State government and senior MPPP officials faced a barrage of
questions over the Spice convention centre during a press conference on
Tuesday.
I was among the journalists who raised these questions, and I jotted down some notes. I hope I got it down accurately, as the answers sounded vague and unclear in some places. Bear in mind, these are not actually quotes but just my notes.
The replies were provided by state exco member Chow Kon Yeow, the MPPP president Patahiyah Ismail and other senior MPPP officers.
Was this RM250m project approved in a full council meeting of the MPPP before the agreement was signed? If not, why not?
It was approved by the Lembaga Perolehan, chaired by YDP, along with the State Financial Officer and a few others.
It was tabled before a full council meeting. (This sounded vague, According to some MPPP councillors, there was no submission or discussion at a full council meeting for the details of the agreement of the project.)
If that’s the case, why were councillors not aware of the details of the agreement or not even a copy of the agreement? Why did they have to request for a special meeting for more information?
Even the State Exco were not given a copy . The agreement itself need not go to full council; otherwise with so many agreements around, only a handful of agreement can be completed.
But we are talking about major outlay of Council money. Was the RM50m to be incurred by the MPPP and the other terms for Spice deliberated and approved by a full council meeting before the agreement was signed?
(No real answer given)
At present, the agreement is only available for viewing at the MPPP office by appointment for two hours at a time. Will it be made public?
We have already created a first in the country by making the agreement open for public viewing. The public can also come back again for another viewing if two hours is not enough.
The agreement was only exhibited after it was a done deal. Why was the agreement not exhibited before it was signed?
(No real answer given.)
If there is nothing to hide, why not put the agreement on the MPPP website?
(No real answer given.)
Who were the other bidders for this project? How can it be an open tender if it is restricted to only those with existing projects in Penang? Were all the bidders offered the 1500 units in extra density?
There was a call for open tender but there no were takers. So the open tender process was then ended.
We then invited requests for proposals. We received three.
Can you give us the names of the other two?
A company called PICO and the other was Taman Kasturi.
Who was involved in the negotiations on the state government/MPPP side?
(Answer wasn’t very clear.)
The developer will benefit from income derived from rentals of the retail outlets, convention centre, indoor stadium and car park. Will the MPPP be entitled to profit-sharing during the 30-year concession period?
(Didn’t have time to ask this question, but heard MPPP not entitled to any profit-sharing.)
The assessment payment to MPPP is being waived for sPICE convention centre, indoor stadium, Aquatic Centre and car park? How much per year is the MPPP losing?
The property belongs to the MPPP; so that’s why assessment is being waived.(But if MPPP owns the land, why is it not entitled to any rentals? It is a Build-Operate-Transfer project for an initial 30 years and the MPPP won’t get any income for their outlay.)
Why is this project exempted from a Social Impact Assessment (SIA) study?
The SIA is a new thing and most of our projects don’t have this. We will have a traffic impact assessment.
Is the Traffic Impact Assessment (TIA) report binding or merely for “academic purposes”?
(They didn’t seem too sure about this. I don’t think it will be binding as it will probably be done by their own consultants).
You have a 6000-capacity convention centre with only 2000 parking lots and a limited number of parking bays for tourist buses. How are you going to cope with the extra traffic?
Road widening around the area will be required. The project will also be integrated into the Penang Transport Masterplan (They also mentioned something about transport interchange nodes. But I don’t think there has been any serious thought about all this.)
We will look again into the parking lots situation when the actual plans come up for approval.
Who is the consultant and will the consultant be independent of the developer?
As this is an MPPP property/project, the MPPP will also be looking into the traffic aspect.
Is this a flood-prone area? Have any studies been undertaken about the water-table in the area?
(Didn’t have time to ask this question).
Why the need to give 1500 units in extra density to the developer?
We are getting a RM250m convention centre paying only RM50m (less repairs and renovation saved etc). The extra density is to allow the developer to raise funds for the project.
There is a perception that the terms are generous. How did you agree to the figure of 1500? Can we see your calculations?
You can assume any figure for the selling price of the extra apartments. We could also assume that it may cost RM300000, in which case they might raise RM200m (which covers the cost of the convention centre).
They can easily raise that amount, no problem, perhaps more. Surely you would have done your own calculations. Can we see your calculations?
There are also intangible and subjective benefits to the state while the project carries certain risks. The MPPP will be a big winner; so will the state and Penangites. The concessionaire is responsible for the risks.
If the project is financial viable, why give ‘compensation’ of 1500 units in extra density? Is there a business plan to show that this project is viable?
