From 87 units per acre density to 128 units per acre!

I am not sure what is going on here. The state government has announced that the “87 units per acre guideline, after deliberation with all stakeholders, will be replaced by a new guideline of 128 units per acre, whereby the units developed under this guideline cannot be less than 900 square feet and cannot be priced less than RM400,000…”

Before it was increased to 87 units per acre in 2010, the upper limit was 30 units per acre. 

Apparently, this 87 units per acre was initially supposed to be only for transit-oriented development nodes, but before long, developers started applying for the maximum 87 units, no matter where. 

So now we are seeing more than a four-fold increase in density in the space of six years! Imagine the wonders that will do for the charm of Penang.

Some questions:

• On what basis is this higher density being allowed? When was it approved and by whom?
• When the earlier density was increased to 87 units per acre, we were told that this would enable developers to build more affordable housing. Now, the density is being increased to 128 units per acre, but units cannot be priced less than RM400,000? We are told that these poor developers apparently find it difficult to sell bigger homes under the 87 units per acre ‘guideline’ (a 1,400sq ft unit can be priced at more than RM900,000 in some cases). So a higher density is being allowed as the higher the density, the smaller the unit size (huh?) and the smaller the unit the cheaper the price (yeah, right). But where does it say that the unit size will be smaller? What is stopping the developers from selling smaller homes as it is?
• Do many of the big developers deserve this? It is not as if many of them have been building homes that most ordinary Penangites can afford. Isn’t there a glut of homes priced above RM500,000 now?
• Who are these “all stakeholders” that the state government has consulted with? Does it include ordinary Penangites on the street? Civil society groups?
• Interesting that the congestion on the streets is being attributed to “our successes” rather than to the poor and arbitrary planning “guidelines” that have allowed higher densities than what the roads on the island can cope with. (This is the same logic that attributes higher tourist arrivals at the Penang Airport to Penang’s success, when a lot of this increase has to do with the expansion in the budget airlines industry – leaving aside the impact of all that air travel on climate change, which alarmingly, few are bothered about.)
• In the absence of the missing-in-action Penang Island Local Plan, does this new higher density “guideline” carry any legal weight in the first place? Isn’t 128 units per acre well above what is allowed under the Penang Structure Plan, which is gazetted and carries the full weight of the law unlike a mere “guideline”?
• Since it appears that densities can be changed just like that, why not allow 250 units per acre or 500 units per acre? That should make the developers even happier… never mind ordinary Penangites.
• Why is the Penang Island Local Plan being delayed even though it was approved by the MPPP in 2008? What is holding back a public display of the approved draft of the Local Plan for feedback? So that densities can be changed just like that?

SPEECH BY YAB CHIEF MINISTER OF PENANG AT REHDA 42nd ANNUAL DINNER ON 24TH OCTOBER 2016 AT G HOTEL

I wish to congratulate the organizing committee for the excellent manner in organizing REHDA’s 42nd Annual Dinner Celebration.

2. We are aware of the current unfavourable economic situation and the state government is working closely with REHDA to resolve the challenges faced by the industry whereby a series of meetings together with other stakeholders have been held by EXCO for Town & Country Planning and Housing to consider all views put forward. Towards this end, the following has been achieved in order to cushion the unfavourable economic impact upon developers:

(a) First, the use of corporate guarantees to replace bank guarantees given by developers for various contributions and charges, which has been extended from previously contributions of: (i) rezoning land value increase; (ii) additional density / plot ratio; (iii) contribution in-lieu of physical development of low and low medium cost housing and (iv) contribution of the North Coast Road development under MBPP, now to all other contributions whereby the total sum is more RM500,000.00;

(b) Secondly, the 87 units per acre guideline after deliberation with all stakeholders, will be replaced by a new guideline of 128 units per acre, whereby the units developed under this guideline cannot be less than 900 square feet and cannot be priced less than RM400,000.00, and further the development charges for the 20% affordable housing units under this guideline are to be standardized at RM5.00 per square feet as well;

(c) Thirdly, the financial contribution for several facilities not physically surrendered such as hawker stalls is being reviewed whereby we are considering placing the same on a fixed rate rather than market rate;

(d) Fourth, to allow flexibility for developments in the North East District to build their affordable housing units under the compliance quota in all development guidelines outside of the North East District, up until the southern part of the island at Teluk Kumbar.

