ABOUT 170 developers who have obtained development orders (DO) from Kuala Lumpur City Hall (DBKL) for their projects risk losing their deposit worth millions of ringgit if they fail to start construction in the next six months.
Kuala Lumpur mayor Datuk Seri Mohd Amin Nordin Abd Aziz said the DOs were awarded in September last year, and until August this year, over 80% had yet to start work.
“In fact projects are supposed to commence within six months after the DO is awarded, but many failed to start work and we have already warned them that if they fail to start work within the next six months they risk losing the 50% discount on DO charges given last year, and we will also withdraw the DO,” he added.
DBKL, he said, would be strict as it did not want developers to end up selling off the projects.
“We want them to prove to us that they will start work as agreed,” he said.
Last September, property developers were given a 50% discount on development charges for DBKL projects.
The offer was served as an incentive to encourage developers to continue building the city despite the slow economy.
“We gave them a hefty discount but we will take it back if they take it for granted,’’ Amin Nordin said, adding that the discount can range between RM500,000 to RM68mil depending on the project value.
DBKL Urban Planning Department director Datuk Sharom Ujang explained that the fee is calculated based on 30% of the enhanced value of the land, before and after development.
If the land was RM100 per sq ft and would be RM200 per sq ft after development, the enhanced value is RM100.
So, 30% from RM100 is RM30 per sq ft and the total sum is calculated accordingly.
If the amount is less than RM1mil, it must be paid in one lump sum.
If it is more than RM1mil, a deposit of RM1mil in cash is required and the balance paid in post-dated cheques up to 24 months.
For charges above RM50mil, a 10% deposit is required followed by the balance also paid in post-dated cheques up to 24 months.
The development order will only be given once the initial payment is made.
Development charges were the second biggest income-generator for the local authority, after assessment tax.
The mayor added that a meeting was held with the developers and Federal Territories Minister Datuk Seri Tengku Adnan Tengku Mansor in early October, and the contractors were warned that further delays would not be tolerated.
Excuses, excuses, excuses
When asked what were the developers’ usual excuses for not starting their projects on time, Amin Nordin said land matters were the common reason given.
“Projects involving MRT tracks encroaching into their lands is not their fault so we will take that into consideration and there are also some who are asking for time to tender out projects.
"We are looking into things on a case-by-case basis and we will be keeping tabs on each project,’’ he said.
“A team will go down to site to monitor if any attempts are made to start work and a report is also being prepared since the minister wants periodic feedback,’’ Amin Nordin added.
He said if developers could start their project within the set six- month period, DBKL may reimburse their 50% discount, but added that the discount was no longer applicable for new projects.
Following the meeting with the FT Minister, Amin Nordin said so far 80% of them had submitted their building plans and that most of it involved housing and commercial projects.
He added that DBKL would consider the terms of amendments needed to the building plans.
In Kuala Lumpur, in order to get a DO, developers must ensure that all necessary drawings on documents pertaining to town planning rules, civil, structural, and mechanical requirements must be submitted with drawings.
Freeze on approval of hotel licences lifted
Amin Nordin also announced that the lifting of the freeze on hotel licences in the city followed a directive from the government.
“We have discussed and have agreed that hotel developments will carry on for now.
“As for office space, if it is for their own use, then we will also allow it,’’ he added.
He said the developments must be continued to take place as the economy depends on it.
When asked to comment on the over development of projects in some parts of the city, the mayor defended the move saying that developers contribute to the infrastructure expenses.
“Developers help contribute to building of roads, bridges and street lightnings.
“For example, for a project in Taman Wirajaya in Wangsa Maju, DBKL was supposed to build a road which was going to cost us about RM10mil.
“But the developer who was also constructing their project there agreed to foot half the bill. That’s RM5mil.
“This contribution which is called infrastructure contribution cost is excluding the development charge that they (developer) have to pay us.
“Infrastructure contribution cost involves a lot of money and includes upgrading roads, drains, walkways, street lightnings and other amenities for the neighbourhood,’’ he said.
In February, DBKL said it would no longer issue hotel licences in Kuala Lumpur until further notice.
The ruling applied to all types of hotels ranging from six-star establishments to budget hotels.
However, hotels that have received planning permission but have yet to start construction would not be affected.
Amin Nordin told StarMetro then that the matter had been discussed at the Economic Planning Unit (EPU) of the Prime Minister’s Department.
He had said that too many hotel projects had saturated the market, with many more in the process of being constructed or about to be built.
Currently, there are 939 hotels in the city including more than 400 budget hotels.