This article first appeared in The Edge Malaysia Weekly on August 28, 2023 - September 3, 2023

THE completion of the thousands of apartments developed by a subsidiary of government-owned Syarikat Perumahan Negara Bhd (SPNB) could be in jeopardy as the hearing date for a winding-up petition against it draws closer.

One such development by the subsidiary, SPNB Aspirasi Sdn Bhd, is Aspire Residence, a 2,000-unit high-rise development in Cyberjaya. In April, SPNB chairman Datuk Husam Musa had said that the project would be completed and delivered to purchasers in September.

Meanwhile, there have been no updates from SPNB and the ministries involved on the issue of non-payment of contractors by SPNB Aspirasi.

SPNB is a national housing development company that was set up in 1997 and tasked with developing quality affordable homes for Malaysians. As at September 2021, it had completed 107,361 homes.

The winding-up petition against SPNB Aspirasi was filed at the High Court of Malaya in Kuala Lumpur by Tunas Manja Development & Construction (KL) Sdn Bhd, its contractor for an affordable property project in Pahang, on May 3, 2023. The court has endorsed for the petition to be heard on Nov 22, 2023, according to a court document sighted by The Edge. If it is wound up, all the financing facilities provided by banks to SPNB Aspirasi could be recalled. As such, the progress of SPNB Aspirasi’s ongoing projects, including Aspire Residence in Cyberjaya, could be affected.

When asked, officials of SPNB declined to comment on the winding-up petition against its subsidiary.

“The topic at hand pertains to legal, private and confidential issues that we are obligated to handle with the utmost care and discretion. As such, we are not in a position to provide any comment or statement that could compromise the privacy and integrity of those involved.

“We understand the importance of transparency and open communication with the media, but our commitment to respecting legal and ethical boundaries is paramount,” says SPNB in a reply to The Edge’s questions.

Meanwhile, questions sent to the Ministry of Local Government Development (KPKT) and the Ministry of Finance (MoF) went unanswered at press time.

SPNB is owned by the MoF, but its operations are governed by KPKT.

A winding up of SPNB Aspirasi could have ramifications for the government of the day as SPNB was set up to develop affordable housing for the people.

On Dec 15, 2015, SPNB Aspirasi and Tunas Manja entered into a development agreement (DA) to construct 469 units of 1½- and double-storey houses at Batu 11, Jalan Gambang, Kuantan. Tunas Manja was appointed as the turnkey contractor of the project by SPNB Aspirasi.

While the project was being developed, disputes arose between the parties, and as such Tunas Manja terminated the DA on Sept 30, 2019. The disputes were then referred to arbitration, with Datuk Dr N Sundra Rajoo presiding as the sole arbitrator.

On June 29, 2022, the arbitrator published the final award in which SPNB Aspirasi was to pay Tunas Manja the sum of RM26.88 million, with interest at 5% per annum until the full realisation of sums awarded.

Due to SPNB Aspirasi’s failure to pay the sum in the final award, on July 14, 2022, the High Court at Kuala Lumpur allowed the recognition and enforcement of the final award as a judgement of the court (enforcement order).

On Jan 27, 2023, SPNB Aspirasi’s applications to set aside the enforcement order and/or to set aside the final award were dismissed by the Kuala Lumpur High Court. Tunas Manja then on May 3, 2023 presented the petition at the same court for SPNB Aspirasi to be wound up.

However, SPNB Aspirasi is appealing against the High Court’s decision to dismiss its applications to set aside the enforcement order and/or the final award. The hearing of the appeal will be heard on Jan 2, 2024.

This means that SPNB or the government may still have legal avenues to challenge the High Court decision, and prevent SPNB Aspirasi from being wound up.

As at June 30, 2023, the accrued total owed by SPNB Aspirasi to Tunas Manja was RM31.86 million, according to court documents sighted by The Edge.

Legal practitioners have differing opinions on how SPNB Aspirasi’s appeal would affect the winding-up petition. A lawyer The Edge spoke to opines that if the winding up is heard before the appeal and a winding-up order is issued by the court, SPNB Aspirasi will be wound up and the appeal may be redundant.

“The company’s chances of appeal are slim as this is an arbitration award. The chances of the company opposing the winding up are nil,” says the lawyer who declined to be named due to the sensitivity of the issue.

Another corporate lawyer The Edge spoke to believes that the winding-up petition hearing in November may not result in an order, as the court will have to wait for the Court of Appeal (CoA) decision.

“The hearing of the petition can proceed as usual. But there might not be an order to the petition. If there is an order, the whole locus standi of the CoA hearing will be problematic,” says the corporate lawyer.

Problems at SPNB are not new.

According to the Auditor-General’s Report 2017 (Series 2), a total of RM279.2 million in government subsidy allocated for the construction of 13,960 units of 1Malaysia People-Friendly Houses (Rumah Mesra Rakyat 1Malaysia or RMR1M) was used for other purposes without the MoF’s approval. An audit by the auditor-general then also revealed that the number of RMR1M houses constructed as of Dec 31, 2017, was below target.

“RMR1M has not reached its target as only 24,057 units have been constructed, while 8,145 were being built, instead of the 44,152 that should have been constructed.

“Payments to contractors were not according to the schedule and the quality of the RMR1M houses also did not meet the specifications set,” said the report.

RMR1M is developed by SPNB.

To be fair, the unity government has been working to resolve the issues relating to the delayed projects under SPNB and other people’s housing programmes.

In June, KPKT minister Nga Kor Ming said that SPNB had completed 15,445 units of Rumah Mesra Rakyat two years earlier, surpassing the 12th Malaysia Plan target to build 15,000 RMR units by 2025.

During a visit to the Aspire Residence site, which was abandoned in 2018 and restarted recently, Nga said SPNB is now also focusing on completing 12 “sick” housing projects involving 1,711 units, all of which are expected to be completed by the end of this year or the first quarter of next year.

The completion of the affordable housing projects under SPNB would just be one of the many issues the unity government inherited that it needs to address. But with its popularity on the wane, especially after the Aug 12 state elections in six states, the delays in the completion of affordable housing projects could become another pain point for the unity government. 

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