KUALA LUMPUR: Selangor State Development Corp (PKNS) general manager Othman Omar has defended its contentious plans to redevelop the sports complex in Kelana Jaya, in the face of a public furore over the project.

In a recent interview, Othman reiterated that PKNS had always envisioned that the land, currently home to a sports complex and football field, would be used for a commercial development. The 7.5ha site bears freehold commercial titles, with PKNS paying commercial assessment rates since 1998, Othman said.

“This project has been planned since 2009, but only now is the issue raised. Maybe it is because it is before the general election. As far as we are concerned we have always been above board,” Othman told The Edge Financial Daily. PKNS is partnering property developer Melati Ehsan Bhd to develop the integrated project with a gross development value of RM1.62 billion.

It comprises two blocks of serviced apartments, one block of small office home offices, a sports complex, two office towers, a shopping mall, a hotel, a performing arts centre and parking spaces. The uncertainty over the project appears to have weighed on Melati Ehsan’s share price, which fell to a one-year low of 61 sen on June 25.

Othman pointed out that the dispute over the status of the land on which the sports complex stands falls at the local authority level. “We are not the only case where it is wrongly zoned,” he said.

The controversy erupted after it was discovered that the Petaling Jaya Municipal Council had zoned the field as a commercial area, while the Selangor Town and Country Planning Department zoned it as a recreational field.

The matter is now being investigated by the Selangor state legislative assembly’s Special Select Committee on Competence, Accountability and Transparency.

For now, PKNS will forward the matter to the Appeals Board to determine whether to uphold the commercial or recreational zoning. PKNS’ plans to go ahead with the redevelopment will only materialise if the Appeals Board rules that the sports complex land is indeed zoned for commercial use.

“If the Appeals Board decides [against us], we will abide by the decision. But we believe that chances are still there. The land title says commercial,” said Othman. He revealed that PKNS had decided not to refer the matter to the State Planning Committee as it is chaired by Selangor menteri besar Tan Sri Abdul Khalid Ibrahim, who is also on the board of PKNS.

The Appeals Board is an independent panel comprising a former judge, architects and town planners. Property industry observers note that the matter is further complicated by PKNS’ role as a state agency. “If they were a private sector property developer, they may not face so many layers of opposition.

But as a state-owned company, PKNS is expected to put the people’s interest before commercial considerations,” said one observer. As Othman said, PKNS has to tread carefully in balancing the interests of the residents of Kelana Jaya, who oppose the project, and PKNS’ larger profit and social responsibility.

Othman said PKNS had anticipated it would earn about RM400 million to RM450 million from the redevelopment project which it would plough back into subsidising its affordable housing scheme elsewhere in the state. “We have to try to work out a balance and engage the Kelana Jaya residents. We also have to protect the interest of PKNS, which belongs to the five million people of Selangor,” he said.

This article appeared on The Edge Financial Daily July 5, 2012.