S P Setia awarded RM300m PICC job

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Latest: It has been announced late this morning that the PICC project has been awarded to Eco Meridean Sdn Bhd, a subsidiary of S P Setia Bhd, and the project will now be dubbed ‘Subterranean Penang International Convention and Exhibition (sPICE) Centre’. The work, which involves upgrading the existing Pisa facilities as well, will reportedly cost “at least” RM300 million (or more?) using a Build-Operate-Transfer model.

According to my source, the tender proposal had expected the state to provide RM50 million in funding. But we now hear that that the burden of coughing up these funds will fall on MPPP (i.e. Penang rate-payers), which is already hard-pressed for funds to upgrade basic public amenities such as public markets and pavements. Has the RM50 million expenditure been approved in a full council meeting of the MPPP? Was it even on the agenda of the last full council meeting of the MPPP? Who is really running the MPPP?

If this RM300 million project, which will take three years to complete, is really feasible, the state government should show us the projections. S P Setia may be able to deliver the convention centre but can it guarantee that it generates operational profits? If not, who will absorb the operational losses and for how long? Realistically, how much can MPPP expect as returns for its RM50 million outlay and when? What about the hidden costs and opportunity costs that may not be reflected in the RM300 million, especially the cost for the use of the MPPP’s land and interest lost by the MPPP on the RM50 million? How much is S P Setia going to pay MPPP for building on council land? Why should Penang rate-payers subsidise this project? Questions, questions… but will we get real answers?

My report early this morning before the official announcement:

S P Setia Bhd has been selected for the job of the Penang International Convention Centre, the cost of which has ballooned from initial estimates of around RM50 milllion bandied about earlier to some RM250 million RM300 million now.

According to a source, negotiations are underway on the terms based on what S P Setia wants from the state government and the MPPP. It is believed the state government was asked to provide RM50 million to help fund the project. I don’t think this is the best way for the state to spend its limited financial resources.

The design for the PICC, to be constructed underground, is believed to include a roof-top garden, a hotel and a retail section. The MPPP has requested a traffic dispersal study. It is not known if a socio-environmental impact study will be commissioned.

The concession agreement is likely to be based on a build-operate-transfer model.

The MPPP, which currently owns the Penang International Sports Arena on the same site, had closed the invitations for the PICC tender last September. The hotel and the PICC are expected to be built next to the existing Pisa.

It is believed a 99-year lease for the hotel was initially proposed, but this was rejected by the MPPP.

The major shareholders of S P Setia are Amanah Raya Nominees (Tempatan) Sdn Bhd-Skim Amanah Saham Bumiputera (20 per cent), EPF (14 per cent), Tan Sri Dato’ Sri Liew Kee Sin (12 per cent) and PNB (7 per cent). As PNB also operates the Amanah funds, this makes the S P Setia virtually a GLC, managed by Liew, whose personal net worth has been estimated by Forbes as RM460 million (US$150 million), making him the 31st wealthiest Malaysian.

Where is the return for the PICC coming from? Can it really be viable at this cost?

In the name of transparency, the state government must announce the latest developments officially. We don’t want the same old BN way of doing things in secret. The tender has been selected: so the state government must announce who the winning bidder is and what the exact terms of the proposal are. What exactly is the bidder asking or expecting (whether expressed formally in writing or otherwise) from the state government and the MPPP in return for handling the project? We want to know the details. This way, the public will be able to decide what is at stake and whether it is a viable bid that won’t strain public coffers, burden state institutions or affect surrounding areas.

Transparency and accountability, please.

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wira

Tweet from YAB CM.

[press stmnt]Penang Is The No.1 State For Total Capital Investments In 2010 Attracting RM 12,238 Million http://on.fb.me/ieJijl

================

Congratulations, Penangites.
Penang leads !

wira

RM11.5 million outlay today to own a RM300 million real estate (in today’s ringgit) outright in 30 years is a good investment.

The annual return is 11.5%.
[This ROI calculation does not include the appreciation of that piece of real estate.]

