sPICE: The quid pro quo with SP Setia

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How is SP Setia going to finance the building of the proposed new convention centre in Penang known as sPICE? It will be allowed to build an extra 1,500 homes in its existing projects in Penang, effectively increasing the density of those projects.

That emerged during a feedback dialogue session on sPICE, which I attended yesterday morning at the Town Hall facing the Esplanade.

At first, I thought it was going to be a small session with the MPPP and the council president, Patahiyah. But it turned out to be a bigger event with the Chief Minister chairing it, until he had to leave and hand over the reins to Patahiyah. Among those present were Council staff and representatives of SP Setia.

As one of the participants, engineer Tan Seng Hai, observed, this was a closed-door session as only those who had emailed their concerns to the Council president were invited. About seven or eight of us out of the 16 or 18 who had emailed objections turned up. (The rest probably couldn’t make it as the session was held during working hours.) No one from the press or BN opposition parties was there. Still, it was notable that such a session was actually being held unlike in the past, when projects were undertaken without any feedback or public consultation.

The Chief Minister started the ball rolling by explaining to those present why he felt the RM300 million convention centre was necessary for Penang. He was clearly passionate about it, pointing out it would only cost the MPPP just over RM11 million net. (MPPP’s share of the RM300 million bill i.e. RM50 million less savings on future upgrading work on Pisa and amount raised from leasing out three acres of the site for 99 years for a 300-room hotel.)

Seng Hai raised the point about the availability of convention centres in other urban centres in the region such as Bangkok, Singapore and Macau. Was there already overcapacity and would there be a glut and would Penang be able to compete with the big boys? Guan Eng was convinced that Penang needs a convention centre for its own requirements and he vowed to personally market sPICE during his trips abroad. He said the seven acres of green space (which would be free and open to the public) envisaged in the project was an added attraction and indeed, Penangites badly need more open recreational areas.

I followed up by asking why MPPP should get involved in building a convention centre when a couple of upcoming private projects in Penang include convention centres of their own. As I ended my question, the Chief Minister raised his hands to show eight fingers: he explained that it would take at least eight years for those proposed private sector convention centres to be completed, and he felt that Penang couldn’t wait that long. As for sPICE, it is better to try and fail, than not to try at all, he said.

Other questions and concerns raised touched on traffic dispersal, the need for an LRT station to be factored into the design, proper ramps for loading and unloading goods at the convention centre, security, the size of the swimming pool, maintenance of toilets, and how really green this project would be (it would be ‘gold’ green rather than ‘platinum’ green, according to industry jargon). On the green space, questions were raised as to whether there would be a jogging track and whether shady trees could actually be planted on a roof-top green space.

I raised a couple of points: was this an MPPP or a Penang state government project, as the decision-making process is different. If it was a Penang state government project, it would have to be approved by the Penang State Assembly. If it was an MPPP project, it would have to be approved in a full council meeting. If so when was it approved?

To which, the Chief Minister responded by saying that this was indeed an MPPP project, but apparently, anything involving MPPP landed property or lease of land would also need approval from the relevant state authorities. I am still not clear if an MPPP full council meeting did indeed approve the deal.

I asked the Chief Minister and the Council president if the RM11 million (or RM50 million, whichever way you look at it) would be the maximum the Council would be exposed to and if there were any other hidden costs, and they both said RM11 million was the maximum and it would be incurred in the first three years. In fact, they said the Council could actually earn assessment from the project in later years. I think I heard it being mentioned that the state authorities had themselves committed to use sPICE for 45 days in a year.

I also expressed concern that sPICE would be 30 years old and out-of-date at the end of the Build-Operate-Transfer period, when the property would be transferred back to the MPPP (though the future price of this prime land would still make the site a valuable asset).

What was also revealed during the session was that the deal involves allowing SP Setia to build an additional 1,500 homes in its existing projects in Penang. I had to seek clarification on this a few times as it wasn’t clear to me what this concession entailed.

After a couple of clarifications from first Patahiyah and then, an SP Setia manager, this is my understanding of the deal:

Out of the extra 1,500 homes now allowed, the 30 per cent low-cost component (450 homes, at a price of around RM72,000) by SP Setia would be built on state land “given” to the developer. If this land is given free or subsidised, then the revenue lost should be factored in as part of the sPICE project cost incurred by the state/MPPP. (Normally, developers have to pay for the land on which their quota of low-cost housing is built.)

