Black Cat, White Cat – Both Catch The Mouse

By Masterwordsmith

Never mind whether it is a black cat or a white cat, just so long as it catches the mouse, so said Deng Xiao Peng when he led the biggest Socialist state in the world down the road of transformation to become the greatest Capitalist state in the world in a mere two decades which took others two centuries.

And did not Russia too go this route? It always starts as a fight for the oppressed. And the oppressed rises up and throws out the oppressor. Then the oppressed discovers that it is easy to talk when you are not in power but not that easy when you now hold the reins of power.

That was the déjà vu feeling I experienced when I read this article in The Sun where Barisan Nasional (BN) claimed the Penang Island Municipal Council (MPPP) has signed away an estimated RM488 million in exchange for the RM250 million Subterranean Penang International Convention and Exhibition Centre (SPICE) project.

Many Penangites may not be aware that the Concession Agreement for Build-Operate-Transfer (BOT) of sPICE, PISA indoor stadium and PISA Aquatic Centre was dated and signed on 19 Aug 2011 and sealed/stamped on 24th August 2011. Last week, the agreement was open for public viewing and information derived there and from The Sun has a few areas of concern. Apparently, few knew about the public viewing which required prior appointment and limited to only two hours – no cameras allowed. Why?

Article 2 of the agreement seems to indicate that the grant of concession rights and sale of hotel site that MPPP has to comply with appear to be lopsided in favour of the developer.

The CM and MPPP should explain why all assessment rates for the entire project site (sPICE, PISA, indoor stadium, Aquatic Centre, car park but not the hotel and retail outlets) shall be borne by MPPP during the concession period.

In the agreement, it is agreed that the Concessionaire shall have the right to apply and/or appeal to MPPP for waiver, exemption and/or reduction of quit rent AND assessment rates for the retail outlets.

Why allow this? Business entities should not be given such waivers as it would mean loss of state revenue and increase in profits to the Concessionaire!

The agreement gives the allowance for the developer to build an additional 1,500 residential units in any project, in any part of Penang, within the concession period of 30 years as one of the loss making decisions.

According to Datuk Teng Hock Nan at a recent press conference, such a move would cost MPPP an estimated RM450 million, as the the council could not impose development charges on the units, or control the built-up areas, and selling prices for the additional units. He said the RM450 million estimation was calculated based on land cost – 30% of RM1 million per unit.

A 1.25 hectare site, within the SPICE project site, where a five-star hotel is to be built, was undervalued and sold by the Penang state government at RM100psf (at a total RM13 million). Estimated value is between 200RM-300RM per square foot! This means that the MPPP could have incurred a loss of RM27million if the land was sold at market rates (calculations based on 300RM psf).

MPPP would also have to provide mature land to the developer to build 450 low-medium cost units as per the agreement. Mature land possess infrastructure like roads and utilities and who would provide the infrastructure and at whose expense?

The CM should explain the rationale behind the decision as to why MPPP unconditionally and irrevocably agrees to grant the Concessionaire and/or any of its Related Corporations the right to additional density of any development carried out by the Concessionaire within the island of Pulau Pinang over and above the maximum permissible density of the land, provided always that the total sum utilized and spread over all projects within the island does not exceed 1500 residential units. They must also explain why there shall be no development charges or built up area control or selling price control imposed by MPPP on any such additional density utilized.

How much will the developer profit at the expense of the state and the rakyat?