gone, but the problem will continue to plague the nation. No amount of lies can cover up all the lies already told. Just look at the way how the lies have been concocted – and published in the Malaysian media, yet the truth eventually surfaces.

    God is great! It is time for Najib to come forward to tell the whole story, now or never! Malaysians are not stupid people, although some of us may appear reticent or inhibited, but I think enough is enough. How long can Malaysians be lied to?

  3. Loss of confidence due to 1MDB dragging down ringgit – Jomo

    A prominent Malaysian economist has countered claims the ringgit’s value is continuing do decline because of external factors such as global oil prices, pointing to a confidence deficit due to the 1MDB scandal.

    “What is of concern is that over the last one-and-a-half years or so, the ringgit has been steadily declining.

    “This cannot be simply attributed to the collapse in the price of crude oil.

    “There are many other factors behind it, including a loss of confidence in the government as more and more revelations are made about 1MDB,” The Edge today reported Jomo Kwame Sundaram saying.

    This confidence crisis, he said, is very serious and has huge implications on Malaysia.

    The highly respected economist was speaking to reporters at the sidelines of the National Economic Outlook Conference 2017-2018 at Putra World Trade Centre, Kuala Lumpur yesterday.

    Yesterday, Reuters reported that the ringgit has slid nearly 5 percent since Nov 9, and the country’s foreign reserves fell by nearly US$2 billion in the last two weeks.

    The Star reported the ringgit hit an eight-month low against the US dollar in October, and it is continuing to fall.

    Two weeks ago it slid to 4.458 to the US dollar.

    During this time, the 1MDB scandal has escalated worldwide, with probes going on in Switzerland and Singapore, among others, and the US launching its civil suits to recover funds it claims had been laundered from 1MDB in their country.

    ‘S Korea premier good example’

    Jomo said the government must face up to the fact that world economies are heading for uncertain times and should be “realistic”.

    “We are entering a very different world and especially for a country with an open economy like Malaysia, it is extremely important that we have a realistic understanding of what is going on and the options we have, going forward,” he was reported saying.

    When asked for solutions the government can take, the economist pointed to the examples of the resignations of South Korean president Park Geun-hye over a corruption scandal and Italian premier Matteo Renzi as praiseworthy.

    “The South Korean president has offered to resign, and that is one way of restoring confidence.

    “The prime minister of Italy has also just resigned. These are extraordinary times. We have to think out of the box,” said Jomo.

    “What she [Park] has done was very responsible.

    “She asked the ruling party and the opposition party to work together to manage the transition process,” the former assistant secretary-general for economic development in the UN was reported saying.

    On the other hand, said Jomo, the resignation of Renzi has caused some uncertainty and said should Malaysia follow suit, it should be a bipartisan effort to ensure a smooth power transition.

    “[The transition] should be in the interests of the Malaysian people.

    “It should not be something just in the interest of the parties – whether it is BN or the opposition parties,” he said according to The Edge.

    The government’s claims that the ringgit’s slide is not cause for long term concern is contradicted by the International Monetary Fund’s (IMF) measure of the buffer between foreign reserves and the country’s external debts.

    Bloomberg last month reported Malaysia ranks the lowest in this gauge, which means it is vulnerable to market attacks and will have little resources to defend its currency.

      • Does our PM cares for B40 Malaysians? Nope.
        He has more dear hearts for the Rohingya, maybe provide free food, free shelter & clothing. Free education also.
        These cost money & yet slashing subsidies (petrol, cooking oil, etc) & education fund is nothing of concern to his dear hearts – just to save 1MBD fiasco(?)
        Time to CHANGE PM.

      • 1975 : S$ 1 = RM 1
        2016 : S$ 1 = RM 3

        1975 : USD 1 = RM 2.3
        2016 : USD 1 = RM 4.4

        1975 : RM 1 = JPY 130
        2016 : RM 1 = JPY 24

        1995 : RM 1 = RMB 3.5
        2016 : RM 1 = RMB 1.6

  4. From “The East Is Red,” a Nov. 23 article on the New Mandala website by former Malaysian Ambassador Dennis Ignatius:

    Malaysia, vulnerable, exposed and ripe for exploitation as a consequence of the massive 1MDB scandal, is set to be the jewel in the crown of China’s ambitious regional agenda. In exchange for a Chinese bailout, significant national assets and lucrative contracts are being handed over to China in a series of murky deals. . . .

