Transport mega projects: MIT researcher highlights failure of Penang government’s ‘top-down’ consultation

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The so-called upgrading work on the College Square field has now been put on hold following an outcry among local residents. Apparently they were not consulted over the ‘improvements’. Do residents really want the grass to be dug up and paved over or to have metal railings put around their small neighbourhood greens (as has been done elsewhere)?

Are they ever seriously consulted – right from the beginning – about what they really want? Would it be any surprise if they don’t want anyone to mess up their precious green spaces with useless contraptions, metal railings on the perimeter and more cement? “Landscaping”, they call it.

The same lack of early public consultation has been repeated on a large and expensive scale in the case of the Penang state government’s public consultations on the mega transport proposals put forward by SRS Consortium. The public ‘consultations’ that took place were more like briefing sessions after everything had been more or less already decided.

The same thing has been happening in meetings of the Penang Transport Council meetings (of which I part). Everything has more or less been decided behind the scenes, and no matter what our criticism, ‘they’ press on with their plans, anyway, after giving us their ‘clarifications’.

An MIT researcher has now pointed to the failure of the Penang state government’s “top-down” consultation process, which has alienated various groups.

These groups should have been engaged early on in the process in a “transparent and deliberative manner”, she said.

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Dr Minal Pathak found that:

Despite a concerted effort to engage the public government failed to resolve conflicts with key stakeholder groups. Three key findings emerge from the assessment:

first, a poorly designed process can be counterproductive, resulting in delays and loss of trust;

second, involving stakeholders at a later stage limits opportunities for meaningful stakeholder contribution; and

third, stakeholder groups can mobilise and shift the balance of political power.

For all these reasons and more, decisions in the public arena must go beyond meeting the mandated requirements, and move towards a deliberative process aiming for shared decision-making. The study proposes a set of recommendations for a more effective process.

Dr Pathak concluded:

In line with several other reported case studies, the Penang case reiterates the failure of the traditional “top down” process of consultation. It also highlights the pitfalls of a poorly managed and executed participatory process. An inadequate engagement process further alienated stakeholders, as they felt the government was insensitive to their interests.

Such conflicts are especially inevitable in cases such as Penang, where private interests appear to dominate.

Governments presume that consultative processes can serve dual purposes of meeting the regulations and gaining political legitimacy. Revisiting the classic planning debate of whether public participation leads to desirable outcomes, the study illustrates that participation by itself is not useful. In fact, poorly designed engagement exposed the weaknesses of the process, allowing opposing groups to mobilise and thwart the plan.

For engagement to be purposive and meaningful, stakeholders should be involved at an early stage, in a transparent and deliberative manner. This can reduce the time and costs, enhance government credibility, improve trust, and help develop long-term relationships between the government and stakeholders.

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Such a process would not only have a higher probability of implementation.

Her full research paper can be found here.

In an immediate comment, Eric Britton, professor of sustainable development, economy and democracy at the Institut Supérieur de Gestion Paris, said the MIT research paper is “recommended reading for anyone who cares about Penang and democracy”.

The author, Dr Minal Pathak, has done a very effective job in her investigation – and that at an important time in the struggle about the state government’s heavily contested “Transport Master Plan”.

I particularly admire the way which she judiciously sticks with her scholarly plan of departure, namely to analyse and report calmly and with great balance on this as a clear example of lessons from a stakeholder engagement process.

Dr Pathak never take sides, which gives her instant credibility. And to me, that is what she has achieved here and to her great credit. And thus, because of this quiet balance, the reader believes her.

The video works very well too: again that same calm balance and the decision to bring in a wide variety of views.

I must say that the balanced but really very hard-hitting words offered by Penang state assembly woman Dr Norlela Ariffin sums up what I believe to be the core of the case very nicely: ‘To me this plan is really mind boggling. Why can’t we just take a step back and really talk to the public (from the beginning).’

Penang and the citizens of Penang owe a real debt to the contribution of Dr Pathak.

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18 COMMENTS

  1. High government spendings on mega projects like MRT contribute to our GDP growth? I remember from Economics that government spending is a key contributor to GDP, never mind how much borrowings are done to plunge the nation into more debt. Anil could you please clarify this matter t educate our readers?

