The state government says the SRS proposal for transport infrastructure needs RM2.3bn in bridging loans.

The bridging loan is apparently needed to finance the costs incurred in the first two years – preparation work, feasibility studies for the railway scheme, EIA costs, LRT and highway construction costs – before most of the reclaimed land is ready to be sold.

The RM2.3bn in the first two years is made up of:

RMbn
1.0 First island land sales
(1.6) First island reclamation cost
(0.5) Second island reclamation cost
(0.8) LRT cost
(0.3) Pan Island Link six-lane highway
(0.1) George Town e-bus and catamaran
—–
(2.3)
—–

But SRS in its transport proposal claimed that this RM2.3bn would be a heavy amount for it to shoulder; so it assumed that the state government would reduce this interim deficit by raising RM1.0bn through the sale of land to third party developers via open bidding as follows:

  • Pesta site (35 acres)
  • Green Lane (25 acres)
  • Jalan Glove (20 acres)

Total 80 acres.

The state government was expected to raise RM1.0bn from these sales, leaving SRS to raise bridging finance for the remaining RM1.3bn via internal funding (RM520m) and debt financing (RM780m) based on 6.5 per cent interest rate. Interest from the debt financing (expected to be RM300m) would be eventually charged back to the project.

So what happened to that idea?

When was the decision made – and by whom – for the state to seek external financing to raise RM1.0bn?

Was this ever discussed or brought up at the Penang Transport Council meetings, which was examining the funding model? If not, why not?

To understand why we should tread warily on financing from China, please read these three articles by former Malaysian diplomat Dennis Ignatius:

The New Silk Road: Pathway To Prosperity Or Slippery Slope To Subjugation?

The New Silk Road: Is There a Plan For Malaysia?

The New Silk Road: Dragons Without, Demons Within

And this one by Nurul Izzah:

China’s investments in Malaysia – too much, too fast, too soon

Please help to support this blog if you can.

47 COMMENTS

  1. No more EIA for Penang Roads and Tunnels project

    It was reported in the past that the RM305mil will fund the feasibility study at RM180 million, detailed design for RM92 million, and environmental assessment for RM33 million.

    After I highlighted that the cost of feasibility study for 17.4km Labrador tunnel is only C$750,000 , the cost of feasibility studies seem to have been shifted to the detailed design.

    This shift made the cost of the feasibility studies RM31million for the three paired roads and RM20 million for the tunnel, but the cost of detailed design for the three paired roads ballooned to RM177.5 million. The detailed design for the undersea tunnel should be RM46.5 million. The cost of Environmental Impacts Assessment (EIA) should remain at RM30 million but as I suspected that this study is no more and the cost is shift to the detailed design for the undersea tunnel. Therefore the total consultancy fees for the undersea tunnel is RM96 million. The state government has promised that EIA should be conducted. The decision whether to go ahead with the project will depend on the outcome of the EIA. Now it is clear that the project will (allegedly) go ahead without EIA, this is a total betrayal by Lim Guan Eng administration.

    This (alleged) unscrupulous manipulation of cost according to Datuk Seri Abdul Rahman Dahlan has made the cost of detailed design for the three paired roads to be (allegedly) four times higher than the maximum allowed under the gazetted scale of fees.

    The best part of the manipulation is the total consultancy fees for one of the roads – from Tanjong Bungah to Teluk Bahang – cost RM120.4 million for a mere 10.53km when the limit for the fee is (allegedly) only RM11.7 million. This fee is (allegedly) TEN TIMES more than the gazetted scale of fees allowed by the Board of Engineers Malaysia (BEM). … (allegedly) paid more than RM10 million per km for a paper work.

    From the website of the main subcontractor, the total cost of the detailed design is (allegedly) RM90 million, but the state government seem to be (allegedly) awarded the detailed design at the total cost of RM224 million to Zenith Bucg Sdn Bhd. This (alleged) overpaid has allowed Zenith Bucg Sdn Bhd to earn an exorbitant profit of RM134 million from the detailed design alone.

  2. It was reported in the past that the RM305mil will fund the feasibility study at RM180 million, detailed design for RM92 million, and environmental assessment for RM33 million.