3. The state government is aware of escalating property prices in Penang and has initiated pro-active steps to provide quality housing at affordable prices. The Penang State Government is actively pursuing the challenge of providing affordable housing which will be overcome when 26,255 homes are built over the next 5-7 years with another similar number to be built by the private sector. I strongly urge all REHDA members to further develop the housing industry as well as to implement affordable and social housing programmes as it contributes to nation building and betterment of life for the people of Penang.

4. Making Penang a world class international and intelligent city is not impossible. Penang has garnered numerous international accolades; for example, hitting No. 4 in Lonely Planet’s Top 10 Cities list for Best in Travel 2016 and No. 6 in CNN Money’s Top Places to Retire in 2016. Recently, Penang has added another new feather to its cap by clinching the number 2 spot as “Top 10 best places in the world to retire” by travel magazine Conde Nast Traveller. Our tourist arrivals have increased every year until the Penang International Airport has already reached the maximum capacity of 6.5 million passengers 4 years ahead of the scheduled 2020.

5. The practice of good and clean governance in Penang has helped Penang become an attractive state for financial investments. In the recent report, Malaysia Commercial Real Estate Investment Sentiment Survey 2016 produced by Knight Frank, Penang is the most attractive region for commercial property investment in Malaysia. In the survey of more than 700 fund managers, property developers and lenders, KL was No.2 with 56% confidence whilst Penang drew 67% of the votes overall.

6. Our vision is to transform Penang into an international and intelligent city. Over the last few years, the Penang State Government’s good governance and clean leadership, has aggressively promoted Penang as a location of choice for investors, a destination of choice for tourists and a habitat of choice for residents who desire sustainable living. From 2007-2015 onwards,

· Penang has recorded annual budget surpluses with accumulated surpluses of RM574 million over the last 8 years of 2008-2015, more than the accumulated surpluses under BN over the last 50 years from 1957-2007 of RM373 million. In other words we did betterin 8 years than the previous government did in 50 years!

· Penang’s asset reserves have nearly doubled over the 8 year period from RM850 million to RM1.6 billion.

· For the comparative 8-year period from 2008-15 compared to 2000-7, Penang’s manufacturing investment increased by 87% to RM54.9 billion from RM24.9 billion, with job creation increased by 17 % to 128,317 job opportunities from 106,583. Unemployment rate is at a low of 1.6% creating a shortage of 20,000 workers.

· Penang’s state’s debts has been reduced by 90% over the same period and at RM69 million by end 2015, is the lowest in the country. This RM69 million debt compares with the total RM16.8 billion of debts owed by all 13 states, with Pahang owing the most at RM2.9 billion, followed by Sabah RM2.6 billion, Sarawak RM2.5 billion, Kedah RM2.3 billion and Kelantan RM1.3 billion.

7. Our successes have created traffic congestion which the state government hopes to overcome under the RN27 billion Penang Transport Master Plan(TMP) combining rail, roads, air and water. We are awaiting Federal government approval.

8. Malaysia and Penang face many challenges due to the economic slowdown caused by imposition of GST and depreciation of the ringgit. Unfortunately, the 2017 Budget does not offer anything new to save our economy, especially to the construction industry. At a time of economic downturn, government projects are important to stimulate the economy. There is no reason why the Federal government cannot grant approval to the TMP, when it can add 0.5% to the country’s GNP.

9. I would like to take this opportunity to congratulate REHDA for taking the lead in assisting the less fortunate inmates from charitable homes through their Corporate Social Responsibility (CSR) initiatives. I strongly urge all developers and associates present here this evening to inculcate a CSR culture in all your companies. It has been demonstrated that it is possible to be profitable while also being socially and environmentally responsible.

In conclusion, I would once again want to thank REHDA for your invitation and your effort in working closely together with the State Government to develop Penang.

Thank you

LIM GUAN ENG