KUALA LUMPUR: Excerpts of exclusive interview with Eco World Development Group Bhd chairman Tan Sri Liew Kee Sin.
Question: What is it like to start all over again?
Answer: Very difficult, despite all the experience gained in the last 20 years. Everything looks easy when you start all over again because of the experience, but in reality it really isn’t.
Firstly, the question is whether land owners will sell land to me as I made my name in SP Setia. Eco World is new to them. Secondly, would the bank continue to lend money? And more importantly, would my customers follow me? Fortunately for me, luck was on my side, because I always honour my words with every person I deal with. The trust was there. So the land owners agreed to sell their land to Eco World and that is how we grew over the past three years.
Q: How did you get hold of land at the start of Eco World?
A: One of my best supporters was Tan Sri Syed Mokhtar (Albukhary). When I came out of SP Setia, I was given an opportunity to buy land from him. He offered me two parcels of land in Johor — parked under DRB-HICOM Bhd and Tradewinds Corp Bhd. He sold me huge parcels of land next to Nusajaya and Tebrau in Johor. But he is a very smart entrepreneur. He owned 402ha but sold me only 281.4ha and kept the rest.
When I asked why he wants to hold the remaining land, Syed Mokhtar said he believes the value would increase by three to four times when I start my development. He knows that once we put our roads, infrastructure, our concept and design, the value will go up. So, it is mutual benefit for the both of us. If any land owner has land to sell, I will buy half the land. After we build the infrastructure and develop the properties, the value will go up and both of us will benefit.
In today’s world, you can’t only think of yourself. If you can have a mutual understanding with the land owner, or alternatively, buy half the land or undertake a 50:50 joint venture, people will like you. In a joint venture, usually the biggest worry is having a good partner. Thank goodness. we have good partners for all our projects.
Q: What are you building in Johor?
A: We are building Eco Spring and Eco Summer, a tranquil garden township in Tebrau, which focuses on medium cost and high-end properties, respectively. Next to Nusajaya we are developing Eco Botanic.
Q: How many projects does Eco World have currently?
A: We have a total of 17 projects in Malaysia. We have 11 ongoing projects and the rest are in the pipeline. These do not include the three projects under Eco World International in London and one in Sydney.
Q: What are your projects in the Klang Valley?
A: We have Eco Majestic in Semenyih, Selangor, Eco Sanctuary in Kota Kemuning and Eco Sky in Jalan Kuching. We also have Eco Forest, which is located next to Eco Majestic. We are also planning a development in Ijok in Selangor, pending the first settlement between the land owners and the state government, on the duplication of the land.
The concept in Ijok will be like Eco Majestic.
Q: In terms of gross development value (GDV), is Bukit Bintang City Centre (BBCC) the biggest project for Eco World?
A: Yes, but bear in mind that we have only a 40 per cent stake in BBCC. We are targeting the first launch in June. Now we have a memorandum of understanding (MoU) with Mitsui Fudoson. If we can ink an agreement with them before June this year, then the launch will happen in June. We want to tell the world first that an agreement has been sealed with Mitsui to show its confidence in the project. Delivery is very important.
Q: Why did you pick Semenyih, Telok Panglima Garang and Ijok for new townships?
A: First of all, townships need land. There is no more land in Petaling Jaya or Shah Alam in Selangor, so we have to venture further out. We also look at areas with infrastructure. It may not be the best infrastructure but we can build from there.
For example, in Eco Majestic (in Semenyih), we build our own interchange. By July, that will be ready. Similarly in Ijok, if we can get the land, we will connect the area to the highways.
Q: When will Eco World deliver its first home?
A: We will deliver the first phase of Eco Botanic in Johor by the end of this year. That will be the first property handover from Eco World. It will also be the real test. Unlike other developers where you sell properties, take your money and go, at Eco World it is progressive, progressive, progressive.
Q: How does Eco World innovate?
A: Now that I have two chief executive officers, I can concentrate on policies and direction. I have Datuk Chang Khim Wah, CEO for Eco World Development Group Bhd, and Datuk Teow Leong Seng, CEO for Eco World International. So, this gives me room to do other things.