    The biggest catch of all, however, is expected to be the Bandar Malaysia project, a colossal monument to avarice and arrogance. With an expected gross development value of RM160 billion (US$38.36b), it will feature the world’s largest underground city, shopping malls, indoor theme parks, a financial centre as well as the RM8.3 billion (US$1.9b) regional headquarters of China Railway.

    When completed, it will turn the Malaysian capital into the most impressive Chinese railway station along the so-called Iron Silk Route linking Beijing with Singapore.

    Malaysians haven’t as yet woken up to the monstrosity that is being foisted upon them.

    Bandar Malaysia, which will cost almost four times the reported cost of Putrajaya, the nation’s administrative capital, will distort the property market, add to the city’s already intolerable traffic congestion, reduce the city’s livability and see the introduction of thousands of P.R.C. workers, contractors and staff.

    No doubt much of the residential and office space at Bandar Malaysia will also be taken up by P.R.C. nationals, already a growing presence in the local property market.

    All in all, it is an outrageous crony project designed to benefit cronies, both local and foreign, at the expense of ordinary Malaysians. It serves China’s interest far more than it serves Malaysia’s.

    And it would be naïve to believe that such massive investments will not translate into significant political and economic control especially given the almost total lack of transparency on most of these projects. At this rate, Malaysia may well find itself reduced to satrapy status within the emerging Chinese order with Bandar Malaysia the new Chinese regional capital.


  5. Long story short: public wealth (prime land) ends up in private hands with negligible or secret compensation.

  6. Interesting reader’s comment on MsiaKini:

    SP Setia was founded by a chinese who turned it into a big success. As a listed company, the govt wanted to control it and asked PNB to invest more than 50% shares. That was the reason why the founder left the company to join his son in Eco World which he had founded too. He has now turned it to a world class company and becomes very successfully while SP Setia remains stagnant. Imagine if its CEO is a malay, what would it be? GLCs where Malays hold the top posts are losing money. Govt has to pump in money to save them.

    • Same with EDEN Eve’s Gardenia.
      Once a diner’s brand name for fine dining (5 decades?) is no where near even PappaRich!
      EDEN’s Brand Diversification – EDEN Duty Free, EDEN Property, EDEN Tourism – what happened to these is anybody’s guess.
      EDEN did buy a Pg Ferry & relocate it in Johor. What happened to that Pg icon?

      • A food vendor brought an authentic Penang 3-wheel cendol cart for use at its Penang cendol stall at the “Malaysia Boleh” food court at Jurong Point shopping mall in Singapore to attract Malaysian workers living in Boon Lay area.

      • SingLand extinction of 3-wheel carts, now have to import these carts.
        So much for nostalgia via imports.

      • Maybe next time your grandchildren will have to go to Singapore to see such cart.

      • But Penang State Museum Curator didn’t see a need for a Street Food Museum to house these artefacts. That was way back in 2012 when I sent a proposal to use the Macalister Road State Museum (which was 90% underuse) as venue for food museum.

  7. UMNO AGM A Wanita Umno delegate today questioned why non-Malays are appointed in top positions in government-linked firms.
    “I urge the leadership to pay more attention to the appointments in GLCs. For example, developer SP Setia Bhd.
    “Everyone knows the majority stake is held by PNB (Permodalan Nasional Bhd) so why is the CEO and the GM (general manager) in Penang ethnic Chinese?

    Simple Answer: Capable people delivers, quota people – I don’t know what to say!

    • What Najib say the DAP will do to the Malays if the DAP ever have political power, NAJIB and those in Umno have already doing to the Malays for decades !

      Who did not allow the Malays in Kelantan to have their rightfull share of the oil royalties? It was Umno!

      Who ordered the murder of those Malays in Memali?…

      Robert Kuok the Chinese who once held the monopoly on sugar, have been selling sugar at a fair and reasonable price until it was taken over by the Malays in Malaysian Sugar Refineries (owned by FGV) and Central Sugar Refineries (Owned by Syed Mokhtar). On their behalf this BN government have signed contracts- paying above market price to secure supply of raw sugar(?) Now who will pay for that? The Malays of course.

