No more swap deals?

The federal government’s intention to “decouple” land swaps from public-private projects should be welcomed.

According to the finance minister, land will now be sold by open auction so that the federal government can maximise revenue from land sales.

On the other hand, projects to be undertaken will be subject to open tender so that the government can receive the best value for the project awarded.

The federal government reportedly said that BN’s land swaps methods had resulted in “extraordinary profits for crony companies”, ultimately shortchanging the government and taxpayers.

But such land swaps were not confined to BN. Ever since I started this blog, I have complained that such swap deals in Penang have been problematic and even lopsided at times, and both sides of such deals should be delinked and evaluated separately on their merits.

We saw what happened during the BN era when land reclamation rights worth billions in gross development value were awarded cheaply in return for building highways worth just a few hundred million ringgit.

The seeds of the Kampung Buah Pala controversy that erupted soon after Pakatan took over Penang in 2008 were sown with a land swap during BN rule.

Under Pakatan rule, we had a convention centre being built in exchange for higher density being given on other property development projects.

Then we saw the controversial swap deal involving 110 acres of prime reclamation rights being awarded in exchange for building a highly controversial tunnel and three environmentally problematic highways.

Finally, the mother of two-sided deals arrived when a consortium (comprising a contractor and two property development firms) proposed that massive land reclamation be used to finance exorbitant transport infrastructure. The arrangement puts the firms in a position of potential conflict of interest – for it is not clear how, if at all, these firms, acting as “project delivery partner” consultants, will be involved, whether directly or indirectly, in the actual land reclamation, property development on the reclaimed islands, and infrastructure construction.

Now, each of these deals may have been slightly different in concept, but they all involved a two-sided equation. They also had the common effect of casting a cloud on the regulatory process, adding pressure, so to speak, as regulatory agencies realised that if their approvals for one side of the swap deal were not forthcoming, the other side of the massive deal would be sangkut.

Such swap deals have also raised questions as to whether the real motivation for some of these infrastructure projects lay in property development (“property plays”) rather than the actual infrastructure provided for the rakyat.

Indeed, in some of these cases, the infrastructure provided may not even be the most appropriate for our times or for the people’s long-term needs. Instead, what is provided may end up:

• worsening congestion by encouraging more cars on the road
• posing environmental risks (landslides, mudflows, slope failure, air and noise pollution)
• providing outdated technology (eg monorails)
• providing expensive transport modes (an RM8bn elevated SRS-LRT instead of more cost-effective bus rapid transit, modern trams or automated rapid trackless trams (ART)
• providing excessive high-end homes that few Malaysians can afford
• adding to congestion through the approval of high-density development
• aggravating imbalances in development between the island and the mainland.

So while it is good that the federal government wants to decouple such swap deals at the federal level, just look at the ongoing effects of some of these deals in Penang under both BN and PH rule.