Let’s use our brains often and not just asked to be spoon fed. 🙂

wira

I don’t think we’ll get to see all the details of the agreement because the commercial agreement is an extremely confidential document to the other signatory.
The main terms are as what we learnt from the CM’s press release.

Ultimately, we’ll have to judge whether this deal is more clean and transparent (plus cronies & rent seekers free) than the commercial deals our BN government have been committing us to all these years.

wira

Please don’t ask me why all the councilors are keeping mum.

I believe there are some councillors who are from NGOs and some who represent commercial interests.
Those are not bounded by the party whip.

Ultimately, the councilors will have to approve the money for this project.
So they should and must ask to see the agreement.

Anyway, I did not vote them to be councilors.
Did you? 🙂

wira

If 70% Malay vote BN, 60% Indian vote BN and 50% Chinese vote BN, Najib will call a general election today.

As that would translate to a BN landslide, larger than what Tun Abdullah achieved in 2004 because in that year, BN took only 62% of the popular vote in their most historic win ever.

The reason why Najib is not taking the bait is because he does not believe in wishful fantasy. 🙂

LimBC

If DAP is worst than BN, then as you suggest before, just go ahead and vote for the third force and the third force did not perform as you have in mind, then you always have the forth force and so on. At the end of the day, you will be a frustrated old man. hehehehe.

nkkhoo

You are harping people have no choice and have to vote DAP and PR.

Your wish will be fulfilled, I foresee at least 60% Indian voters will vote BN in the next GE.

See how many % Chinese will vote BN in Tenang by-election. I say 50-55% will vote BN.

What chance PR have to win Putrajaya IF 70% Malay votes BN, 60% Indian vote BN and 50% Chinese votes BN?

PR will go back to old days with less than 1/3 seats.

PR should blame themselves for unable to perform and has broken all sorts of promises.

wira

Dear LimBC.

I just “beh tahan” those who think they can foresee an internal problem better than those entrepreneurs who commit a lot of their own money to make a dream happen. 🙂

nkkhoo

LGE should not inject a single sen of public fund into this project. As long as public money involved, he should convince Penang taxpayers with ROI projection.

His main job is to ensure EIA is done as a CAT state government, venture into business is not his expertise and business.

SunnyOoi

You are entitled to 1 vote. You are NOT entitled to tell our CM what to do. Get that into your head.

How can we put every decision to popular vote? I want transparency but not the same way you have in mind.

nkkhoo

I challenge LGE to repeat same words as you. If this is DAP attitude, they are worst than BN.

What kind of transparency in your mind IF LGE cannot get the basic CAT right?

sunnyooi

No, not agreeing with you does not make one a dictator. Take your spin to utusan.

nkkhoo

I do not ask LGE must agree with me. I only ask him to follow his own CAT.

It’s that hard for you to comprehend CAT?

Kometenmelodie

Sunny

You are wrong. If you say we cannot tell LGE what to do then DAP stands for dictatorship and not democracy.

LGE is the Chief Minister of Penang and the Chief Public Servant. He is our servant and not the other way around.

We have every right to demand answers as this involves public fund. No one can question LGE if he goes around shopping using his own money as that’s a personal matter.

As long as it involves public fund, public asset and public interests, we have the right.

ABC

Go tell umno what to do and see what happens.Go tell BN your rights and tell them you want to know every single sen that the gov is spending.If you can’t question the big players, don’t act smart here.

LimBC

Dear Wira,
A very good one, I like that. With the half baked information, so many peoples are acting like a lawyer buruk here. How do they judge that they are strong protest?

wira

SP setia is a successful private enterprise.
Do you think they would dump RM250~300million to put their real estate in a probable lake?

wira

When the state government announced that 1 out of 3 tenders was chosen for sPICE, I can accept that the successful tender must be the best offer. Otherwise, the other 2 will hold press conferences and cry foul because the principle concessions and monetary involvement are already out in the open, including the design of the new sPICE centre.

I am unsure if it is ethical to disclose to the general public the names of companies which are unsuccessful in the tender exercise, their tendered amount and concept without their agreement.

nkkhoo

Anyone should able to check and see all tender documents under CAT principle.