      • All the rhetorics from Umno but yet to see in my life any specific example where DAP has marginalised the Malay community or anti Islam, as claimed by Umno repeatedly especially during its AGMs. But the Malays are brainwashed by Utusan and TV3 since majority of them cannot understand other languages to learn from other media.

      • Years of brainwashing have made Malays fearing their privileges would disappear if they are not governed by Umno. Obviously Umno is using DAP bogeyman as a fear factor, no wonder most malays still have self doubt of their ability … and still caught in the doldrums of Malay Dilemma.

      • najib conveniently raised the rohingha issue and suddenly all malays are so agitated that they forgot about high cost of living, low ringgit value and 1mdb scandal.

      • Those Rohingya refugees in Msia (just look at the large number at Najib-Hadi rally), could be potential voters for Umno (as claimed by Tun M) in the next GE?

      • Najib has ran out of reason to convince the people to support BN or ultimately UMNO themselves. Hence he is using race and religion and this is very dangerous and harmful to all Malaysians. I hope the Malaysian can think wisely!

      • If Umno is already strong as claimed by Najib, why still scare of DAP?
        Maybe people can see how good Penang is under DAP?
        Anyway, Umno makes Malays dependent on tongkat. Ha ha!

      • Certainly they need more as Ringgit has fallen in value, in order to sustain their overseas shopping habit.

  8. I guess it is a pre-requirement from DBKL for SP Setia to develop the Kg Abdullah Hukum land, to JV with Umno Youth’s YGK.

    There are many foundations set up by UMNO to (allegedly channel) land and funds….

    Foundations can be used as vehicles to solicit, hold and distribute funds to vested parties, under the guise of charity.

    As for SP Setia, it is just another business deal. In BN controlled-states, it might do business thru’ the back door. In Pakatan-controlled Penang, it did thru’ the front door for the PICC tender.

    • Small korektion, it´s apre-requiremwnt from UMNO for SP to develop the KG.land to JV With UMNO´s piggy bank=oops haram.Mmm the Setia group is also GLC issint it? So its jest UMNO doing a deal with itself to sapu money and tralah…Rm 75million in the yayasan. Of all the Cina sapu doit majik the UMNO felllas have been (allegedly) conning the Malay all the while.

  9. this is the same SP Setia which gave thumbs uo to Ali-Baba.

    and the Baba this time round is some UMNO Cronies.

    who doesnt want to be division chief of UMNO?

    • SP Setia terpaksa mengalah dan tunduk kepada kehebatan Ivory Properties di Pulau Pinang…?

      Maka SP Setia terpaksa mencari kuncu Umno untuk cebisan bisnes ali baba?

    • Decades-old Ali-Baba ‘Scheme’:
      Satu Lagi Projek > Amino Insider Dapat > Cannot-Do-The-Job > Tender To Amino Kronie > Orang Cjna With-Many-Type-Of-HardWork-Experience-Dapat-Contract-Do-The-Hard-Work (sweat-never-mind) > But-Must-JV-With-One-More-Amino Kronie > Orang Cina Still-Never-Mind > Both Top-Of-The-Chain Amino Insider + Last-Of-The-Chain Amino Kronie Shake 4-Legs 24-7-365 (waiting for no-sweat-money-from-the-sky). This is the end of the cari-makan-chain of Ali-Baba Scheme flourishing in Satu Lagi Projek Malaya Nusantara.
      Where is Malaya Nusantara? (If you still wondering where to cari-makan)

      • Are they not worried PRC’s Ali Baba aka Jack Ma will soon dominate the e-commerce of Nusantara or Mara Digital?

      • PRC developers already making hay while the sun shines in Malaya Nusantara, TQ to Naik Jeep desperate for PRC investment.
        But REDHA is worrying day & night.

      • Rehda: Now is the best time for those looking to buy residential properties especially in Iskandar Malaysia.

        Real Estate and Housing Developers’ Association Malaysia (Rehda) Johor chairman Datuk Steve Chong Yoon On said prices are expected to jump by between 5% and 10% in about a year.

        He attributed the price increase to the weakening of the ringgit against major currencies over the past two years as well as the hike in land, building materials and labour costs.

        He said prospective buyers, especially first-timers, were also adopting a “wait and see” attitude and would only go for residential properties priced within their budget.

        Chong advised the 128 developers with Johor Rehda to look at residential properties priced between RM300,000 and RM700,000 as demand for properties within the price range was still good.