    • We should bear in mind that GDP growth is not a good measure of the people’s wellbeing. For instance, high GDP growth can be due to greater extraction or production of goods that could cause environmental damage and worsen people’s health – eg production of more cars contributes to air pollution and depletes natural resources; production of more timber will lead to loss of forest cover.

      • So is ‘production’ of more high end condos which doesn’t truly reflect the well-being or purchasing power of Penangites.
        I wonder where the H. developers learnt of this ‘production’ frenzy to justify higher GDP for Penang to accountant-savvy Penang CM???

  2. The East Coast Railway Link (ECRL) is pegged at RM55 billion. This is allegedly RM25 billion well above budget. There is every indication that China has allegedly allowed Umno and the local Umno contractors to inflate the budget to pad their own pockets.

    With Malaysia owning the project, the project must succeed, without which the Malaysian taxpayers would have to assume the entirety of the debt, after a grace period of seven years at 3.25% interest rate, not a very government-to-government ‘bilateral’ arrangement.

    At 3.25%, the interest rate is damning and high too. If not enough traffic and tonnage are generated, the whole project will collapse and fail. Indeed, studies by economist Jomo Kwame Sundaram showed that the entire project has to increase its tonnage from six million tonnes right now to 60 million tonnes. And that is on eastern corridor!

    Only China can support such a large increase in tonnage. If China does not lift its finger to support the train traffic of Malaysia, then Malaysia would be in a perilous position. Not unlike Hambantota in Sri Lanka, which could not repay its loan of US$301 million with a high interest of 6.3%, nor has a business that is sustainable, it has had to convert its facilities, which is twice the size of Macao, to a 99-year lease with an 80% ownership by Chinese firms effectively swapping debts for equity.

    https://m.malaysiakini.com/news/392978

    • One issue that has been raised is whether the influx of funds from China is a real investment or just a long-term soft loan.

      In some of the recently announced projects, the Chinese government, through their state arm, provides financing to special purpose vehicles created by the Malaysian government on the understanding that the top-tier contractor would be a Chinese company.

      Upon completion of the project, the Malaysian entity is still liable to pay back the loan with interest. Some of the loans are also guaranteed by the Malaysian government, which means there is very minimal risk on China’s part.

      The biggest example is the East Coast Railway Line (ECRL). State-owned China Eximbank will provide RM55 billion for the project. Malaysia will start repayments only after seven years, when the construction is expected to be completed, and over a period of 20 years.

      The Malaysian government will act as guarantor to Malaysia Rail Link Sdn Bhd, a special purpose vehicle created by the Malaysian government to receive the soft loan and oversee the delivery. However, it has already been announced that the main contractor tasked with constructing the ECRL is another Chinese state-owned enterprise, the China Communication Construction Company (CCCC).

      There is a requirement that CCCC must subcontract some portions to local companies, but the bigger picture remains, in which Malaysia borrows money from China and will immediately use a large sum of that money to pay a Chinese company.

      After seven years, Malaysia will still need to pay back the loan plus interest, again, to China.

      Not only does China get back a substantial portion of its money immediately in the form of payment for work done by their state-owned enterprise CCCC, they will also get more money when repayments start, with interest. Ultimately, over the long term, there is still an outflow of funds from Malaysia to China.

      This will occur even if the ECRL is not profitable, because the risks and the liabilities are borne by Malaysian taxpayers through a government guarantee of the loan.

      Venezuela provides a good comparison. China gave Venezuela a soft loan of US$63 billion between 2007 to 2014, and the repayment was supposed to be with oil. When the price of oil more than halved over that period, Venezuela’s repayment costs doubled. China refused to renegotiate the terms of what was supposed to be a soft loan, leading a commentator to say “Venezuela’s road to disaster is littered with Chinese cash”.

  3. Why do cities become unaffordable
    https://www.project-syndicate.org/commentary/real-estate-prices-housing-inequality-by-robert-j–shiller-2017-07

    There is also a different kind of inequality: in the affordability of homes across cities.

    In many of the world’s urban centers, homes are becoming prohibitively expensive for people with moderate incomes. As a city’s real-estate prices rise, some inhabitants may feel compelled to leave. Of course, if that inhabitant already owned a house there that they can sell, they may regard the price increase as a windfall that they can claim by departing. If not, however, they may be forced out with no compensation.

