How is SP Setia going to finance the building of the proposed new convention centre in Penang known as sPICE? It will be allowed to build an extra 1,000 homes in its existing projects in Penang, effectively increasing the density of those projects.
That emerged during a feedback dialogue session on sPICE, which I attended yesterday morning at the Town Hall facing the Esplanade.
At first, I thought it was going to be a small session with the MPPP and the council president, Patahiyah. But it turned out to be a bigger event with the Chief Minister chairing it, until he had to leave and hand over the reins to Patahiyah. Among those present were Council staff and representatives of SP Setia.
As one of the participants, engineer Tan Seng Hai, observed, this was a closed-door session as only those who had emailed their concerns to the Council president were invited. About seven or eight of us out of the 16 or 18 who had emailed objections turned up. (The rest probably couldn’t make it as the session was held during working hours.) No one from the press or BN opposition parties was there. Still, it was notable that such a session was actually being held unlike in the past, when projects were undertaken without any feedback or public consultation.
The Chief Minister started the ball rolling by explaining to those present why he felt the RM300 million convention centre was necessary for Penang. He was clearly passionate about it, pointing out it would only cost the MPPP just over RM11 million net. (MPPP’s share of the RM300 million bill i.e. RM50 million less savings on future upgrading work on Pisa and amount raised from leasing out three acres of the site for 99 years for a 300-room hotel.)
Seng Hai raised the point about the availability of convention centres in other urban centres in the region such as Bangkok, Singapore and Macau. Was there already overcapacity and would there be a glut and would Penang be able to compete with the big boys? Guan Eng was convinced that Penang needs a convention centre for its own requirements and he vowed to personally market sPICE during his trips abroad. He said the seven acres of green space (which would be free and open to the public) envisaged in the project was an added attraction and indeed, Penangites badly need more open recreational areas.
I followed up by asking why MPPP should get involved in building a convention centre when a couple of upcoming private projects in Penang include convention centres of their own. As I ended my question, the Chief Minister raised his hands to show eight fingers: he explained that it would take at least eight years for those proposed private sector convention centres to be completed, and he felt that Penang couldn’t wait that long. As for sPICE, it is better to try and fail, than not to try at all, he said.
Other questions and concerns raised touched on traffic dispersal, the need for an LRT station to be factored into the design, proper ramps for loading and unloading goods at the convention centre, security, the size of the swimming pool, maintenance of toilets, and how really green this project would be (it would be ‘gold’ green rather than ‘platinum’ green, according to industry jargon). On the green space, questions were raised as to whether there would be a jogging track and whether shady trees could actually be planted on a roof-top green space.
I raised a couple of points: was this an MPPP or a Penang state government project, as the decision-making process is different. If it was a Penang state government project, it would have to be approved by the Penang State Assembly. If it was an MPPP project, it would have to be approved in a full council meeting. If so when was it approved?
To which, the Chief Minister responded by saying that this was indeed an MPPP project, but apparently, anything involving MPPP landed property or lease of land would also need approval from the relevant state authorities. I am still not clear if an MPPP full council meeting did indeed approve the deal.
I asked the Chief Minister and the Council president if the RM11 million (or RM50 million, whichever way you look at it) would be the maximum the Council would be exposed to and if there were any other hidden costs, and they both said RM11 million was the maximum and it would be incurred in the first three years. In fact, they said the Council could actually earn assessment from the project in later years. I think I heard it being mentioned that the state authorities had themselves committed to use sPICE for 45 days in a year.
I also expressed concern that sPICE would be 30 years old and out-of-date at the end of the Build-Operate-Transfer period, when the property would be transferred back to the MPPP (though the future price of this prime land would still make the site a valuable asset).
What was also revealed during the session was that the deal involves allowing SP Setia to build an additional 1,500 homes in its existing projects in Penang. I had to seek clarification on this a few times as it wasn’t clear to me what this concession entailed.
After a couple of clarifications from first Patahiyah and then, an SP Setia manager, this is my understanding of the deal:
Out of the extra 1,500 homes now allowed, the 30 per cent low-cost component (450 homes, at a price of around RM72,000) by SP Setia would be built on state land “given” to the developer. If this land is given free or subsidised, then the revenue lost should be factored in as part of the sPICE project cost incurred by the state/MPPP. (Normally, developers have to pay for the land on which their quota of low-cost housing is built.)
The remaining 1,000-odd extra homes that SP Setia would be allowed to build on its handful of existing projects on the island effectively means raising the approved density of those projects on Penang Island. This is the real deal clincher for SP Setia and the SP Setia manager acknowledged as much during the session.
