Transport minister Loke Siew Fook, who witnessed the signing ceremony, said he hoped the housing project would run smoothly and be completed soon.

“We hope that this land can be optimised and bring in benefits to the residents, which would improve their socioeconomic status,” he said in his speech, adding that he hoped the squatters would give their cooperation for the project.

Later at a press conference, the transport minister said the RAC was looking into proposals submitted by developers and that a decision would be made soon.

Meanwhile, chief minister Chow Kon Yeow said a comprehensive development plan would be required because the land does not have a planned drainage system, making it vulnerable to floods.

“This would transform this settlement into a much more organised, efficient housing area for the well-being of this community,” Chow said.

He also said that the housing project could spur economic growth with the creation of commercial areas that could create jobs for the community, as well as proper traffic routes.

Chow said he had lived in a squatter settlement for 20 years, and that it was important that the state government has policies that are friendly towards the squatter community.

Roughly 300 families in Kampung Manis – descendants of workers at a nearby sugar factory – have been squatting on government land for decades, despite multiple attempts to evict them.

The issue was a hot topic during the state election last year, with Pakatan Harapan’s candidate for the Perai seat, S Sundarajoo, promising to resettle the squatters.