Despite civil society objections, Penang government endorses massive Seri Tanjung Pinang land reclamation project

Despite a host of concerns and objections raised by civil society groups and fisherfolk in the state, the Penang State Planning Committee has “endorsed” E & O’s controversial masterplan for Phase 2 of the Seri Tanjung Pinang land reclamation project covering 891-acres.

E & O was notified about the endorsement on 10 June.

The masterplan was prepared by Tanjung Pinang Development Sdn Bhd, a subsidiary of Eastern & Oriental Berhad.

The state government is in an awkward position in endorsing the masterplan as it holds a 21.2 per cent stake in Tanjung Pinang Development. The state government is also in favour of a cross-channel tunnel and highways on the island and had promised the tunnel developer a chunk of the reclaimed land from Phase 2 of Seri Tanjung Pinang as compensation – which means it needs the reclaimed land from Phase 2.

Phase 2 involves the creation of an artificial island 300 metres off-shore from Tanjung Tokong, the shoreline for which had already been reclaimed for Phase 1. More expensive houses and high-rise condos for the affluent would be constructed on the artificial island, which would be split by a canal running through it. Related to Phase 2 are plans to build an expressway, a linear park and a promenade along nearby Gurney Drive. Land reclamation for Phase 2 would all but wipe out the fisheries sector in the area.

The Penang government’s endorsement comes a couple of weeks after a 28 May announcement that Morning Crest Sdn Bhd, a firm substantially owned by E & O Managing Director Terry Tham, would be buying a 10 per cent stake at RM2.90 per share from Sime Darby, which would reduce the GLC’s stake to 22 per cent. Sime Darby is cutting back its stake only a few years after buying it at a premium. See Sime Darby’s strange purchase and sale of E & O.

Earlier, on 10 April, the federal Department of the Environment had speedily approved the Detailed Environmental Impact Assessment report despite Penang Forum, a grouping of a dozen civil society groups, submitting a 21-page report outlining its concerns and objections. No response was received to these concerns. The DOE approval for this massive project came just a few weeks after the public display of the draft Detailed Environment Impact Assessment report had concluded.

E & O’s share price rose after the DOE’s approval and the State Planning Committee’s latest endorsement (although there are other EIA reports related to the project that have to be undertaken). The decisions leave E & O poised to reap super-profits from the project’s gross development value of RM25bn on the back of land reclamation rights acquired very cheaply.

Not everyone is celebrating though: activists reacted with shock at the DOE’s and the State Planning Committee’s endorsements.

The almost nominal value of land reclamation rights awarded in the past represents a huge opportunity cost incurred by the Penang public, which will now bear the environmental cost (loss of marine biodiversity and expected traffic congestion) of the project. Meanwhile, the stupendous profits from the physical development of the area have been largely privatised.

The State Planning Committee’s endorsement comes on the heels of serious concerns expressed by the Penang Inland Fishermen’s Welfare Association about the impact of land reclamation and pollution of coastal waters in the state. (Ironically, the state government has just launched the Penang Green Council office, “the first pilot project in Malaysia GBI (NRNC) Office Interior Tool Provisional Certified” … a case of not seeing the wood for the trees?)

What’s more, the cost of future dredging of the sea bed (due to the impact of the Phase 2 land reclamation), would run into millions of ringgit; this cost to be borne by the state government, and by extension, the Penang public.

A classic case of privatisation of profits, socialisation of costs/losses?