CAT needed in sPICE project

The Penang Forum is deeply concerned over the manner in which the concession agreement between the Penang Island Municipal Council (MPPP) and the project concessionaire for the sPICE centre was signed.

Since 2008, the Penang State government has pledged to implement good governance and run its administration with its CAT (Competency, Accountability and Transparency) policy. Thus, the rushed manner in which the sPICE project agreement was signed is baffling and raises many important questions.

It was reported that the sPICE project and the budget was approved in a full council meeting in 2010 without the details of the project and the Agreement being agreed upon by the councillors. The Request For Proposal (RFP) for the project was called in the middle of 2010 and the Agreement signed in August 2011. The councillors were not briefed on the terms of the Agreement before the signing. The councillors and the Penang public only read about it in the newspapers in September.

At a recent press conference, the State Exco and the MPPP President responded that even the State Exco members were not given a copy and that there are many other agreements going around and this would take too long. These are indeed poor excuses and not exemplary of a state government that pledges CAT. It is important that the State Authorities recognizes the separation of power between the State Authorities and the Local Authorities. While the State Authority may give directions of a general character to the Local Authority, it cannot direct the local authority to undertake specific projects that the latter may deem otherwise. The local authority must maintain their independence to decide, plan and implement the local and structure plans and work with the State Authority for the interests of the people of Penang.

More importantly, a project of this magnitude involving millions of ringgit of ratepayers’ money and that has generated widespread public interest and controversy should not have been pushed through in such a manner. What is also worrying is the apparent lopsided terms of the Agreement that appear to favour the project concessionaire.

The State government has maintained that the total project cost to MPPP is only RM50 million. Penang Forum questions this figure as our analysis shows that the total cost to MPPP would be in excess of RM110 million. These include costs of revenue foregone in waiving development charges, assessment, quit rent and provision of land at no cost to the project concessionaire to build low-medium cost (LMC) housing. MPPP explained that assessment and quit rent are waived because the buildings are owned by MPPP. Why are assessment and quit rent then not waived for the retail outlets that also occupy the same premise? Why are assessment and quit rent waived when there is no profit sharing agreement between MPPP and the concessionaire even though MPPP will contribute 20% of the total building costs?

Penang Forum is also very concerned that the Penang State Authority has set a dangerous precedent to amend planning guidelines and to allow additional density favouring the concessionaire. The State Exco’s argument that this is allowable under the Local Government Act and that this practice has been done in the past is unacceptable. Under what conditions are planning guidelines allowed to be amended? What are the checks and balances to prevent the misuse of the power of the State Planning Committee and to protect the interests of the public? Would this not subject the state authorities to questions of bias and unfair business practices by other developers?

Schedule B in the Agreement states that a Traffic Assessment Impact (TIA) study to be submitted by the developer is “purely for academic purposes only (and) shall have no bearing on proposed road upgrading works”. This clause is baffling. Penang Forum questions the State Authority and MPPP their commitment to tackle the traffic dispersal problems in the vicinity of the sPICE project. There are currently five ongoing mixed development projects within a one kilometre radius from the sPICE centre. These five projects will add an additional 2000 residential, office and retail units to the fast growing Bayan Baru township. Why is a TIA “purely for academic purposes only” for this project while it is mandatory for many other projects? Why is a Social Impact Assessment (SIA) also not a requirement for this project? This raises questions on whether the State Authority is serious in promoting sustainable development and a livable city.

Penang Forum views the whole process this sPICE concession agreement was rushed through as contrary to the CAT policy, and as setting a dangerous precedent. Therefore, Penang Forum urges the State Authority and MPPP to uphold good governance standards that they have set for themselves when executing future projects of public interest. This is especially so in relation to projects of public interest and far-reaching public consequences, especially in the areas of land reclamation, coastline and hill development, transport infrastructure, Federal, State and MPPP land use and exploitation of natural resources.

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