A few more questions arise here, which I only thought of after the session was over: would a development charge be imposed for this increase in density? If not, shouldn’t that revenue lost by the MPPP be factored in as a cost of sPICE? Second, would this increase in density set a precedent and result in future permissible densities becoming more ‘flexible’? Third, who pays for the supporting infrastructure needed to cope with the extra density?
In this connection, another question arises: when will the Penang Island draft local plan, which specifies permissible densities for each area, be released to the public? So far, we have only heard about the ‘special area plan’ for the heritage area of George Town but not the draft local plan for the island for 2005-2020.
Consultants started working on the island-wide plan from 2005-2006. It was approved by the MPPP in 2007 and later resubmitted to the MPPP for approval in September 2008 after incorporating amendments that had been proposed by a few councillors who, together with the consultants, had gone through it with a fine tooth comb. This plan was to be confirmed by the state government by December 2008, after which it was to be open for public viewing.
The state government then asked the consultants to brief them and that took many meetings until 2010, when the Chief Minister called for a final meeting of all councillors and Aduns. It was then announced that the draft local plan for the island and the ‘special area plan’ for the heritage zone would be open to the public in 2010 because the authorities need to submit the special area plan to Unesco by February 2011. What we read in the press now is all about this special area plan.
So we really need to look urgently at the Penang Island local plan, which could get even more outdated with each passing month (after all it is for the period 2005-2020), and take a careful look at the densities allowed.
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Related posts:
Concerns about sPICE
S P Setia awarded RM300m PICC job
PICC – a re-run of the unhappy Pisa saga?
sPICE exhibition ‘disappointing’
MPPP chief says “No” to funds for PICC
Posted by Anil at 10.12amTagged with: local plan, MPPP, Penang, SP Setia, sPICE
55 Responses to “sPICE: The quid pro quo with SP Setia”
kclim says:
15 February 2011 at 11.58am
dear anil
thank you for sharing with us the dialogue. The dialogue is in line with the state govt’s policy on transparency but as you have pointed out, it is questionable for the state govt to increase density without proper studies, public dialogue and due consideration for the inadequate infrastructure. The state and MPPP should come out clean on what are the permissible densities for all the areas all over the state so that the people of penang know what to expect and to avoid possible corruption and favoritism of certain developers. The tabling of the local plan for public viewing and discussion will help in that direction. since the plan was prepared since 2005-2006, it is probably outdated by now thus the urgency for public viewing and implementation if found suitable. we are tired of the wastage in grandiose projects such as PISA,MPSP building,the batu kawan stadium to name a few.
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Gerakan K says:
15 February 2011 at 12.22pm
If we look at the case, a lot of smart wording being used to justify the project. A kind of snake oil seller style.
Even with face to face Q & A session, we still unclear about the project.
Then, a closed door session ??? Or was that a guaranteed no-objection session because all of own people session ???
Why they always like to do mini thingies ??? Mini local election and mini Q & A, then let its machais to spin it as full scale events that deserve ISO standard !!! A new tactic invented by the talk talk and talk Chinese-based party.
Why afraid to make that Q & A session public so that non-DAP people like me can participate ???
Was that Q & A session intended for Oscar or Stars Award nomination ??? If so, let us know. Got sms voting contest ???
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Andrew I says:
15 February 2011 at 2.19pm
“Still, it was notable that such a session was actually being held unlike in the past, when projects were undertaken without any feedback or public consultation.”
Did you read this part, or don’t you read?
Meanwhile, the back door minister has been slammed by the honest minister for insinuating that the latter is using back door antics to try to increase his party’s allocation of seats. As they say, it takes one to know one.
For full details, go here: http://thestar.com.my/news/story.asp?file=/2011/2/15/nation/8062071&sec=nation
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Andrew I says:
15 February 2011 at 2.29pm
p.s. Here’s a Q and A: Who is the BN’s favorite whipping boy in the coalition?
No sms voting, sorry.
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Gerakan K says:
15 February 2011 at 3.06pm
Hello,
only a handful of invited participants involved in the Q & A session and not general public. Re-read the article before jump to defend mode.
A direct nego project comes with directly invited Q & A session.
I think they need a better scriptwriter before aiming at Oscar level.
Let’s see if any dumb local viewer interested in their story.
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Andrew I says:
15 February 2011 at 3.44pm
Still better than before. Half a loaf is better than no bread, which is what we will get if we invite the back door minister back to rule us.
