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Putrajaya will honour Federal Hill agreement with SP Setia, says FT Minister

KUALA LUMPUR (March 20): The government will not cancel an agreement entered with SP Setia Bhd's 50%-owned unit in relation to the Federal Hill (Bukit Persekutuan) development at Bangsar, Federal Territories Minister Khalid Abdul Samad says.

Speaking to reporters at the Parliament lobby today, Khalid said the government cannot afford to breach the agreement, as doing so might affect investors' confidence.

"This agreement has been entered when I took over, so I inherited many things. If I was the Minister in the past, I probably wouldn't have entered into this agreement. But when I inherited, I have to handle it, and I cannot just cancel the agreement, so we have to find the best possible solution.

"I cannot just ignore all the agreements and contracts just as I like. That will have very adverse consequences to the government and also affect our image, because other investors who want to enter Malaysian market may think that we do not honour the agreements we sign and decide not to invest in our country," he said.

SP Setia's 50%-owned unit Setia Federal Hill Sdn Bhd (formerly known as Sentosa Jitra Sdn Bhd) had on Nov 29, 2012 entered into a Privatisation Agreement to undertake the development and construction of a new integrated health and research complex for the government, to be located within Setia Alam.

In exchange, the government will swap approximately 52 acres of prime land located in Bangsar, on which the group plans to develop an integrated luxury residential and commercial development, to be known as Setia Federal Hill.

Khalid today said SP Setia has honoured its promises to build the health facility, now known as National Institute of Health (NIH) in Setia Alam, Shah Alam.

"As the Federal Territory Minister I have to honour the contract, while for SP Setia, they have delivered what they have promised, so we cannot suddenly say we don't care, we want to cancel the agreement. They can sue us.

"If they sue us, we have to pay compensation and the sum will not be small — it can be over a billion ringgit," he said.

Khalid, meanwhile, said he has told SP Setia to review the development plan at Bukit Persekutuan, to ensure the developers minimise the negative impact that could potentially affect residents who live adjacent to the site.

"I have informed SP Setia to ensure that the development takes into consideration the sensitivity of adjacent residences like those at the back in Bangsar, and to ensure the high density projects be placed near KL Sentral areas [instead of existing residential areas]. To build high-rise there [on the land] is not so bad, but for the area adjacent to the existing residential area, they should reduce their plot ratio if possible," he said.

"So they have a big piece of land, they can do their planning. I hope the residents there take into account that this is an agreement that has been concluded, and we should not force the government to breach the terms.

"Because the legal implication is serious, so the best I can do is to ensure the development plan to be approved in future has minimum negative impact to the residents," he added.

— theedgemarkets.com

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