    After I highlighted that the cost of feasibility study for 17.4km Labrador tunnel is only C$750,000 , the cost of feasibility studies seem to have been shifted to the detailed design.

    This shift made the cost of the feasibility studies RM31million for the three paired roads and RM20 million for the tunnel, but the cost of detailed design for the three paired roads ballooned to RM177.5 million. The detailed design for the undersea tunnel should be RM46.5 million. The cost of Environmental Impacts Study should remain at RM30 million but I suspect that this study is no more and the cost is shift to the detailed design for the undersea tunnel. Therefore the total consultancy fees for the undersea tunnel is RM96 million.

    This (allegedly) unscrupulous manipulation of cost according to Datuk Seri Abdul Rahman Dahlan has made the cost of detailed design for the three paired roads to be four times higher than the maximum allowed under the gazetted scale of fees.

    The best part of the manipulation is the total consultancy fees for one of the roads – from Tanjong Bungah to Teluk Bahang – cost RM120.4 million for a mere 10.53km when the limit for the fee is only RM11.7 million. This fee is (allegedly) TEN TIMES more than the gazetted scale of fees allowed by the Board of Engineers Malaysia (BEM). … paid more than RM10 million per km for a paper work.

    From the website of the main subcontractor, the total cost of the detailed design is (allegedly) RM90 million, but the state government seem to be awarded the detailed design at the total cost of RM224 million to Zenith Bucg Sdn Bhd. This (alleged) overpaid has allowed Zenith Bucg Sdn Bhd to earn an (allegedly) exorbitant profit of RM134 million from the detailed design alone.

  3. BN trains spotlight on Penang’s spending
    http://www.thestar.com.my/news/nation/2017/06/03/bn-trains-spotlight-on-penangs-spending/

    PETALING JAYA: The Barisan Nasional strategic communications team has questioned the Penang government on its YEARLY OPERATIONAL COSTS THAT HAVE GONE UP BY 500% since DAP took over in 2008.

    In a statement on Friday, it said that Penang Chief Minister Lim Guan Eng had neglected to respond to queries on how the state government managed to collect revenue to cover the 500% increase in yearly spending and yet registered a surplus.

    “We note that during the same period, the Federal Government’s spending has increased 35.3% compared to 500% for Penang,” it said.

    Earlier, Lim reportedly said that the high administrative spending or operational costs was necessary to ensure that projects were well delivered.

    The BN team also questioned the ways in which the Penang government received its funding.

    “Is it from Federal Government funding, from taxing Penang people five times more via increases in assessment rates, fines or increasing water rates four times? Or is it from increasing sales of state land and assets?” it said.

    It added that if the additional revenue was indeed from the sale of state land and assets, then why couldn’t the state government “sell one more piece of land” that was valued at RM1bil or above to avoid borrowing from EXIM bank of China and incur interest costs.

    “Is this because there are now NO MORE VALUABLE STATE LAND OR ASSETS TO SELL as what Penang Exco Chow Kon Yeow had said?” it said.

    It also asked if the practise of selling depleting state assets to cover an increasingly big annual operational expense can be considered as sustainable long-term good governance and also sought confirmation from Lim if Chow’s statements to The Edge were accurate.

    Chow was reported saying that the cost of the Penang Transport Masterplan project had increased from RM27bil to RM46bil.

    “If it is accurate then how would the Penang state government fund this RM19bil increase? Will this be from loans from EXIM bank or from other banks?” it added.

    • Dedak sleeping? SPAD asked for Penang and northern region master transport plan.project increase in scope and cost went up to 40 billions. Dedak wants Penang Lang to work 7/25? Same civil servant force to supervise and oversee 40billion and northern region?…

    • Like kalvin said, don’t divert. It is about funding for PTMP. Ask why Rapid will be using the PTMP only pays road tax to PJ but ais kosong to PTMP and helps to get more passengers and income? Of course saga seed troopers contradict each other. Others cannot divert but good mates can

  4. KUALA LUMPUR (June 2): China Construction Bank (Malaysia) Bhd (CCBM) is the first foreign commercial bank to be granted a banking licence in Malaysia in six years.

