Aspen clarifies decade-old land buy from PDC ‘fundamentally different’ from Umech's BKIP2 deal

• In a statement, Aspen's president and group chief executive officer Datuk M Murly stressed the fundamental differences between the direct negotiation in 2013 and the recent land sale in BKIP2, asserting that a comparison between the two is illogical and unreasonable.

KUALA LUMPUR (Oct 7): Aspen (Group) Holdings Ltd has issued a clarification regarding its land purchase from Penang Development Corporation (PDC) 10 years ago, to address any confusion arising from recent reports about a direct negotiation involving a land sale in Batu Kawan Industrial Park 2 (BKIP2) to Umech Construction Sdn Bhd.

In a statement, Aspen's president and group chief executive officer Datuk M Murly stressed the fundamental differences between the direct negotiation in 2013 and the recent land sale in BKIP2, asserting that a comparison between the two is illogical and unreasonable.

He said that in 2013, the land in Batu Kawan was undeveloped, lacking proper infrastructure and located in a swampy area, as the construction of the Penang Second Bridge was still underway.

“At that time, the state administration and PDC were eager to develop Batu Kawan and envisioned Batu Kawan as the third satellite city of Penang. 

“However, due to its undeveloped condition, finding interested developers or investors was a significant challenge. PDC was actively seeking a commercial catalyst that can bring in business opportunities for Batu Kawan, specifically the IKEA store, as a key commercial catalyst,” he added.

Murly said Aspen, in collaboration with Ikano Retail (the franchisee of IKEA) as its joint venture partner, engaged in negotiations with the state government and PDC in 2013 and since then became the pioneer developer in Batu Kawan. 

He said the necessity of direct negotiation arose because they were not required to participate in any tender exercise as there were no direct or indirect competitors available for PDC to compare if an open tender were initiated with an IKEA store being the mandatory requirement. 

“The negotiations focused specifically on the IKEA store serving as the catalyst, along with an integrated shopping centre and a mixed-use development comprising residential, commercial, and other mixed-use components on a 245-acre land in Bandar Cassia, which is now Aspen Vision City (AVC),” said Murly.

Singapore-listed Aspen acquired the land in Bandar Cassia at the then prevailing market price in 2014, while the recent land sale in BKIP2 took place in 2023. 

The 245-acre land in Bandar Cassia was purchased for RM483.951 million, equivalent to the average rate of RM45 per square foot. 

Meanwhile, a 558.96-acre land in BKIP2 was reportedly sold to Umech Construction for RM26.53 per square foot, totalling RM646.02 million. 

The Penang Chinese Chamber of Commerce had recently raised concern over a decision by PDC to sell the 558.96-acre land in BKIP2 to Umech Construction for RM646.02 million, which the chamber claims significantly undervalues the land. Moreover, it questioned why the sale was not done through an open tender.

Aspen's investments on land costs close to RM1 billion

Aspen added that it has fulfilled its obligation to develop the land in partnership with its joint venture partner, adhering to the purchase and development agreement (PDA) with PDC.

Furthermore, under the PDA with PDC, Aspen was restricted from disposing of the land without the consent of PDC, including any other catalyst developments within AVC, such as Columbia Asia Hospital, currently under construction, which required the prior approval from PDC, which Aspen duly complied to and obtained the necessary approvals from PDC. 

Aspen was also restricted from changing its shareholding structure without the consent of PDC and has not changed its shareholding structure to this day.

The company is headquartered in Penang, with 99% of its employees based there, contributing significantly to the state's economic growth. Aspen's investments in earthworks, land improvement, infrastructure, and public amenities have exceeded RM500 million, elevating the overall land cost to nearly RM1 billion.

As the pioneer developer, Aspen has played a vital role in transforming Batu Kawan into a thriving satellite city and commercial hub. 

The success of developers in the surrounding industrial area can be attributed to Aspen and its joint venture partner's early investments.

Comparing Aspen's AVC project to PDC's new land sale through direct negotiation is not fair, as the circumstances and goals of PDC then and now are vastly different.

Aspen reiterates its commitment to fulfil its obligations under the PDA with PDC, including the development of the remaining undeveloped parcels. The company envisions AVC in Batu Kawan to become a thriving commercial hub and the third satellite township of Penang.

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