Penangite

It aches to see fellow penangites so scared of development. By all means, raise your concerns but please do not prejudge.

dawsheng

SP Setia should know whether a floating PICC worth RM250 million, that is RM8.33 million a year excluding interest and operating cost, if the flood problem is not solved, SP Setia will lose even more, so I consider the flood problem solved.

Beng

A new convention/exhibition center in Penang is definitely needed but I believe the RM 300 million is just way too much to spend on a convention center, either by the state government or by SP Setia. A convention of similar size initially only cost about RM 50 million and the extra RM 250 million of “over-design” cost will eventually have to be borne by someone (unless SP Setia consider sPICE as a community project for Penangites). Considering RM 250 million at 6 percent per year, that is RM 15 million in interest alone, I don’t think rental collection alone can… Read more »

James Loh

Something very interesting I think Anil should inform his readers. The EC is suggesting proxy voters. That’s great for the future of Malaysia. We’ll be able to allow Phantom voters legally from now onwards!

http://www.themalaysianinsider.com/malaysia/article/ec-mulls-proxy-voting-in-election-law-changes/

donplaypuks

Personally, I think a convention centre in Penang has a better than even chance of being a long-term financial succes than one in Putrajaya or Jalan Duta in KL. No one knows if the CC’s in KLCC and Mt Kiara (Sime Darby) are making a decent return or in the red. However, there’s nothing like seaside ambience, history and good food/entertainment to draw foreigners in. I am reliably told that Penang has attracted the highest number of residents under the ‘Malaysia My 2nd Home’ campaign. Nevertheless, LGE and the Penang State Govt have a duty to Penangites to disclose the… Read more »

wira

I want to raise my concern where government responsibilities are being outsourced to private enterprise. Take the case of the management of Bukit Jambul Country Club being outsourced to Taiyo Resorts for a reported annual fee of RM2 (?) million where the Japanese company also have to come out with their own money to upgrade the golf course and to make it one of the attractions in Penang for tourism. However, there is little safeguard of member’s rights which suffered erosion the day the first 9 holes of the golf course were closed for re-turfing and refurbishment. The right of… Read more »

Pinang Boy

Kudos to the Penang government !!! It is important to walk the talk. Keep up the good work. When Penang was under BN, it took more than 10 years just to build the Tun Lim Chong Ewe Expressway (previously known as Jelutong Expressway). Penang was a sleepy hollow under the ruling of Koh Tsu Koon. It was a NATO (No Action, Talk Only) government. TDM was more interested to allocate billion of funding to Langkawi. This also happen today in Najib government. How many ETP/GTP are benefiting Penang? Almost none ! Thanks to the creativity and the forward looking mindset… Read more »

wira

2 tweets from CM Lim Guan Eng read as follows:-

“Pg Conventn Cntr sPICE costs RM300m but local council pays net RM11.5m not RM50m- gd deal as public gains a new 7acre4 green park 4 d public.”

“[Media Stmnt] MPPP will be paying a net sum of RM 11.5 million cash in Exchange for a Penang People’s Park http://on.fb.me/iefscl

There are savings from having to spend money on repairs to PISA and Aquatic centre and the sale of land in this deal to offset that RM50mil.

Just

RM 50 million is upfront cash? how about the investments MPPP had already sunk in the Aquatic Centre and PISA? That was about rm20million twenty years ago?What is the net present value of existing developments? Are the people who are in evaluation committee qualified to analyze the financial proposals of the project? I think MPPP owes it to the ratepayers to explain how the financial proposals are worked out.

Szetho

To be fair, until the full details are made known, it would be presumptious to critcize or oppose the project altogether. Alot of assumptions are being made and as usual some are making unfounded allegations based on it. Some projects will require funds from either MPPP or state gov. That in itself is not wrong, so long as the project brings benefits and fair returns.Who said the cost fluctuated from 50 to 300 mil? What is your basis for claiming that? Anil, would you withdraw your objections (using MPPP funds)if the project is a success? If you have issues or… Read more »

sunnyooi

Cheap shots. The words I was looking for. Thanks Szetho.