    CCBM is the third China-based bank in Malaysia after the Bank of China (Malaysia) Bhd and Industrial and Commercial Bank of China (Malaysia) Bhd.

    In his speech today at the opening of the bank, Prime Minister Najib said the establishment of the China Construction Bank (CCB) branch in Malaysia is timely after the recently concluded Belt and Road Forum for International Cooperation in Beijing.

    • RHB and AmBank to merge for fear of takeover by China bank down the road? Najob has opened floodgate for China firms to gain foothold in Malaysia. Perkasa must be worried. Tun M will use this issue to gain Malay support.

    • Are you trying to divert the issue here? It is so typical of the DAP cyber-troopers using this diversion tactic, pointing out to national issues. Stick to the topic and let’s have a debate for the betterment of Penang.

      • Dedak think how better can Penang be when his paymaster just withheld funds to Penang when Penang Lang continue to pay taxes and GST. For betterment of Penang, dedak should ask his boss in PJ give more funding. KL can have PJ funded LRT, Sibu 2m airport expansion and PG only ais kosong. In the end, dedak is still telling his boss to give Penang tin kosong. Even Rapid buses will be using PTMP roads but pay no road tax to ptmp. This is what dedak is happy and boast. How can Penang be better when his boss can squeeze tighter or Penang managed to survive. Of course Tunglang will be a happy man too.

  5. The scenario in Penang now is grim and worrying maybe partly because of those pyramid schemes ? Secondary market of property now is getting active where a lot of “older” houses are even in force-sale mode ! Some of those LGE’s backing developers are having (big) problems in selling their houses and the market in Penang is practically at a standstill man !

    • Danga Bay Country Garden in Johor Bahru has 45 condominium towers with a combined total of 9,500 units set for completion by 4th quarter 2017 – this will trigger private housing glut by year end in JB.

      • 70% of Danga Bay Country Garden are bought by PRC Chinese. So we can expect rental yield to drop drastically in JB by next year.

      • Again, diversion tactic. Instead of worrying about our own house, we are talking about someone else’s problem. Why worry about JB, leave it those Johoreans to sort out their own house.

      • calvinsankaran you are wrong. Now many Penang folks living in JB and shuttle daily to work in Singapore. The advice by Ang for such Penangites not to purchase any condo in JB at the moment as the glut is coming.

    • Developers facing sales problem, cash-flow problem, etc.

      So, Niao Kong sings the Bridging Fund Sweet Deal for affected developers linked to PTMP Swap Deals?
      (Already postponed its decision to raise the contribution fee by developers who fail to build low-cost and low medium-cost housing until the year-end)
      Read more at http://www.thestar.com.my/news/nation/2017/04/13/fee-reprieve-for-penang-builders-higher-penalty-rate-put-off-to-yearend/#WKppuQgEjjKAHuSv.99

      Of course, zoro will come out with a dedak-ed justification, never mind that prices of properties are adjusted at a minimal (CAT has the bile to wail this is the biggest price drop of all states) but still beyond the reach of 99% of Penangites.

      Bridging Fund only for developers.

      Lu Penang Lang, lu si lu e su! Want bridging fund to purchase properties, go jump from the Pg Bridge.

      • Another dedak still sleeping when thousands of housing were abandoned under tunglang ammo gomen. Even a deep silence from CAT basher when ammo minister give approval for extension when developers are supposed to pay penalties to house buyer. So CAT basher and sonicfish are more developer best mate. Imagine developer delays and supposed to pay fines. Yet CAT basher snd Sonicfish agree in silence and help the minister to spin. Poor house buyers have to continue to pay rent and service loans and still in rental house

      • Wages stagnant under BN regime due to low productivity and little value add high dependency on cheap foreign workers. Prices of everything have gone up. No wonder many people head south to work in Singapore for better income as Ringgit has no value to fight inflation or pay for imported stuff.

    • Sonicfish’s standstill comment would be great news to house seekers looking for cheaper bargains on the island, and may trigger 4WD hunt round island, minus landslide prone Paya Terubong, for now appearing to be more ideally ivory-grade affordable homes?