The remaining 1,000-odd extra homes that SP Setia would be allowed to build on its handful of existing projects on the island effectively means raising the approved density of those projects on Penang Island. This is the real deal clincher for SP Setia and the SP Setia manager acknowledged as much during the session.

A few more questions arise here, which I only thought of after the session was over: would a development charge be imposed for this increase in density? If not, shouldn’t that revenue lost by the MPPP be factored in as a cost of sPICE? Second, would this increase in density set a precedent and result in future permissible densities becoming more ‘flexible’? Third, who pays for the supporting infrastructure needed to cope with the extra density?

In this connection, another question arises: when will the Penang Island draft local plan, which specifies permissible densities for each area, be released to the public? So far, we have only heard about the ‘special area plan’ for the heritage area of George Town but not the draft local plan for the island for 2005-2020.

Consultants started working on the island-wide plan from 2005-2006. It was approved by the MPPP in 2007 and later resubmitted to the MPPP for approval in September 2008 after incorporating amendments that had been proposed by a few councillors who, together with the consultants, had gone through it with a fine tooth comb. This plan was to be confirmed by the state government by December 2008, after which it was to be open for public viewing.

The state government then asked the consultants to brief them and that took many meetings until 2010, when the Chief Minister called for a final meeting of all councillors and Aduns. It was then announced that the draft local plan for the island and the ‘special area plan’ for the heritage zone would be open to the public in 2010 because the authorities need to submit the special area plan to Unesco by February 2011. What we read in the press now is all about this special area plan.

So we really need to look urgently at the Penang Island local plan, which could get even more outdated with each passing month (after all it is for the period 2005-2020), and take a careful look at the densities allowed.

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Beng

SPICE cost Penangites RM 300 million for 7000 sqm = RM42857/sqm
MATRADE Expo cost Malaysian RM 650 million for 100000 sqm = RM 6500/sqm

The only comparison that is needed

Kometenmelodie

Beng…Only an ignorant person will area vs area in comparing two building. Obviously a kampung house and a condo might have the same area but in terms of value they are vastly different.

In any case, this is not about the cost of the building but about accountability and using of public money responsibly.

Teng Kim Chew

No doubt, the PISA is a failure, mal-function building.
Why we need to rush to SPICE??? Just becoz of those ‘pasar malam’ events like PC Fair, Property Fair… n put up a classy name ‘International’ events!!! OMG!!!
I may agree a well planed convention center in Penang, no matter ‘International’ or not. But PISA is too congested, pls let go Bayan Baru!!!

Adrian Powerman

Whatever is this at least LGE has the guts to consult those who send e-mails to MPPP. Just wondering did we have this kind of thing prior to 2008? FYI, when I was young, I stayed in Butterworth. This BN government went & took out the whole of Jalan Pantai beach in early 90s. We used to jog at this beach but it vanished. MPSP under BN didn’t even bother to consult anybody & today for people in Butterworth they don’t even have a decent place by the sea to jog. So, to those, UMNO/BN morons, pls shut your mouth… Read more »

nkkhoo

1) If 100 stories for Warisan Merdeka cost 5 billion, then at 300 million per storey, 20 stories would cost 6 billion. sPICE Convention Centre would likely be no more than 10 stories high. This means the sPICE Centre costs 12 times more than the Warisan Merdeka.

This is more stupid calculation I ever seen in my life.

AgreeToDisagree

Here’s some math and Pakatan fails in comparison, offers a WORSE deal than surprise, surprise . . . UMNO? No way? Read below to find out who needs Math tuition. Pakatan’s sPICE Convention centre will only benefit DAP proxies and cronies. How? 1) If 100 stories for Warisan Merdeka cost 5 billion, then at 300 million per storey, 20 stories would cost 6 billion. sPICE Convention Centre would likely be no more than 10 stories high. This means the sPICE Centre costs 12 times more than the Warisan Merdeka. 2) The acreage of this project (sPICE at 7 acres) compared… Read more »

diagreetoagree

Of course 100 storeys highrise will be cheap. They become proton saga assembly after the 10th floor. Look the new world trade centre has reached certain stage quickly because the floors are just repeating. Just some simple maths for agree to disagree. Every new floor at 4 to 5 days which is the standard construction for tall buildings in all over the world.

nkkhoo

I was invited also for last Monday’s meeting with MPPP. Unfortunately no every one especially those from KL can attend the meeting due to leave or other reasons.