(No real answer.)
The MPPP development charge is being waived for the 1500 extra units. There is a reason why development charges are imposed. Why is it being waived in this case? And how much are the amounts waived? Please provide us with figures.
It depends on the actual projects and where the 1500 units will be built. They can only use these extra units for larger projects where there are 8000-10000 units. (Not very clear.)
On what basis are the higher plot densities being allowed? 120 units per acre? Aren’t these well above existing plot ratios? What is the maximum permissible under the Local Plan?
The State Planning Committee has the power to decide the densities.
But the Local Plan was approved by the MPPP in 2008?
The Local Plan is not yet in force so it is a guideline. Under existing guidelines, low-and-medium cost housing is allowed 120 units/acre and the Local Plan also allows. (But is this restricted only to LMC?)
Why is MPPP providing land free-of-charge for SP Setia for the low-cost housing? What is the estimate cost of the land?
The land needed is not that big as what has been speculated. Based on current density guidelines, only about 3.75 acres is needed and not 16ha as speculated. We want to ensure that affordable housing is built.
Why is this precedent being set for providing land?
(No time to ask this question)
The hotel – this is the jewel in the crown of the project. How was the price of RM100psf arrived at for the sale of the land? Who did the valuation?
It is based on transactions in neighbouring sites. The valuation decided by MPPP’s own valuation department.
Why is the hotel and land not being returned to MPPP after 30 years? Why is it 99 years?
The land is being leased for that period.
Can you give us a total estimated cost for all the additional related costs (development charge and assessments waived, free land provided) on top of the RM50m to be incurred by the MPPP? What are the total costs (direct and indirect) to the MPPP?
(Vague answer. They are sticking to the line that “we pay RM50m and we get a convention centre, ‘people’s park’ etc worth RM250m which will serve the needs of Penang”.)
Final note
The press conference, which began at 1.00pm, ran until 2.35pm, forcing the cancellation of a scheduled OSC committee meeting. Credit to the MPPP and state exco for facing the press.
But while appreciative of the opportunity to raise questions, I didn’t really get much new information except for the identities on the other parties who were supposed to have made proposals.
While it is arguable whether Penang needs a convention centre, what I am more concerned about how this deal is being pushed through the MPPP, the swap mechanism and financial implications for the MPPP, and the worrying precedent this will set for other possibly bigger swap deals.
I was among the journalists who raised these questions, and I jotted down some notes. I hope I got it down accurately, as the answers sounded vague and unclear in some places. Bear in mind, these are not actually quotes but just my notes.
The replies were provided by state exco member Chow Kon Yeow, the MPPP president Patahiyah Ismail and other senior MPPP officers.
Was this RM250m project approved in a full council meeting of the MPPP before the agreement was signed? If not, why not?
It was approved by the Lembaga Perolehan, chaired by YDP, along with the State Financial Officer and a few others.
It was tabled before a full council meeting. (This sounded vague, According to some MPPP councillors, there was no submission or discussion at a full council meeting for the details of the agreement of the project.)
If that’s the case, why were councillors not aware of the details of the agreement or not even a copy of the agreement? Why did they have to request for a special meeting for more information?
Even the State Exco were not given a copy . The agreement itself need not go to full council; otherwise with so many agreements around, only a handful of agreement can be completed.
But we are talking about major outlay of Council money. Was the RM50m to be incurred by the MPPP and the other terms for Spice deliberated and approved by a full council meeting before the agreement was signed?
(No real answer given)
At present, the agreement is only available for viewing at the MPPP office by appointment for two hours at a time. Will it be made public?
We have already created a first in the country by making the agreement open for public viewing. The public can also come back again for another viewing if two hours is not enough.
The agreement was only exhibited after it was a done deal. Why was the agreement not exhibited before it was signed?
(No real answer given.)
If there is nothing to hide, why not put the agreement on the MPPP website?
(No real answer given.)
Who were the other bidders for this project? How can it be an open tender if it is restricted to only those with existing projects in Penang? Were all the bidders offered the 1500 units in extra density?
There was a call for open tender but there no were takers. So the open tender process was then ended.
We then invited requests for proposals. We received three.
Can you give us the names of the other two?
A company called PICO and the other was Taman Kasturi.
Who was involved in the negotiations on the state government/MPPP side?
(Answer wasn’t very clear.)
The developer will benefit from income derived from rentals of the retail outlets, convention centre, indoor stadium and car park. Will the MPPP be entitled to profit-sharing during the 30-year concession period?
(Didn’t have time to ask this question, but heard MPPP not entitled to any profit-sharing.)
