980-acre land reclamation in Penang

Another massive land reclamation project has received approval in principle from the Penang state government. This time it is Eastern and Oriental (E&O) Bhd’s plan to reclaim an additional 740 acres in Tanjong Tokong under Phase 2 of the Seri Tanjung Pinang project.

That’s three times the size of Phase 1, under which the firm is reclaiming 240 acres with a gross development value (GDV) of RM4bn.

E&O said Tanjung Pinang Development was granted the exclusive right to reclaim and develop about 980 acres of land along the Tanjung Tokong shore-line in 1992. (Who granted this exclusive right and what was the consideration?)

Other approvals are still needed for Phase 2, in particular an environmental impact assessment.

According to The Edge, HwangDBS reportedly estimates that reclamation work for Phase 2 could cost RM2.1bn, but GDV is expected to be RM15bn.

Going by what is said in the website of GDP Architects, three islands will be created under Phase Two: Island 1 – 163 acres, Island 2 – 73 acres, and Island 3 – 480 acres (Total 716 acres). The Star, however, quotes E&O executive director Eric Chan as saying, ““Phase two will be a mixed integrated development comprising two islands of approximately 740 acres in size. At three times the size of phase one, phase two is expected to generate RM12bil in gross development value.”

Phases 1 (240 acres) and 2 (740 acres) of Seri Tanjung Pinang in the north-east coast alone account for 980 acres. Other huge swathes of coastline in the east (The Light), south-east (Queensbay and Southbay), and south-west (E&O’s 365-acre tract in Gertak Sanggul) have been earmarked for massive land reclamation or property development that will change the map of Penang. These projects could effectively turn much of the coastline on the eastern half of the island into enclaves for the rich and well-heeled.

Some questions arise:

• What does the state of Penang and its people get in return for surrendering reclamation rights worth billions of ringgit in GDV to private developers? How much does the state/public receive from these deals?
• What proportion of Phase 2 (740 acres) will be for public use, including parks and green lungs?
• We have seen siltation along the Gurney Drive coastline already. Will all this reclamation affect tidal patterns and currents and result in siltation/erosion on the shoreline and at Penang Port and choke up the Northern Channel? Have these plans seriously considered previous studies, if any, on the flow of the channel?
• Will the public be guaranteed access to the entire coast-line and sea-front?
• What proportion of these projects will be low-cost housing? 30 per cent?
• Wasn’t the interchange for the Penang Outer Ring Road (see below) part of the northern land reclamation package? Now that Porr has been scrapped, is the reclamation deal in 1992 still valid?

The following is E&O’s announcement to Bursa Malaysia on 12 April:

Approval in principle of the masterplan for Phase 2 of Seri Tanjung Pinang

Introduction

Eastern & Oriental Berhad (“E&O”) is pleased to announce that by letter dated 11 April 2011, the Jabatan Perancang Bandar dan Desa, Pulau Pinang, communicated the State’s in-principle approval to the masterplan submitted by Tanjung Pinang Development Sdn Bhd (“TPD”) (a subsidiary of E&O) for the proposed mixed integrated development on land to be reclaimed in Tanjong Tokong, Penang (Phase 2) (“In-Principle Approval”).

Brief History

In 1992, TPD was granted the exclusive right to reclaim and develop approximately 980 acres of land in the district of Tanjong Tokong in the north-east coast of Penang. To date, the Group has reclaimed and is continuing to develop Phase 1 of the project comprising approximately 240 acres of land under the name “Seri Tanjung Pinang”.

The Group through TPD had sought State approval to reclaim the balance concession area of approximately 740 acres.

The Approval

The In-Principle Approval is conditional upon the following terms and conditions:

(i) TPD’s masterplan must comply with all technical requirements and other conditions associated with planning approvals;

(ii) in view of protecting public interests, TPD’s masterplan will still be subjected to closer scrutiny by the State Government; and

(iii) TPD may nevertheless undertake the relevant technical studies at its own cost and expense; without the State Government incurring any liability or obligations.

E&O would nevertheless like to emphasise that whilst the In-Principle Approval is a vital step towards being able to reclaim the balance concession area, there are other steps still to be undertaken and approvals to be obtained before reclamation works can actually commence. Not least of all will be a satisfactory environmental impact assessment (EIA) study which will entail traffic impact assessments by the relevant authorities.

Whilst it is too early therefore to outline the detailed effects of the In-Principle Approval in respect of the masterplan or its implementation timetable, the Board of Directors of E&O is nevertheless of the view that in the longer term, the Group will derive substantial benefits with a successful implementation of the In-Principle Approval.