  6. Compare “democratic” and “communist” capitalism. Both are trying to increase loans to others, get these guaranteed by governments, and profit from collateral (when the borrower cannot pay) as primary drivers of “growth”. Both are working to exploit employees, and to reduce jobs and wages through automation. Both hide pollution or devastation for as long as possible, and then try to dismiss them as “external factors”. Both try to dismiss or punish environmentalists and social activists… Both cannot exist without fascism.

    The major change in this century is that China is now using its trade balance to gain direct, significant influence and benefit rather than leaving it in the financial centres of the ungrateful West. Compared to the military “interventions” of the “democratic” West, it intervenes economically. There is also the little matter of impending climate apocalypse, with no PLANet B available.

    • Anil, go to Paya Terubong to see for yourself the ‘devastation of hills’ never seen since the days of earth-friendly settlements by the Chinese immigrants. Bukit Kukus is bulldozed to the extremes just to open up a hill road parallel to Jalan Paya Terubong & connecting to Bukit Jambul.
      One hill road warrants such a devastation?
      Should we wait for the hill tunnels to happen with more devastations?

      Nyiamak Niao Kong! Cleaner Greener Penang???

      • You mean if you see a big fire or a robbery you will report to Anil in this blog? Which school do you come from? Of course like newspaper you are just self ego to make news and have your name.

    • I tell you a much greater environment happening.the iceberg covers thousand of kilometres develop cracklines and will detached as mentioned in south china hearld all because of 4wds. The area is few penangs

  7. What about making car ownership very expensive in Penang by introducing electronic road pricing (ERP) like in Singapore?

    Then there is no need more more highways. Money collected could be used to fund a better and more efficient public transportation?

    Will Penang Forum agree to this proposal?

  8. The land price is going to increase year by year. And the interest rates of EXIM might as low as 3% a year.
    Sell the land now just to raise 1billion, or get the loan from EXIM with low interest rates but keep the land first? The appreciation of land will cover the interest of loans and even make more cash for the state. This is a very simple calculation. What if the EXIM can’t provide us a low interest rates? Then don’t borrow from EXIM, that’s it. What so big deal!?

    • That’s the point isn’t it? The land price is keep increasing every year because it is in short supply in Penang and for us one of the most valuable commodity. By selling off the land, what we are doing is skin to selling our blood to finance our drug habit. Sooner or later something going to give and everyone knows that when we will run out of land, we will have nothing left.

      We can understand if the DAP govt is borrowing billions to develop affordable housing because that’s something of a basis need and that is severe short supply. But spending Rm50B for something that is a luxury is definitely a mark of an irresponsible and unaccountable government.

      The track record of DAP in developing affordable housing is pathetic and all they have produced so far is excuses and excuses. The super-luxury houses built during the LGE reign far outnumber affordable ones. In fact I don’t think there has been any built at all that really can be considered as affordable in the last 9 years.

      • As GE is approaching, we can see those BN cyber troopers appearing in this blog.

      • Very good point. You did alot of analysis only on ph states and deep silence on BN.come on how can you be a profession with one sided comments. Anil in the past also said gilakan has been selling more land than ph and yet you .remain dump on this.why dont you tell your financer how much land ammo sold? The rail gate keeper had few plots and 4 storeys house in low cost area. All earnings do not flow into rakyat. They get 1and rakyat 1 only.
        You still protect your paymaste. who did not pay a cent and worse rubbing salt, KL and Selangor mtp is not required but pg needs for the whole region and join to Plus and minus highways.
        CAT basher happy. Toll free highway faster and more time in Belum

      • calvinsankaran: You are totally insane! Borrowing billions to develop affordable housing?! Do you really understand what is affordable housing? The State need to subsidises the affordable housing project, ie the state gov pay 100millions for a AH project, after they sell all the units to the public then the state gov can only get back maybe 30millions! Get billions of loans to build affordable housing?!! You must be mad. Please do some research on affordable housing and the how HDB work in Singapore! Your way will lead Penang to bankrupt loh!

        And the increasing of land price doesn’t mean it’s because of the short supply of land at all! Eventually the land price is going to increase, it depends on the economic, then why should we sell those prime lands to raise 1billion when we know all this lands will be more valuable for the state in the near future!? This is why the state still keep the lands on hand!

        I don’t know why I need to explain all this common sense to you. You totally don’t know about economic, traffic, urban planning at all!