        “Market sentiments are not good and residential properties priced RM800,000 and above are finding it difficult to attract buyers,” he said.


      • REDHA fears PRC developers who in 2 yrs time can sell cheaper properties to all Malaysians!
        So, REDHA has to quickly ‘unload’ excess stocks of mostly super-expensive homes, a Karmic by-product of greedy, irresponsible developers who now have to pay the price. Serves them well!!!

      • Those PRC developers in Iskandar, Johor have their own marketing strategy, and they never participate in the local Mapex show, Star Property Show or iProperty.com. So Rehda may not have the complete picture of the excessive supply in the coming 2 years as many projects are near completion.

      • After Johor, these PRC developers may be aiming for Penang, Ipoh & Melaka with the most Chinese population & Chinese food culture.

      • Johor Crown Prince Tunku Ismail Ibrahim downplayed speculation that Iskandar Malaysia, the expansive economic growth corridor near the Singaporean border, is fumbling towards an oversupply due to overenthusiastic residential property developers from abroad.

        The monarch, who said he has been following the development of Iskandar Malaysia since 2006, said that a population boom will catalyse demand in the area well into the next decade.

        The prince’s speech allays fears that developers in Iskandar Malaysia are building beyond their capacity to lure buyers and occupants. The rapid rise of Chinese developments in particular “scare the hell out of everybody,” Bloomberg reported last month.

      • They never seem to learn from ‘ghost towns’ new development in many 2nd Tier cities in China. Income disparity won’t support such high ticket mass production of condos no matter how fast to build such properties.
        What’s the use of ghost towns if there is no sustainable demand?
        Tak a drive along Dato Keramat Road towards Komtar & you will see almost 80% dark windows of Times Square on any night. 80% unoccupied?

      • Najib announced at Umno AGM that he would reserve 50% of shop lots at MRT project to Malay retailers (or Umno cronies?).

      • Frustrated in seeing Bumiputra’s lack of achievement in Malaysia’s economy, Datuk Seri Tengku Adnan Tengku Mansor raised question whether the government has been spoon-feeding the group too much all these years.

        The Federal Territories Minister in a vent of exasperation in front of hundreds of future Bumiputra entrepreneurs pointed out several key problems plaguing the community, causing them unable to place themselves on par with other races in sharing the economic pie.

        He highlighted that the Bumiputra were lacking self-resilience, with many of their businesses had to be closed down due to the uncompetitiveness.

        “I don’t know, maybe it was our own fault. Maybe we have been too much spoon-feeding all of you that caused this problem,” he said.

        “What I am saying now comes from my heart. Whether you like it or not, it is up to you. I like to speak from my heart because I am saddened to see my own race in this situation,” he said in his speech at the ceremony to hand over Federal Territories Bumiputera Economic Empowerment Program Certificate at Connexion Conference and Event Centre.

      • Give them a fishing line + hooks,
        but let them find the competitive fishing grounds.
        It’s not helping when they are spoon feed all the way.
        Also, the mentality that if business fails, no need to pay back is a mental-comfort as an irresponsible entrepreneur, if entrepreneurship actually befits them at all.

      • This is reported on the front page of The Sun today.
        Ku Li acknowledged that those 100% halal food court in the end fail to attract more customers. So much for sausage over hot dog.

      • Tengku Adnan said the government had tried to assist them through various means, even by giving them land to develop, but such efforts proved unsuccessful.

        “There is a lot of land in Kuala Lumpur which can be developed by the bumiputras. We gave these lands to them but they did not develop it. They were given free lands … (but) wait for the value to increase and then sell it.

        “When we give it to the Chinese, people will get angry, but the Malays do not perform. The land is worthless if you don’t develop it,” he added.

        Commenting on halal and non-halal food businesses operating in the same area, he said it was not an issue as there needs to be variety in the food offered to customers.

        He said many Malay-owned stalls operating in food courts run by Kuala Lumpur City Hall (DBKL) were unable to succeed as they only catered to the needs of specific customers.

        “To me, if our stalls want to sell non-halal (food), we can have a non-halal section. It doesn’t matter… We need to change.

        “I have instructed DBKL to emphasise on variety in food courts, not only catering to Malays but the other races as well.

        “If no food of other races is sold, they will not come into the Malay business areas,” he added.



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