Boustead reclamation deal: Please explain

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Could someone please explain this deal with facts and figures. The circumstances surrounding earlier land reclamation deals were too hazy; that is why complete transparency and accountability are important.

Boustead was claiming RM60 million in compensation for scaling down its project in the world heritage zone in George Town.

In return for giving up that claim, it is now reportedly allocated land/reclamation area “very much less” than 100 acres in the southeast of Penang Island. How much less than 100 acres and how much is the gross development value of this land/reclamation area? (The Edge estimates that the entire 97-acre site could fetch RM870 million.)

Could someone please provide precise figures.

In the recent past, under BN rule, a couple of the major land reclamation deals in Penang – worth billions of ringgit in gross development value (GDV) – landed up with big property development companies. And what did the Penang state government get in return for handing over all these prime waterfront stretches for high-end development to private developers? A pittance (whether in cash or kind) compared to the GDV. Are we seeing a continuation of this trend?

How much did the state government actually earn from all these deals for the public? Why couldn’t PDC handle such land reclamation so that the projects could include ample social element (affordable housing, parks, public transport, cycling lanes) and the profits be used for the public interest?

We need transparency on all past and present land reclamation deals. We should demand a  detailed accounting that should be independently audited and made public.

This is the report in The Edge:

Boustead may get to reclaim land south of Penang Bridge

Written by Regina William
Tuesday, 14 September 2010 14:26

GEORGE TOWN: Boustead Holdings Bhd will be allowed to reclaim an area south of the Penang Bridge as compensation for scaling down its Royal Bintang Hotel project from 12 floors to five floors as required by Unesco for declaring George Town a World Heritage Site, according to sources.

They told The Edge Financial Daily that Boustead will be allowed to reclaim an area “very much less” than 100 acres between the existing Penang Bridge and the Penang Second Crossing (P2X) in Batu Maung.

The reclamation will be carried out to the south of Bayan Mutiara, which the state government recently tendered out to be developed in a bid to raise much-needed funds for its social programmes.

The state had made a request for proposals (RFP) for the multi-billion ringgit development of almost 100 acres (40.47ha) of land at Bayan Mutiara, which under the previous Barisan Nasional (BN) state government had been earmarked for a new state administrative centre.

The RFP, inviting local and regional players, is for the development of 62 acres of Bayan Mutiara, a new development area south of the Penang Bridge overlooking Pulau Jerejak, with the potential to develop an additional 35 acres via reclamation after the development of the initial 62 acres.

The reserve price of the Bayan Mutiara project is expected to be above RM200 per sq ft which would mean that the 97-acre site (62 acres with 35 acres to be reclaimed) could fetch over RM870 million.

It is learnt that Boustead is planning to develop the reclaimed area into an integrated township with upscale housing and commercial components.

With Boustead being allowed to reclaim the area, almost the entire eastern shoreline would be reclaimed from the south coastal area of Pantai Jerejak right until the end of Jelutong coastal expressway.

The reclamation is part of the compensation for Boustead due to its hotel project having to be scaled down in accordance with Unesco requirements.

After a year of negotiations and demand from Boustead for land as compensation for scaling down the project, it was agreed that the company would be allowed to reclaim land along the coast.

The state government and Boustead have agreed in principle to the proposal and Boustead has also backed down from its initial RM60 million compensation claim from the Penang Island Municipal Council (MPPP) and will only seek abortive costs for having to amend its plans. It is also learnt that both parties will move ahead to appoint a third party to ascertain the abortive costs.

With the talks having just been concluded, the paperwork is now being completed with Boustead preparing the draft agreement. t is learnt that Boustead would soon submit its amendments to the MPPP and proceed with the construction of its hotel, which had stalled at five stories. Sources said Boustead was fighting for time to complete the project by November.

The state government had directed the developer to scale down the project to meet Unesco’s requirement of 18 metres or five-storey height in the core heritage zone of Weld Quay following George Town’s inscription as a Unesco World Heritage Site on July 7, 2008.

In a report on April 5, Boustead deputy chairman and group managing director Tan Sri Lodin Wok Kamaruddin was quoted as saying the height of the new Royale Bintang Hotel would be reduced, but that Boustead was seeking compensation, which could include land.

The Royale Bintang Hotel project was among four projects affected by the Unesco ruling in the core zone of the World Heritage Site in George Town.

There were no problems with the other three projects, namely Asian Global Business Sdn Bhd’s (AGB) Rice Miller Weld Quay Development in the core zone; Eastern & Oriental Bhd’s annexe building of the E&O Hotel in the buffer zone; and Low Yat group’s project along Jalan Sultan Ahmad Shah.

This article appeared in The Edge Financial Daily, September 14 2010.

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Ong Eu Soon

http://www.theedgemalaysia.com/in-the-financial-daily/173565-guan-eng-confirms-bousteads-land-reclamation-deal.html Chief Minister Lim Guan Eng confirmed reports by The Edge Financial Daily that Boustead Holdings Bhd would be allowed to reclaim land as part of a compensation for having to scale down its Royal Bintang Hotel project from 12 floors to five. The reclamation is part of the compensation for Boustead due to the hotel project having to be scaled down in accordance to Unesco requirements for naming George Town as a World Heritage Site. “We are already at the advanced stages of negotiations (with Boustead) and we will announce the details of the solution and compensation at an… Read more »

KJ

I’m confused..the article says the reclamation would be done between the 1st and 2nd bridge, and further specify that it would be south of Bayan Mutiara. If you take a look at Google Maps, to the south of Penang bridge is Bayan Mutiara (which is already reclaimed land). Further to the south is already Queensbay (also reclaimed). Further down would be the Bayan Lepas FTZ. Where would there be space for land reclamation for Boustead?

tan, tanjong bungah

Hi everyone,

I do agree to a certain extent that Boustead is an aggrieved party in the sense that its plans were already approved, but then asked to redraw to cut-down on the height to fulfil heritage requirements!

