Monday, July 18, 2016

Penang Transport Masterplan increased from RM27 to RM40 billion

Guan Eng with the model of the cheaper RM27 billion Transport Masterplan

When UMNO Penang raised issue on the Penang tunnel undertaken by Zenith Consortium for the last general election, we did not find it interesting enough.

If the arrangement involves no money from the state government and it is purely a private sector initiative, what is there to it. Even when there was issue with the higher consultancy fee for the construction of a certain highway over another highway, it seemed more politicising an issue that is technical in nature. It was seen to be similar in the way we see 1MDB being treated.

So there must be the What, When, Who, Where, Why and How of the allegation to be fulfilled, before anyone can criticise or accuse with surety and confidence.

Somehow this new issue of Transport Masterplan of Penang is interesting and something worthy to ponder over.

The development concept is not something new. It is quite the norm for construction of transportion infrastructure be tied together with development. Most of the time there is a cross-subsidy arrangement. Wonder why EPU never insist it be done in Malaysia in the past.

However, the fact that it is raised by a blogger known to be closely associated with opposition or namely a PKR figure and not any pro-Federal government made us took notice.

Anil Netto (whose is in our blogroll) raised issue on the potential RM160 billion potential development that came with a RM40 billion proposal by Gamuda-led consortium.

We repost below:

RM160bn property development scheme in Penang

July 12 2016

The transport infrastructure proposals for Penang put forward by the Gamuda-led SRS Consortium is expected to cost a whopping RM40bn.

This is apart from the RM6bn for three highways and a tunnel in northern Penang Island under the Zenith consortium which is being funded by a 110-acre land for infrastructure swap deal.

This adds up to a staggering RM46bn for transport infrastructure.

Now, this is much higher than the RM27bn transport masterplan put forward by consultants Halcrow, which had proposed mainly bus rapid transit and trams, along with the highways-tunnel which the state government wanted them to include.

The state government plans to fund this massive RM40bn tab for the SRS proposals by selling reclaimed land. Three artificial islands are expected to be created off the southern coast of Penang Island, which will affect the fishing communities there.

Two islands are expected to be created in Phase One (2017 to 2023) and the third island will be created in Phase 2 (2022-2030). The sale of reclaimed land is expected to generate RM20bn-28bn in Phase 1 and RM20bn in Phase 2.

Though the SRS plan includes sale of Pesta land (in Phase 1) and 800 acres of reclaimed land in Middle Bank (Phase 2), it is not clear if these two will proceed.

Property development firms will be rubbing their hands in glee over the prospect of developing up to 4,500 acres of reclaimed land from the three islands. (For Phase 1 alone, the reclaimed land would be 3,700 acres.)

Under the proposals for Phase 1, industrial land is valued at RM170-200psf, residential land RM230-730psf and commercial land RM370-750psf.

So how do we get a figure of RM160bn for the gross development value of the property development for both phases? Well, I am told land cost usually constitutes 25 per cent of gross development value.

So if the total sales of reclaimed land amount to RM40bn, developers would stand to reap RM160bn in gross development value (or let’s be conservative and say RM100bn).

Whichever way you look at it, it would be a boon for developers.

This makes some people wonder if what is driving the expensive SRS transport proposals is a vision for sustainable mobility or a vision for even more (mostly high-end) property development in Penang.

In any case, a north-south highway on the island (under Phase 1) is hardly a visionary proposal in this era of climate change and energy constraints. It is regressive – reflecting a 1970s mindset of highways as symbols of progress.

The initials SRS might give us a clue as to the driving force behind the expensive transport proposals. It stands for Southern Reclamation Scheme.
The way I see it, it is property development plans that are driving the expensive transport proposals.
RM160 billion seemed a lot for spending only RM40 billion.

But the amount of money to be spent need to be compensated with a fair amount of return. Not sure how the maths work out after time, cost, finance, etc are taken into account.

This issue came in the midst of Lim Guan Eng is facing corruption charges and in political limbo. It would be easily swept aside as politically motivated to put the final nail on Guan Eng's political coffin.

Already Guan Eng is seen as looking quite desperate to sue Joceline Tan for her latest Sunday column, "Snap election for Penang?" which described his current political situation.

It would certainly be political if raised by some political parties or personalities. But, this issue on the Transport Masterplan is raised by Penang NGO. They have put together videos to explain their concern, below:

And, another video on more issue raised:

The issues raised made sense of Anil Netto's concern on SRS Consortium proposal that it is more towards property development than towards an efficient transport system.

Since the engagement is not politicised but still at engagement level, the state government may need to convince the public that the more expensive, developer friendly and seemed hastily done proposal will translate into cheap transport cost for public.

Otherwise, it will be no better than the many privatisation infrstructure project done by the federal government in the past which only contribute to the high cost of living and till today being borned by the common folks.

That had always been DAP's argument against privatisation in the past but now it is DAP government that is pursuing privatisation in it's fullest commercial entirety. 

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