The assessment payment to MPPP is being waived for sPICE convention centre, indoor stadium, Aquatic Centre and car park? How much per year is the MPPP losing?
The property belongs to the MPPP; so that’s why assessment is being waived.(But if MPPP owns the land, why is it not entitled to any rentals? It is a Build-Operate-Transfer project for an initial 30 years and the MPPP won’t get any income for their outlay.)
Why is this project exempted from a Social Impact Assessment (SIA) study?
The SIA is a new thing and most of our projects don’t have this. We will have a traffic impact assessment.
Is the Traffic Impact Assessment (TIA) report binding or merely for “academic purposes”?
(They didn’t seem too sure about this. I don’t think it will be binding as it will probably be done by their own consultants).
You have a 6000-capacity convention centre with only 2000 parking lots and a limited number of parking bays for tourist buses. How are you going to cope with the extra traffic?
Road widening around the area will be required. The project will also be integrated into the Penang Transport Masterplan (They also mentioned something about transport interchange nodes. But I don’t think there has been any serious thought about all this.)
We will look again into the parking lots situation when the actual plans come up for approval.
Who is the consultant and will the consultant be independent of the developer?
As this is an MPPP property/project, the MPPP will also be looking into the traffic aspect.
Is this a flood-prone area? Have any studies been undertaken about the water-table in the area?
(Didn’t have time to ask this question).
Why the need to give 1500 units in extra density to the developer?
We are getting a RM250m convention centre paying only RM50m (less repairs and renovation saved etc). The extra density is to allow the developer to raise funds for the project.
There is a perception that the terms are generous. How did you agree to the figure of 1500? Can we see your calculations?
You can assume any figure for the selling price of the extra apartments. We could also assume that it may cost RM300000, in which case they might raise RM200m (which covers the cost of the convention centre).
They can easily raise that amount, no problem, perhaps more. Surely you would have done your own calculations. Can we see your calculations?
There are also intangible and subjective benefits to the state while the project carries certain risks. The MPPP will be a big winner; so will the state and Penangites. The concessionaire is responsible for the risks.
If the project is financial viable, why give ‘compensation’ of 1500 units in extra density? Is there a business plan to show that this project is viable?
(No real answer.)
The MPPP development charge is being waived for the 1500 extra units. There is a reason why development charges are imposed. Why is it being waived in this case? And how much are the amounts waived? Please provide us with figures.
It depends on the actual projects and where the 1500 units will be built. They can only use these extra units for larger projects where there are 8000-10000 units. (Not very clear.)
On what basis are the higher plot densities being allowed? 120 units per acre? Aren’t these well above existing plot ratios? What is the maximum permissible under the Local Plan?
The State Planning Committee has the power to decide the densities.
But the Local Plan was approved by the MPPP in 2008?
The Local Plan is not yet in force so it is a guideline. Under existing guidelines, low-and-medium cost housing is allowed 120 units/acre and the Local Plan also allows. (But is this restricted only to LMC?)
Why is MPPP providing land free-of-charge for SP Setia for the low-cost housing? What is the estimate cost of the land?
The land needed is not that big as what has been speculated. Based on current density guidelines, only about 3.75 acres is needed and not 16ha as speculated. We want to ensure that affordable housing is built.
Why is this precedent being set for providing land?
(No time to ask this question)
The hotel – this is the jewel in the crown of the project. How was the price of RM100psf arrived at for the sale of the land? Who did the valuation?
It is based on transactions in neighbouring sites. The valuation decided by MPPP’s own valuation department.
Why is the hotel and land not being returned to MPPP after 30 years? Why is it 99 years?
The land is being leased for that period.
Can you give us a total estimated cost for all the additional related costs (development charge and assessments waived, free land provided) on top of the RM50m to be incurred by the MPPP? What are the total costs (direct and indirect) to the MPPP?
(Vague answer. They are sticking to the line that “we pay RM50m and we get a convention centre, ‘people’s park’ etc worth RM250m which will serve the needs of Penang”.)
Final note
The press conference, which began at 1.00pm, ran until 2.35pm, forcing the cancellation of a scheduled OSC committee meeting. Credit to the MPPP and state exco for facing the press.
But while appreciative of the opportunity to raise questions, I didn’t really get much new information except for the identities on the other parties who were supposed to have made proposals.
While it is arguable whether Penang needs a convention centre, what I am more concerned about how this deal is being pushed through the MPPP, the swap mechanism and financial implications for the MPPP, and the worrying precedent this will set for other possibly bigger swap deals.
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