At least LGE attended the meeting for a 300 million project unlike BN government.

In contrast, BN government cannot even disclose the projected ticket price for 36 billion MRT project in the public consultation session.

Ong Eu Soon, are you invited by MPPP?

Andrew I

And here are some people asking for the moon from Guan Eng. Let’s go and ask BN for the same kind of accountability. The middle finger is not all you’ll be getting.

nkkhoo

BN government is (one of) the most corrupt government(s) in the world based on black money outflow statistics, therefore only corrupt regime will benchmark them as a gold standard.

There are few solid points LGE should address and answer to Penangites.

– How many % share MPPP own after pump in RM50 million?

– Why no EIA report and ROI analysis prior to approval of sPICE.

Kometenmelodie

nkkhoo I think you are smart enough person to understand that there is no direct correlations between money outflow and corruption. If there is, please do point out to me. BTW,no economist of any credibility (we can exclude Tony Pua from this obviously) will agree with the outrageous amount of Rm 888 Billion outflow. The amount was derived based not on data but some via indirect calculations on some other parameter. I am highly skeptical on the conclusion and even more skeptical on the accusations that Petronas was involved. To someone familiar with economy and business, this is a ridiculous… Read more »

nkkhoo

I give you a real case, an ah long God father I know (not friend) brought out hundred of millions ringgit to Singapore.

His black money was from his loan shark business with the (alleged) blessing from the (law enforcement personnel) and UMNO politicians.

There is a strong correlation between corruption and black money outflow.

Bank Negara suppose to be authoritative source cannot come out a single rebut on RM888 billon is imaginative number as claimed by Mahathir’s son.

Kometenmelodie

nkkhoo No there is no direct correlation. If you claim otherwise, please provide the data or source of your claim. Just because you can bring out “hundreds of millions’ by bribing people, doesn’t support your argument. If there is indeed a strong correlation then this dubious report must be also correlated to the TI’s corruption index. But if you look at the two lists, I don’t see any correlation at all. Malaysia is indeed suffering from corruption but to say it is the most corrupted is totally inaccurate and not based on any factual data but perhaps on your personal… Read more »

kingkong

AT one time many (ruling party) big shot wives go to Celyon and bought rubies and previous stone like batu arang and cross the custom as if there is no barrier. Just look at Sg Golok. The custom officer just look as how lorries come and go and boats flying across the river. Even the immigration officer can stamp the passport without when passport are handled at the counter. The presenter may be a he but passpoprt is a she. Try to come out of China’s border. They insist a good look at the person giving the passport. Similarly who… Read more »

Kometenmelodie

I am puzzled on you were invited Nkkhoo when you are not even a Penangite when many other Penang based NGOs and civil society members were not given the same accord.

I have already made my points clear about the forum which is just a platform for LGE to re-cycle his marketing pitch rather than provide answers to questions and be accountable.

Kometenmelodie

Anil

Strange…I did email but I was not invited. Again the invitation process is very opaque. Perhaps they only invited people who are polite (like yourself) or DAP cheerleaders.

Ong Eu Soon

No.Nobody dare to invite me.

nkkhoo

U talk a lot outside, but have no intention to communicate with MPPP directly.

I will not sympathize this kind of empty tank syndrome.

Kometenmelodie

nkkhoo

I think mutual respect is a good policy. While you might not always agree with Eu Soon, but in the spirit of free speech and mutual respect we should not resort to name calling.

You are wrong about Eu Soon. He took part in several forums and he was very vocal too. I tend to believe that LGE dare not to invite vocal people like Eu Soon or myself. To tell the truth I am puzzled why he even invited you, a non Penangite.

Kometenmelodie

Anil I think you missed one big and important point here. The reason why we were asking for this public dialogue session was to give our feedback and seek answers. However, what I notice from your report is the session was more like a session to sell the idea to the public rather than to listen to our feedback or give open and transparent answers. The message is the project will go on and all you can do is just attend and hear our reasons irrespective if you agree to it. In fact, LGE will use this opportunity to say… Read more »

SH Tan

Thank you Penangite. The report is by Anil who was there with me and six others from the public. I think Anil has reported most of the important points raised during the dialogue. Like Anil said, the Local Plan will be very critical to the future of Penang and we are waiting anxiously for its public consultation. I hope all of you who commented here will participate in it.