Charlie Oscar

Mr Sunnyooi,
Agree with you for agreeing with Szetho for the “CHEAP SHOTS”!!!
Anil wants the CAT which the so call PR gomen have kept at HOME!!!
Sorry for the “Cheap Shots” if you understand the DIRFTS!!!

SunnyOoi

Sure i understand. LGE needs to be more transparent as promised. Beyond that there is no real points to criticize.

nkkhoo

I did not see Anil criticize him for only one wife. So what is your point?

Ong Eu Soon

PISA is prone to flood during raining season. Is Desmond the Desperado want to build a swimming pool and aquarium by accident with his amazing underground exhibition hall?

nkkhoo

As long as EIA report proves the project is feasible with solutions to alleviate traffic and flooding issues.

Of course ROI must be positive also before state government embarking in a joint-venture (or provide free loan?).

The issue here is zero transparency on this cPICC project.

Penang Voter

From what I have heard, whoever takes this project is what the Chinese say ‘Eat Dead Cat’.

The are other conditions attached. I am sure will be revealed. The conditions are ‘HIGHLY FAVORABLE’ to Penang and Penangites.

Kometenmelodie

Obviously you are a DAP fan club member who regards LGE as demi god and DAP as a religion. If you have heard of such “highly favorable” condition, then it surely means that you are an insider with privilaged info that even MPPP councilors do not have. BTW, if you do have such information, then we are all ears. So please go ahead and share it with us. Why not LGE reveal the terms before embarking on the project ? And why not let us give our feedback as it is OUR MONEY that LGE is burning !! This is… Read more »

sunnyooi

Hello, your political spin is so clear for all to see. Your lack of tack is exactly why BN will fall.

You have no data to show if the deal is good or bad for the people. So choosing to be negative in your comments clearly reveals your intent.

And let me remind you how democracy works. We have chosen who represents us and that person is neither you nor gerakan k.

Charlie Oscar

Mr Sunnyooi,
“We have chosen who represents us”
It is “You have chosen who represents YOU”, so YOU FOLLOW BLINDLY???
How Very Interesting!!!
Please Don’t Anil!!!

Ong Eu Soon

Everyone seem to forget about the flooding problem that plagued PISA for decades. I really wish that this Desmond or Desperado administration really know what it try to do. A Subterranean Penang International Convention and Exhibition (sPICE) Centre that submerged by rain water? Solve the flooding problem at PISA first before even attempt this stupid feat of political suicide.

Ong Eu Soon

Hello Desmond! The price fluctuated too fast from RM50 million to RM300 million. What is the basic for this fluctuation of cost? Can’t budget properly? Why still want the monument? Afraid no more opportunity after next election? So much for Competency, Accountability and Transparency.
No matter how must suck the RM50 million from MPPP first.

SamG

Anil, Are you totally against the PICC? If that is the case, however much we try to convince you that we need it, you will not accept it.
For me, as long as PR Govt comes clean on the process and the Business Plan shows reasonable investements, with no loop-sided agreement favouring SP Setia it should be given a fair chance.
Unless it is transparent that the funding is against the State/MPPP/Rakyat, then it is a major problem

nkkhoo

Yes, PICC financial projection should be published for public purview because no Penangites want to see another 300-year breakeven point like BN Putrajaya Convention Center.

Kometenmelodie

khoo

Taking into consideration LGE is burning up OUR MONEY, it is not just a matter of financial consideration or ROI. There are a lot of issues involved as I had stated in my earlier post.

I am afraid, these blind and fanatical DAP fans have created another dictator in the form of Chairman Lim, giving him a licence to trod on our rights and suppress our voices.

nkkhoo

Basically you only three major issues answered, ROI, EIA and rule of law.

yang

When UMNO BN awarded a project it is their cronies that will benefit.

When PR awarded a project. It is a WIN WIN SITUATION

The “MPPP wins, the company wins, the people win and the environment wins”.

So what is the fuss about. Maybe Gerakan K likes the 100 storey building better because it gives him and the sycopants of UMNO and BN more benefits not the people.

Kometenmelodie

Not sure how the environment wins either..strange logic the Cheap Minister uses…

manukan

Ha ha …better we vote back BN