KLCC commercial projects

Recent search on TheSun daily (2013) has shown that KLCC (Holdings) Sdn Bhd CEO, Hashim Wahir said that their company wants to evolve commercial projects in Kuala Lumpur City Centre (KLCC) region and the gross development value (GDV) is more than RM5 billion. The projects are a luxurious hotel, a 64 levels top level office building, a 6 levels shopping centre that connected to Suria KLCC and a parking lot.

According to Hashim, the hotel will have residences, serviced apartments and facilities that linked the hotel with the shopping centre. He also mention that the hotel and residences will be managed by an expert operator but he refuse to reveal its name. These projects are developed by Cititower Sdn Bhd. For the financial matter, he believes that local banks will help giving them some donation. Moreover, Qatari Diar will help them preparing KLCC Holdings’ fund as well as the land.

The development above involve stockholders, stakeholders, managers, investors and owners which can result a separation of ownership and management (Jordan, Westerfield & Ross 2011), this is why agency problems might occur on the company. For instance, this project conducted by KLCC Holdings requires an enormous cost which means they need investors who can give huge funds to the project. This problem can lead to Direct Intervention by Stockholders (Investopedia n.d.) whereby the largest institutional investors on the company will take over the company’s stock and give impacts to the company’s department and operations. Another thing is Threat of Firing (Investopedia n.d.), since the CEO said that he will hires some expert operator to manage the hotel and residences, some of managers will be afraid of being transferred or fired due to comparison of quality of work if it’s compared to the expert one.

Moreover, they will be other things that cause disagreements between stockholders and managers such as profit maximizing. For example, the managers think it is a risk taking to build 3 projects at the same time and some of them are connected to another one which means Suria KLCC will have some improvement and it might interrupt Suria KLCC customers. And also, the price for the hotel would be extremely expensive since it will be connected to the retail podium or shopping centre that also connected to Suria KLCC and it might not attract the customers since there are lots of other hotels around that location. While, to the investors, it is an opportunity of higher profit and it is a new thing to connect 3 buildings at once and it only take around 4 year to finish it. Plus, the location is also in the center of the city so to the investors it was a good spot and it’s a great project to invest.

In conclusion, some managers chase diversification to minimize the risk as what they see it. On the other hand, investors see a firm's risk differently (Myers 1984).

Reference List

Investopedia n.d., Complete Guide to Corporate Finance, viewed 23 April 2013,

Jordan, BD, Westerfield, RW & Ross, SA 2011, Corporate Finance Essentials, 7th edn, Mc-Graw-Hill/Irwin, New York.

Myers, SC 1984, Finance Theory and Financial Strategy, Massachusetts Institute of Technology, Cambridge, Massachusetts.

Yeong, V 2013, KLCC Holdings develops RM5b project in KLCC, viewed 23 April 2013,