    As such people depart, an expensive city gradually becomes an enclave of high-income households, and begins to take on their values. With people of various income levels increasingly divided by geography, income inequality can worsen and the risk of social polarization – and even serious conflict – can grow.

    • Gentrification (displacing poorer people) is only one aspect. Chicago is a leading example of the logical end of capitalist greed. The problem began long before 2007. The population is now about 1/3 of its past peak. Most of its people are struggling to get by in the “informal” economy. One major industry is illegal narcotics and related enforcement – an important reason to keep cannabis illegal. Another option for youth is to take up the persistent offer to join the military. Many houses do not have utilities or cannot afford them. Some have been levelled to grow food on the lots. The money men – and their promoters in Hollywood and academia – are not going to admit the inevitable, mid-term result of following the goals and lifestyles they promote, let alone the long-term result.

  4. Why Johor wants to be involved in RTS
    http://m.todayonline.com/why-johor-wants-be-involved-rts

    Johor Sultan Ibrahim publicly expressed reservations about numerous aspects of the planned Rapid Transit System (RTS). He disagreed with the bridge’s curve and elevation, preferring a straighter, lower — and presumably cheaper — design. He reminded Malaysians that land issues in Johor are a state government responsibility, and urged that he be consulted about future developments regarding the RTS.

    The Sultan also questioned the choice of the federally-owned Prasarana as the Malaysian partner in the joint venture, stating that a Johor state government operator would be better and that he could raise the capital, if necessary.

    Given Johor’s history, the state’s location, and the ambitions of its ruler, it is a player that needs — in Malaysia at least — to be kept onside.

  5. True cost of ECRL may exceed RM100b

    Official statistics on the RM55 billion East Coast Rail Link launched last week paint a grimmer future scenario with costs likely to escalate through land acquisition, purchase of rolling stock, the construction of a Port Klang to Gombak stretch, and cost overruns.

    Our calculations indicate that total true costs may eventually escalate to an astronomical over RM100 billion eventually with much of cost overruns accruing to the China construction companies which will have a major share of the project.

    Only 30% of the project cost of RM55 billion, or RM16.5 billion, will be for local contractors with the lion’s share of 70%, or a massive RM38.5 billion, going to China contractors. China finances 85% or RM46.75 billion.

    That basically implies that the inflow of funds over the project period of seven years will be a mere RM8.25 billion (RM46.75 billion – RM38.75 billion), or RM1.2 billion a year, and therefore the multiplier impact of the project will be rather small locally.

    Consulting firm McKinsey and Company estimates that for mega rail projects, cost overruns average about 45% while demand is overestimated by over 50%, a double whammy which can put paid to the economic feasibility of the most well-planned project – and ECRL certainly does not deserve to be in that category.

    https://m.malaysiakini.com/columns/391940

    • Based on studies, higher cost pg Lang will talk less , almost nothing to say. Thousands of trees have to make way, also less to say. If it is a few trees and cost is thousands ringgit, they will be jumping and screaming.

    • Let’s compute the ECRL payment to China for this massive loan (with no payments for the first seven years). This means government starts to pay in the eighth year and it will take 13 years to make the full payment to clear the debt.

      The amount needed to pay per day to clear the debt will be RM55,000,000,000 ÷ (13×12×30) = RM11.75 million. This amount doesn’t include interest.

      From this calculation, the government has to pay more than RM11 million a day. Was there a feasibility study done to find out if the project is feasible and whether the government can afford to take the loan?

      Source: Malaysiakini

  6. Why is the scholar not spelling out the underlying system that promotes such “development”, destruction, profligacy and corruption everywhere, not just in this case? Was she worried that she would offend her evaluators and their masters? The factors include (a) control over international finance by empires – first USA and now China (b) offshore banking (c) secretive financing of politics (d) feudalism – kissing the hands of your political and civil servants instead of ordering them (e) divide-and-rule.

  7. 55 billion and more than 0.5 thousands km. Do we have a say or is there any public consultation? Official secret? Pg Lang too frightened by such figures and only can count ABC and up to 10. Can make noise on petty things but not on big things.

  8. This is one of the major reason why we must continue to vote DAP… At least they listened to the people and stop work. During the days of Gerakan, they are so arrogant and would just ignore the people.

    The reason they are doing all these work is to cari makan with projects. Do you think they care about what the residents want? Keep on dreaming…

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