Bayan Bay: Penang calls off Boustead land reclamation deal

Heeding Bayan Bay residents’ protests, the Penang state government has called off a controversial proposed agreement to allow Boustead Holdings Bhd to reclaim land as compensation for having to scale down the firm’s hotel along Weld Quay.

Boustead had obtained approvals for a 12-storey hotel under the previous state government and before George Town received its Unesco world heritage listing.

Under a compensation agreement, Boustead would have been allowed to reclaim “a minimum 50 acres of net saleable development land area along the coastal area off Queensbay on a freehold basis” in exchange for reducing the height of its hotel from 12 storeys to five storeys. (To me, that sort of compensation would have been way too excessive. Also, certain activists have argued that reclaimed land should be alienated on a leasehold basis and not granted on freehold.) The agreement, which was supposed to have been signed on 27 June 2011 in a ceremony, was however postponed.

The saga is not over. Boustead submitted amended building plans on 21 June 2011 to scale down its hotel from 12 storeys (300 rooms) to seven storeys (180 rooms).

Boustead will still be required to comply with the World Heritage building height control of 18 metres height within the heritage core zone in George Town, said Chief Minister Lim Guan Eng. “The form of compensation to be paid and whether it should be paid, is still subject to further negotiations with (the firm).”

An added complication is that Boustead is now suing Pantai Jerejak Adun Sim Tze Tzin over his remarks defending the interests of his constituents in Bayan Bay – a move the state government views “with displeasure and is a form of pressure exerted on the state government”.

What do you all think? Should the state/public compensate Boustead for having to live with Unesco-imposed restrictions – and if so, what would be a fair compensation?

A counter argument is that Boustead’s scaled down hotel could still profit from the Unesco listing, which could draw hordes of visitors to George Town, so why compensate?

Guan Eng’s statement in full:

1. Background

“CADANGAN MENDIRIKAN 1 BLOK HOTEL (300 BILIK) 12 TINGKAT DENGAN TEMPAT LETAK KERETA DAN PEMULIHARAAN BANGUNAN WARISAN SEDIA-ADA NO. 1 & 2 PENGKALEN WELD, DI ATAS LOT 723, 724, 725, 235, 719 DAN TANAH KERAJAAN (PLOT 1 & 2 YANG TELAH DIBERIMILIK), SEKSYEN 23 GEORGETOWN, PULAU PINANG UNTUK TETUAN BOUSTEAD HOLDINGS BHD” (“the Project”) to comply with the World Heritage Building Height Control of 18 meters within the heritage core zone in Georgetown in consideration of the State Government/MPPP compensating BHB in the form, terms and conditions hereinafter set out.

Details of the Project

The Project originally comprised the development of a 12-storey 4-star Hotel with 334 modules or 293 keys and the restoration of a 3-storey Heritage Building at No. 1 & 2 Weld Quay, Penang, on a 1.195 acre site.

Planning approval was obtained from MPPP on 9th April 2007 whilst building plans were approved by MPPP on 15th February 2008.

Works on the Project were halted in 2009 due to conditions imposed by the United Nations Educational, Scientific and Cultural Organization (“UNESCO”) for Georgetown’s World Heritage City status.

3. Salient Terms

i) BHB agrees to submit a revised building plan for the Project for the approval of MPPP which will not exceed the height of 18 meters in consideration of the State Government/MPPP agreeing for BHB to reclaim up to 100 acres or as sufficiently needed to provide for a minimum 50 acres of net saleable development land area along the coastal area off Queensbay on a freehold basis, to be formalized via a Reclamation Agreement.

ii) A signing ceremony was initially planned on 27th June 2011 with Boustead Holdings Berhad (“BHB”) to enter into an Agreement with the State Government and MPPP. In that agreement (strictly without prejudice) BHB has agreed to revise the building plans of their hotel project by reducing from 12 storey to 5 storeys in exchange for compensation in the form of the reclamation project. However the signing ceremony was postponed by the Penang Chief Minister, over the objections of BHB, as he wanted to listen to the Pantai Jerejak Assemblyman YB Sim Tze Sin and the views of the residents in the surrounding affected areas.

DECISIONS

I) After much public consultation, the Penang State Government has taken cognisance of the views of the residents of Putra Marine, Gold Coast and Bay Garden and decided not to pursue the land reclamation at Bayan Bay to BHB. This decision by the Penang state government is also pursuant to the legal notice of defamation sent by BHB to YB Sim over his public remarks in defending the interests of his constituents, which the state government views with displeasure and is a form of pressure exerted on the state government.

II) As the Penang state government only submits to the people of Penang, to pursue the land reclamation deal with BHB under the shadow of the legal notice of defamation sent by BHB to YB Sim is wholly inappropriate. Boustead Holdings Bhd (BHB) will still be required to comply with the World Heritage building height control of 18 meter height within the heritage core zone in George Town. The form of compensation to be paid and whether it should be paid, is still subject to further negotiations with BHB. Boustead Holdings Bhd (BHB) submitted the amended building plan on 21st of June 2011 and to scale down from 12 storeys (300rooms) to 7 storeys (180 rooms).

LIM GUAN ENG