        Oh ya? Do you know what is the total income of the state? Do you know how to raise fund? Do you know where to get money for transport, affordable housing… You know nothing, but just insisted to spend money like a trust fund baby.

        This is my last reply to you, because I don’t want to waste time on ignorance anymore. I always thought this is a place for healthy and knowledgeable discussion, but I think I was wrong.

      • nn1860. It is clear that you (may be) one of the many “special assistants” of the Dear Leader, seeing from the kind of detailed information that you have that is not available in the public domain or during the “public display” of documents. You can fool the naïve readers but thankfully not all of us are under the spell of the Dear Leader.

        I burst out laughing at your comments. You think only you know about economy, traffic. urban planning, etc. Perhaps you can share your credentials so we can judge for ourselves. You could be a PhD with 20 years of urban planning from Singapore and the UK or you could be just Ah Beng hired to spread to spread confusion, misinformation and out right lies.

        Please do some research before you spew all kinds of nonsense. Government around the world spend billions to subsidize for public housing. Even the Fed govt can provide cheaper houses than Penang’s inflated “affordable housing”.

        Singapore spends billions as well and their HDB is considered the best affordable housing scheme in the world. The reason why they are able to keep the price of HDB below market price is mainly due to the fact that these are built on government land and also provided with subsidies. In the case of Penang, instead of acquiring and using state land, they do the opposite by selling off the state land thus inflating the land and house prices for all houses. The only person who can buy a below market price is the Dear Leader himself.

        I find it strange that Penang is willing to finance a private company in tune of billions for a project that is non essential or even possibly a white elephant yet finds it unacceptable to spend money on affordable housing. I don’t advocate taking loans but at least I can understand if the loan is for a noble purpose such as affordable housing instead of to support a (crony?) company for commercial reasons.

        This is precisely the problem with the DAP government. It is OK to prop up a (crony?) company but a big “No No” to spend for rakyat. Despite raking in billions in land sales the DAP govt still refuses to spend (more) on affordable housing for the needy.

        .

      • Kalvin I do have the last laugh. Singapore spends billions because it is the singapore federal Gomen uses tax payers money. Now this BN saga seed trooper wants to use singland to compare? Of course Tunglang will become the poverbial … for blasting others for quoting singlsnd how much did federal gave to Penang Gomen? Even the federal Rapid buses playing on propossed ptmp has to depend on the generosity of ptmp. Why Rapid buses did not contribute it’s share for the road? Tell use how much and many houses your financer has built houses in Penang when PH is governing?
        Please also refute Anil’s statement that previous BN Gomen sell more land and jual murah than than present Gomen.

    • When did professional like him and cat basher wants to have healthy discussion? Lackery .. just barking. Did he analyse and write about kl mrt, high speed rail, east coast rail, SG besi airport? Love to hear his view but bad because he writes for his blue saga seed master. It is just like the lawyer charging RM 1 to act on behalf of Ah Gee and SR reported about 10m was given out.

      • Calvinsankaran should examine why BN is in debt yet continue to borrow money like no tomorrow (at least for the next 30 years). We trust the Penang government is more prudent with spending.

  9. The whole thing makes no sense whatsoever and looks highly suspicious. I recall when the contract was awarded to SRS there were many who questioned if SRS has the financial strength to undertake such a huge project and especially since they were found to be a Rm2 company with no track record at all. However at that time LGE boasted that SRS was supported by their Chinese partner who is financially very strong.

    So what happened since then? Why all of a sudden SRS have problem financing the project? At that time of award I was very critical how the project was structured as it allowed SRS to develop and sell houses on the reclaimed land before having to build highways and tunnel.
    But it seems like even with such sweet heart deal SRS cannot fund itself. This shows that the critics like us were right in questioning the selection of SRS as the winner.

    The thing is that this is just the beginning and later on SRS needs to have a lot more funds to finance the more expensive part of the project such as the tunnel. And if they can’t even finance now, surely they will need support from the state again. Effectively SRS can blackmail the state as if the state govt won’t support, the whole project will fail. Bringing another developer would mean more delays and costs.

    All these will likely to turn Penang into Malaysia’s own Iceland – state of bankruptcy!