Kometenmelodie

That is, if there will be any public consultation.

Andrew I

Que sera sera.

penangite

Seng Hai is just reporting on the dialogue he had with LGE and also what other feedback he heard. I respect him for not being intentionally omitting and adding words. He sounded neutral. Can we please stop bitching about hairy fairy things conjurred in the minds? At least be like Seng Hai, who went through proper channels i.e. responded on feedback invitation which was open to public for 2 weeks at PISA, and was invited to attend the feedback session to ask and get answers for his queries. In the end, Seng Hai may or may not agree with the… Read more »

Ong Eu Soon

The Penang Hill funicular train service upgrading project will end up as another RM68million wastage by BN with the blessing of LGe. Wonder who will be blame for the screw up? Nik Ali? After the Botanical garden fiasco, the Penang Hill will be this year most spectacular fiasco. LGe will be in 7th heaven trying to manage crowd control to prevent the outbreak of disorder and prevention of possible stampede when tourists rush to the Penang Hill in unlimited number.

Ong Eu Soon

The real challenge of Penang Hill funicular train service upgrading. The state Public Works, Utility and Transportation Committee chairman Lim Hock Seng in explaining the need to extend the delay of resuming the funicular train service pointed out that the reason for the delay was difficulty faced by the contractor in diverting the alignment at the middle station. “They need more time in the foundation work at the middle station and also the installation of Tenaga Nasional Bhd (TNB) cables from the lower station to the hilltop sub-station,” he said. LGe has refuse to listen to critics when critics pointed… Read more »

Ong Eu Soon

The Guan Yin Temple is Penang oldest temple. Anil. You need to highlight the plight of this temple before it is too late. Don’t allow a poorly conceived renovation to turn this temple into a commercial temple. The Guan Yin temple is asking for help! Penangites must act now before it is too late. Once the working visas of china workers are granted and the renovation work started, the damage will be forever. Forget about those heritage preservation NGOs or activists they have let us down not once but again and again.

Ong Eu Soon

100% sure. The drawings on the wall will be replaced by carved sculpture. All the lohans will be placed with sculpture type. Modern toilets. Other detail are no available. But surely will be make commercialized.

Ong Eu Soon

The Kuan Yin Temple next to the Chinese Assembly Hall will go for renovation… The renovation (might) totally change the characteristic of the temple…

Ong Eu Soon

The Penang Hill funicular railway project although is the pet project of Ng Yen Yen, it is also dream project of LGe. Until today no news about this screw up funicular railway upgrading when it suppose to be ready on March after the previous postponement. Another screw up project without taking into account the carrying capacity of Penang Hill. Simply allow a high speed funicular railway service to ferry tourists without limit will see the biggest chaos in Penang Hill. Just can’t wait to see how LGe and Ng Yen Yen together screw up the whole Penang Hill. Just wonder… Read more »

Ong Eu Soon

Let LGe builds the sPICE and let him goes and markets it overseas. LGe need to concentrate fully on the marketing effort, he better quit as CM and devote all his time to make sure that the sPICE is a success. However the truth is that he is determine to build the sPICE and let it fail. Simply because he know pretty well that the project not only can’t bring revenue, he also know about the technical challenge that the developer need to overcome. LGe just can’t stop digging his own grave by misleading others into believing his warped logic.… Read more »

Ong Eu Soon

LGe is setting a bad bad precedent on how crony-ism should work. He is giving concession to SP Setia yet refuse to acknowledge it. He also set a bad bad precedent for high density development in total disregard for all regulatory laws. He is setting a bad bad precedent on how to hijack MPPP for his pet project. He is setting a bad bad precedent for public consultation and feedback by inviting all those who are too decent to criticize him. To tally no gut to invite a big mouth like me. What a shame! One term only, LGe already… Read more »

Kometenmelodie

Anil Thanks for bring our concerns and trying to get some answers. But the conclusion after the closed door Q & A session is that there are more questions now than answers. From the answers given by LGE, I don’t think any nuetral person would be satisfied at all. Some of my concerns : 1. Why is LGE is attending the session when this is supposed to be a MPPP project ? Why is he answering questions on behalf of MPPP ? This clearly shows that it is LGE and not MPPP who is driving this project. 2. The numbers… Read more »

Andrew I

“Also would this means LGE will make many more free trips overseas on tax-payers expense to promote sPICE ?”