Any compensation, be it to ‘squatters’ or in this case a developer, has to be a fair compensation, not one deems as a ‘sweet’ deal to unduly profit the developer. Let’s wait for the details of the deal so as to assess how much profits the developer would gain from the land reclamation and development of the reclaimed land.

Gerakan K

I’m afraid that the proposed deal looks suspicious.

No one is angel any way. MACC should step in to prevent any abuse of state fund.

Bigjoe

I think you still have to wait on the final details of the deal. I think Boustead let out the details according to what they want, not what the final terms that will be agreed to, to gain mileage over the govt.

There is more than enough talent in LGE team to calculate the right numbers to make sure Boustead don’t get a sweet heart deal but Boustead is getting a good deal and unavoidable given they are the injured party.

looes74

On top of what Joe is saying, I think we can’t just rely on one source & then make conclusion on anything. Like I say before, everybody has agenda…..That includes The Great Anil Netto. Having said that I am not saying that Anil is wrong. We must look at the situation from a bird’s eye view before we start shooting people. It doesn’t help if one has myopic view on everything…. Back in Singapore, questions being asked. Why YOG’s game overran 3 times more than it should? Hmmm…..300 million USD…..But then, what’s the bottomline? People, Don’t get me wrong of… Read more »

DatukNenek

In the case of Tanjong Pagar, without KTM there would means no more opportunity for any form of ‘infiltration’ all the way from Bukit timah to the heart of the Lion City.

wandererAUS

…..initially, it may appear the Corporate body got the better of the deal, at least, we are seeing development in the State. Any land claimed will stay in the island for eternity. Today may seemed to be a big amount in profit for the developer, tomorrow, it is just a small sum when the land is developed and appreciated. Sometimes, it is better to see progress than to have a stagnant govt enjoying just the evening sea breeze! By the way, no one will do anything for free…as long as they do not behaved like the corrupted BN which only… Read more »

SamG

Anil,
Get your contacts in 26th Floor to come clean on this deal.
Is there anything in the reclaimation that would be beneficial to the state?
Reclaimation costs is also expensive, so even if the revenue is high, consider the development costs.

DatukNenek

Yes, we only heard one side of the story.

K S Ong

Before we jump into conclusion, using the value of land after reclamation, we should allow for the costs of reclamation. As a rough comparison, I am looking at Marina Island Resort by DKLS. It seems to be ahead of schedule, already in operation after less than 7 years instead of the expected 15. One can expect some kind of trade-off where it involves private initiative and capital and the state gets well planned development. “TELUK MUROH RECLAIMATION WORK TO START SOON New Straits Times Release : January 30, 2003 IPOH, Wed – Reclamation work for the proposed 162ha “resort island”… Read more »

SimpliSiti

Anil

Kindly allow me to use your blog space to tell all Penangites that Siti is coming to Penang for a concert this Saturday:

Konsert Siti Nurhaliza on Saturday, 25 September 2010, 8pm at Penang’s Stadium Bandaraya MPPP.

Bring Mykad and pay only RM1 per person for a bottle of water as entry ticket!

Chin Tu Lan

Well have you check how much does it cost to reclaim the land? It could be a substantial amount money involve.

Gerakan K

… We, the people of Penang will know what to do in next GE.

looes74

Hahaha, voting in the whimper Gerakan…..More selling of land to companies like Boustead

Yang

Gerakan K
Ask your Penang Gerakan chief, Dr. Teng Hock Nan. He already knew the answer.Don`t you!!

Ong Eu Soon

Hei! What happen to open tender? Transparency? Accountability? Where is LGE’s competency? As an accountant? As a CM?…

What happen to our rights to information? LGE is just as BAD as KTK.

Ong Eu Soon

Like I told all the cyber troupers of LGe before that LGE will not fight against the developer on the compensation. Instead most likely that LGE (may) give in to what ever demand voluntary. Now my prediction come true(?) Any doubt why we need to get rid of LGE in order for PR to survive in the coming GE?…

Martin Chuah

You must be dreaming … LGE is having tremendous support for things that he has been doing in Penang …not even Najib can dethrone him …talk about voting him oout? as a penangite, I am positively delighted that he is the CM …not others..

Brainbox

This whole stupidity could have been averted if LGE and his ‘great advisors’ had taken a deeper and real interest in the UNESCO issue, spoken to the real experts and moved on.

Instead, the state now has to contend with selling Penang to these corporate sharks.

And who says the other three projects did not have problems? The reporter should not be sloppy since problems faced by developer AGB because of the height restriction is well known.

Abang Adek

Another example of how incompetent and business-friendly this DAP CAT government is. LGE and the State Government owe Penangites a fully accountable and transparent statement explaining this land deal. Previously, LGE and this government complained loudly about how damaging financially the legal suits and claims from the likes of Boustead would be if they canceled Boustead’s hotel project that ran foul of Penang’s Heritage Status. Now, to the amazement of all, they do an about-turn and give away land worth nearly 15 times Boustead’s potential claim. Either Lim Guan Eng and his state cabinet are the world’s most incompetent bunch… Read more »

kl_boy

Then what do you suggest? just cancel everything outright??….only make the situation worse as there will be law suits as the approvals are already a sealed deal previously. Imagine investors sees Penang govt changing next round and start cancelling all sort of agreements made by the past admin. not a very encouraging respond in integrity. The solution now is to get a win-win deal for everyone rather than an outright battle in the court room. Only then the investors will be have some confidence that Penang can still negotiate with businesses for a winning solution.

DatukNenek

It is just a small price to pay to retain the UNESCO title.