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limko1 says:
15 February 2011 at 1.47pm
Thanks to Anil for enlightening us on the latest going-ons with regards to sPICe. Indeed, it is a good start to have a dialogue on the proposed convention centre as this has never happened before and augurs well for transparency and wider public participation.
However, as noted by Anil, there is an urgent need to come up with clear standards and guidelines with regards to plot ratio to avoid too much ambiguities/manipulations.
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donplaypuks says:
15 February 2011 at 2.12pm
I clearly smell a rat – a big, dirty, black stinking rodent! I particularly detest this smokescreen of playing around with valuations and obfuscation over development densities and “free land” while ignoring additional costs in infrastructure etc.
I further detest this play acting at transparency when the deal’s already been concluded in the CM’s office, behind closed doors.
I bet if all the numbers are put together, SP Setia would have come up with no negative cash flow of their own. Having worked for many years in a couple of property Plcs, I know exactly how developers think and plan in direct nego contra deals!
If CM LGE is serious about transparency, then he should do better than pull a leaf out of UMNO/BN’s “direct nego” deals.
I am not against the SPICE per se, but let there be open tender so we can see what we are paying for instead of being ‘stuck with a pig in a poke’ after 30 years!
And this talk about “it’s better to have tried and failed” is all false bravado. Let’s see if LGE is willing to put his own money and take risks; it’s so easy to mouth homilies when it’s the TAXPAYER who will be left holding the baby if things go drastically wrong!
I am very disappointed in CM LGE and his handling if this very important matter. There is no development that cannot wait proper planning, ever!
dpp
we are all of 1 Race, the Human Race
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Ong Eu Soon says:
16 February 2011 at 9.16am
Don’t you understand? It is better to try and fail!
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kingkong says:
17 February 2011 at 4.52pm
I thought it was a open tender where there was another competitor? Maybe the developer you work with, did not win the tender(?)
Who are the stake holders? Only NGOs and existing property owners? The stake holders include public who are squatters, poor income owners and those wanting to stay near the project area and of course the unemployed who also wanted a small slice of the cake and Penang Manufacturers.
The only question is everyone in the win-win situation? If one thinks it is bad to increase the density, then it would be better to cut more hills and clear the jungle to lay more roads for new township.
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wandererAUS says:
15 February 2011 at 5.12pm
Aiyah Anil,for a moment I thought you were talking about the Spice Girls!
Leave this dull subject to Gerakan K la…he is just waiting and looking for more “Lopan”…a bloody snake in the medicine seller show….
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LTH says:
15 February 2011 at 10.52pm
I fully agree with donplaypuks’ comments.
The session goes to confirm this is all LGE’s personal agenda to have a PICC,bull dozing it thru behind closed doors, without following proper procedure, like eg. when you asked if this big project has received formal green light from MPPP, he side-stepped it conveniently and left off the hook quite easily then.
It would be interesting if you had insisted for a direct yes/no answer from him.
While donplaypuks smelled a rodent, I saw its head coming out from the dark hole. Let there be light!
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Kometenmelodie says:
15 February 2011 at 11.55pm
Anil
Thanks for bring our concerns and trying to get some answers.
But the conclusion after the closed door Q & A session is that there are more questions now than answers. From the answers given by LGE, I don’t think any nuetral person would be satisfied at all.
Some of my concerns :
1. Why is LGE is attending the session when this is supposed to be a MPPP project ? Why is he answering questions on behalf of MPPP ? This clearly shows that it is LGE and not MPPP who is driving this project.
2. The numbers provided by LGE are highly misleading and certainly the figure is not Rm 11 Mil max as claimed by him. Rm 11 Mill is the nett and not the total or max amount. If you factor in the loss of income for additional houses built and others, the amount is much much higher.
3. The matter of approval by MPPP council was never answered. Probably there wasn’t one.
4. Financial projection : None given expect some empty talk by the CM. That clearly shows that the state govt has not done their homework and hoping to get the numbers. If sPICE requires CM to personally attract people then it has failed. Also would this means LGE will make many more free trips overseas on tax-payers expense to promote sPICE ?
5. Open tender : No answer.
6. Why Eco-Meridien and not SP Setia : No answers
7. Eco and traffic studies : No answers
8. Terms and conditions of the tender : No answers
9. Liability : No answers
10. Marketing costs : No answers
11. Management of sPICE : No answers
12. Why did the state govt committed to take up 45 days ? Shouldn’t this be also factored in as a cost ?
13. Finally the idiotic comment by LGE about “it’s better to have tried and failed”. I don’t have any issues of LGE trying and failing but I do have an issue when it involves PUBLIC FUNDS.