One economy class seat, please.

Kometenmelodie

Don’t buy that BS from LGE….The Cheap Minister doesn’t fly cattle class anymore…

Andrew I

Isn’t that why he’s cheap, flying cattle class?

Kometenmelodie

Cheap Minister is certainly not cheap when using public funds in … spending on useless white elephants.

Andrew I

So why is he cheap?

Kometenmelodie

I am in awe of your single minded defence of the DAP regime and LGE !

LTH

I fully agree with donplaypuks’ comments.

The session goes to confirm this is all LGE’s personal agenda to have a PICC,bull dozing it thru behind closed doors, without following proper procedure, like eg. when you asked if this big project has received formal green light from MPPP, he side-stepped it conveniently and left off the hook quite easily then.

It would be interesting if you had insisted for a direct yes/no answer from him.

While donplaypuks smelled a rodent, I saw its head coming out from the dark hole. Let there be light!

wandererAUS

Aiyah Anil,for a moment I thought you were talking about the Spice Girls!
Leave this dull subject to Gerakan K la…he is just waiting and looking for more “Lopan”…a bloody snake in the medicine seller show….

donplaypuks

I clearly smell a rat – a big, dirty, black stinking rodent! I particularly detest this smokescreen of playing around with valuations and obfuscation over development densities and “free land” while ignoring additional costs in infrastructure etc. I further detest this play acting at transparency when the deal’s already been concluded in the CM’s office, behind closed doors. I bet if all the numbers are put together, SP Setia would have come up with no negative cash flow of their own. Having worked for many years in a couple of property Plcs, I know exactly how developers think and plan… Read more »

Ong Eu Soon

Don’t you understand? It is better to try and fail!

kingkong

I thought it was a open tender where there was another competitor? Maybe the developer you work with, did not win the tender(?) Who are the stake holders? Only NGOs and existing property owners? The stake holders include public who are squatters, poor income owners and those wanting to stay near the project area and of course the unemployed who also wanted a small slice of the cake and Penang Manufacturers. The only question is everyone in the win-win situation? If one thinks it is bad to increase the density, then it would be better to cut more hills and… Read more »

limko1

Thanks to Anil for enlightening us on the latest going-ons with regards to sPICe. Indeed, it is a good start to have a dialogue on the proposed convention centre as this has never happened before and augurs well for transparency and wider public participation.

However, as noted by Anil, there is an urgent need to come up with clear standards and guidelines with regards to plot ratio to avoid too much ambiguities/manipulations.

Gerakan K

If we look at the case, a lot of smart wording being used to justify the project. A kind of snake oil seller style. Even with face to face Q & A session, we still unclear about the project. Then, a closed door session ??? Or was that a guaranteed no-objection session because all of own people session ??? Why they always like to do mini thingies ??? Mini local election and mini Q & A, then let its machais to spin it as full scale events that deserve ISO standard !!! A new tactic invented by the talk talk… Read more »

Andrew I

“Still, it was notable that such a session was actually being held unlike in the past, when projects were undertaken without any feedback or public consultation.”

Did you read this part, or don’t you read?

Meanwhile, the back door minister has been slammed by the honest minister for insinuating that the latter is using back door antics to try to increase his party’s allocation of seats. As they say, it takes one to know one.

For full details, go here: http://thestar.com.my/news/story.asp?file=/2011/2/15/nation/8062071&sec=nation

Andrew I

p.s. Here’s a Q and A: Who is the BN’s favorite whipping boy in the coalition?

No sms voting, sorry.

Gerakan K

Hello,

only a handful of invited participants involved in the Q & A session and not general public. Re-read the article before jump to defend mode.

A direct nego project comes with directly invited Q & A session.

I think they need a better scriptwriter before aiming at Oscar level.

Let’s see if any dumb local viewer interested in their story.

Andrew I

Still better than before. Half a loaf is better than no bread, which is what we will get if we invite the back door minister back to rule us.

kclim

dear anil thank you for sharing with us the dialogue. The dialogue is in line with the state govt’s policy on transparency but as you have pointed out, it is questionable for the state govt to increase density without proper studies, public dialogue and due consideration for the inadequate infrastructure. The state and MPPP should come out clean on what are the permissible densities for all the areas all over the state so that the people of penang know what to expect and to avoid possible corruption and favoritism of certain developers. The tabling of the local plan for public… Read more »