    • Hi it looks as if you are conflating Consortium Zenith BUCG (three highways + tunnel project at Gurney reclamation in the north east) with SRS Consortium (project delivery partner for the SRS transport infrastructure proposal of LRT, Pan Island Highway, monorails financed by land reclamation for three islands in the south). It was the former that had the China partner.

      • OK, my mistake! Apologies….!

        However, the same question applies to PDP ie SRS. If they don’t have the financial means to manage the project why then select them as PDP? Since when the state became a finance company? This reminds me of the UEM/PLUS case during Mahatir’s reign where UEM/PLUS was given the NS Highway contract along with financing provided by the government. Such a super sweet deal where outrageous profits are guaranteed with zero risk.

        Also with this scandal, one now wonder if Consortium Zenith BUCG also has the financial strength to undertake the project now that the China government has imposed capital controls to prevent movement of money overseas. Can our Dear Leader confirm the project is safe? Tony Pua was questioning so much about Bandar Malaysia and the Chinese connection but apparently having an amnesia on this case.

      • Only up till now we realize, the Penang govt is a real disgrace, with all sorts of hype but no action !
        Cantonese saying: 口水多过茶 (meaning there are more saliva than a cup of tea.)

    • Main gasing too much and head is spinning. Cant help under instructions as sg besi airfield is flooded being too SMART tunnel.

  10. Bridging financing is one form of financial leveraging. Leverage upon the rich to sustain the livelihood of the poor?

    • The poor bo bin-chui Penangites may have to emigrate to hinterland of mainland & beyond thus changing the demographic-socio-status of Cosmopolitan Penang forever.
      How can this be called sustaining the livelihood of the poor?????????????????????????????

      • bin chui so important ?then work harder or join more money games for instant wealth to stay on Cosmo island for ego sake. Nothing to be ashamed of to move over to the mainland of peninsular to avoid the pressure of sustaining bin chui. There are now 2 bridges to bridge the 2 sides of pulo mutiara

      • Damien, you miss the point.
        Penangites need affordable to LC housing since many are working at low wages in the island. Why travel so far & incur more travelling costs from the mainland & beyond when one can stay nearer to place of work ONLY if state gomen is caring to the housing needs of people instead of pampering to fancies of developers for maxi-profiteering from high-end properties? Less travelling over long distance also means less traffic on the road & more time with families.

        Comes GE CAT gomen still have the bile to invite many played-out + disillusioned Penangites to ‘come back’ to island to vote for its survival? What a coffin-thick-face shame!
        It is up to the political will of a state gomen who habitually sells salivas comes GE but never do what it promises to genuinely UBAH for a better Penang for all Penangites.
        Forget about unsustainable + disruptive market forces of the rich & famous to determine the future of the state. Otherwise, the state gomen should UBAH its status from a deceptive political party to a maxi-profiteering corporation run by one accountant: Developers Association of Penang.
        Now, don’t tell all Penangites, both rich & famous bin-chui (on the island) & bo bin-chui (from the mainland & beyond) to once again brandish “LOVE PENANG, LOVE NIAO KONG” comes GE14!
        Now, do you still miss my point???

      • All hyper with slogans and CAT bashing. with contradictions. Tell people to buy food truck to do business which add more traffic and fossil burning. On the other opposite roads and ptmp. You want PG to build more LC houses and want factories and work places nearby to void transport costs. This means CAT basher wants factories near residential area.. this go against the structure plan and why not CAT basher ask for Padi and vegetable plots around the city? CAT basher himself owns 4wds with 10 wheels in PG city. and talk about heritage houeses and many are converted to homestays and backpackers for flower people and hippies in his era. Tell us how much pg Lang working in budget hostels can earn?

        Ammo lower our wages and does not upgrade. How many migrant workers do your Gilakan Gomen issue permits and how many illegal workers include refugees? What kind of skill upgrading? Our factories are similar to those in Cambodia and Vietnam. Time to visit China again and see how much skills and advancement resulting in higher income.

        CAT blind to state has only limited powers. Education, labour, are all not under Komtar don’t you understand

LEAVE A REPLY

Please enter your comment!
Please enter your name here