In the end, in his single-mindedness in pursuing sPICE, LGE not only squandering millions of public funds but he also giving away public assets such as land and lowering the quality of life.
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Andrew I says:
16 February 2011 at 10.54am
“Also would this means LGE will make many more free trips overseas on tax-payers expense to promote sPICE ?”
One economy class seat, please.
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Kometenmelodie says:
16 February 2011 at 11.23pm
Don’t buy that BS from LGE….The Cheap Minister doesn’t fly cattle class anymore…
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Andrew I says:
17 February 2011 at 12.02am
Isn’t that why he’s cheap, flying cattle class?
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Kometenmelodie says:
17 February 2011 at 8.20pm
Cheap Minister is certainly not cheap when using public funds in … spending on useless white elephants.
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Andrew I says:
18 February 2011 at 10.41am
So why is he cheap?
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Kometenmelodie says:
19 February 2011 at 12.55am
I am in awe of your single minded defence of the DAP regime and LGE !
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Ong Eu Soon says:
16 February 2011 at 9.33am
LGe is setting a bad bad precedent on how crony-ism should work. He is giving concession to SP Setia yet refuse to acknowledge it. He also set a bad bad precedent for high density development in total disregard for all regulatory laws. He is setting a bad bad precedent on how to hijack MPPP for his pet project. He is setting a bad bad precedent for public consultation and feedback by inviting all those who are too decent to criticize him. To tally no gut to invite a big mouth like me. What a shame! One term only, LGe already can’t resist the temptation…. This state government will only last for one term, mark my word. I have received enough feedbacks to show that LGe can be defeated easily in the next state election. A drastic change from the previous years, when a mere criticism on LGe will attract anger from the public. Now I have no more problem to talk and criticize LGe openly in the public without the fear of offending the sentiment of the public. Fact is now more people will join in my discussion and show their disbelieve on how stupid is LGe. No one dare to dispute the fact that LGe is stupid and incompetent.
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Ong Eu Soon says:
16 February 2011 at 10.42am
Let LGe builds the sPICE and let him goes and markets it overseas. LGe need to concentrate fully on the marketing effort, he better quit as CM and devote all his time to make sure that the sPICE is a success.
However the truth is that he is determine to build the sPICE and let it fail. Simply because he know pretty well that the project not only can’t bring revenue, he also know about the technical challenge that the developer need to overcome. LGe just can’t stop digging his own grave by misleading others into believing his warped logic.
He distorts the open tender system by accepting conceptual design rather than real proposal and detail tender. He distorts public feedback and consultation in an acting to make public believe that he is listening when he already make up his mind on his pet project. He just like BN politician, has no qualm in spending public fund on a sure failed project.
He is helping his BN cronies by giving concession in an unprecedented manner; (free?) lands and hidden concession in the name of accountability and transparency.
He is turning Penang island into a big ghetto in the name of development in total disregard for regulatory laws and public interests.
He share the same attributes with all other dictators and bad politicians in building his monument and hijacking the power of local government.
http://anilnetto.com/economy/development-issues/spice-mppps-quid-pro-quo-with-sp-setia/
￥￥￥￥￥￥￥￥￥￥￥￥￥￥￥￥
这间建筑公司和 黄X 定的关系很密切。。。。
林冠英。。。。。。。。。。。。。。。。。。。。。。
我的感觉是在自掘坟墓。。。。。。。。。。。。。。。。。。。。
基本上评论，看法对林先生不利。。。。。。。他走着黄X定的路。。。。不过，。。那可能是。。。。让他。。。。
终身悲哀的决定。。。。。。
他可能就没有那么幸运了。。。我看到了乌云已经密布。。。。。。。。。。等着他。。。。。。。。。。。
不是得罪。。。。。。。。。。。。。。。。。。。。。。。。。。是他没有看到前面的。。。。。洞。。。。。。
宁可不建。。。。。。。SPICE。。。。。。。。。。。。并不绿化。。。。。。槟城要的是好玩。。。。。。。。可以玩上5天以上，吸引人逗留一周以上。。。。。。。。。的绿化。。。。接近大自然的地方。。。。RELAX。。。。。ENJOYABLE。。。GOOD—FRESH AIR。。。。。。。SPICE--讲不好听，是多块鱼。。。。。
太不小心了。。。。。。。。。。。。。。。。。。。。。。。。。。。。。。。。。。。。。。。。。。。。。。。。。