Last time, at SP Setia Bhd, I was the president and CEO. I handled policy, operations and other issues. But today, I take a step back, I look at things in a very different light... more of a top-down approach. But I still maintain my hands in terms of knowing the products and the people but I no longer interfere in terms of implementation.
This gives me plenty of time to ponder, to think where we could go, how we can do things, where’s the direction we are heading to and how to improve as we go along. I do give ideas to both the CEOs on how we could improve in terms of services and product quality. It is things like that which make us a better company because if we keep doing the same thing over and over again then how are we going to innovate.
For example, when we were in SP Setia, every award that was available in the property industry we won. I myself had won many individual awards. So when you leave a company, you start all over again, and you definitely can’t copy the things you have done before. Eco World has moved ahead in terms of service, product and design. We just have to innovate. If we don’t, there is no way we can compete.
Q: What is Eco World’s business model?
A: We have three business models, with 70 per cent being township development, 20 per cent industrial park and 10 per cent mixed integrated projects.
Q: Why are you focusing on township development?
A: I am a long-term player. For example, Setia Alam, when we bought it in 2002 and launched it two years later, the total GDV of the 1,608ha development was only RM5 billion. By the time I resigned as CEO at SP Setia in 2014, the GDV hit RM25 billion. Over time, it becomes a significant value. I believe in long term value.
Q: Why is Eco World interested in industrial parks?
A: We are focusing on industrial parks, especially in Johor. This is because there is a massive relocation of factories from Singapore to Johor, thanks to developments in Iskandar Malaysia. We believe that the success story of Iskandar Malaysia is not said enough. Yes, there is oversupply, but if you look at Iskandar Malaysia as a region, it is very successful.
There is good infrastructure and network. In fact, for the last five years, Singaporeans have been relocating their operations into Malaysia. We are a beneficiary of this business. We have created a one-stop centre in Johor and are talking to players in the market. But we are not the only ones in the market. This is big business in Johor and there are other developers in the market. There are other industries, including support services from overseas coming into Johor. There are also universities that are coming up. While there is a lot of negative news about Johor such as oversupply issues, we, as entrepreneurs, like to think big and positive.
Q: How do you differentiate between SP Setia and Eco World?
A: SP Setia is a very strong company. When we left, we left a strong company behind. I think the major difference would be hard to tell today. Both are equally good. In terms of speed, we are faster than the previous company. In terms of profitability, we are not there yet.
Q: Are you bigger than SP Setia, currently, in terms of sales?
A: I don’t think so. SP Setia is doing very, very well. If you calculate and count only Malaysia, then yes, we are number one in terms of sales. But because SP Setia has the Battersea project in London, they are bigger.
Q: How long would it take for Eco World to be like SP Setia?
A: SP Setia took 20 years to be where it is now. Eco World is not there yet. In terms of development, yes, Eco World has the sales but profit comes only after you build. So at Eco World we get only minimum profit currently. All profits started last year, which were at RM40 million. This year, we expect our profit to double. It will come in step by step. We are targeting sales of RM4 billion this year, which is RM1 billion higher than last year. We have RM4.15 billion in unbilled sales. If we can continue our sales like that, then within five years we will be there. We have the sales, the land bank, the people and the finances but now we only need the profit.
Q: How is your relationship with Permodalan Nasional Bhd?
A: There is no relationship. We left amicably. They are also very kind. They allow us to take over the anak-anak angkat.
Q: What is your outlook for the property market this year? Analysts have a negative outlook on the sector.
A: If you look at it generally, then yes. It is up to each developer to pick the market. For example, Eco World International started only in May last year. Up to October, we had done £554 million (RM3.41 billion) in sale.
People should stop having a negative perception about Malaysia. There are a lot of investors still coming in to invest. We, entrepreneurs, will continue to survive despite challenges and difficulties. We will look at the market as a whole. We are risk takers. We will go into an area or we will find an area that suits us.
For example, if we think if we can resolve all the issues in Ijok, we are going to do it very well and create a wow factor just like we did for Eco Majestic.