PTMP funding model has failed: Time to scrap SRS proposal

The chief minister’s recent statement that the massive reclamation off the southern coast of Penang Island may be modified, scaled down or even reviewed is a tacit admission that the funding model of the SRS proposal has failed.

I recall from a Penang Transport Council meeting that one of the primary justifications for selecting SRS Consortium as the project delivery partner was that its proposal would not involve public or government funds. Instead the funding for transport infrastructure in the state would be raised through selling reclaimed land.

And so the RM27bn transport infrastructure proposed under the original Halcrow masterplan (itself having to include state government’s controversial plan for the RM6bn tunnel and three highways) was bumped up to RM46bn under the SRS proposal. The infrastructure proposed was completely changed.

Compared to the Halcrow plan, which significantly included an institutional framework, the SRS proposal is more car-focused, especially the extravagant Pan Island Link. Instead of cheaper bus rapid transit and modern trams for the whole state under the Halcrow plan which would have come up to RM9bn, SRS proposed a rojak of expensive options – a RM9bn highway and an RM8bn light rail transit under the first phase, which was focused mainly on the island, totalling about RM17bn. Add to that another RM6bn for the tunnel (still missing in action) and three highways.

[Meanwhile, the untapped potential of the buses and ferries of Penang have not been fully realised as the public transport modal share remains below 5% compared to 67% in Singapore.]

The SRS proposal plan involved seeking a couple of billion of ringgit from bridging loans.

That was always going to be a problem, which was pointed out to the state government from the start. How do you finance RM17bn worth of infrastructure construction with just RM1-2bn of working capital? By relying on the sale of reclaimed land to developers of high-end housing? And who would the developers sell such expensive housing too?

In their hubris, they forgot to look deeply into several crucial factors.

• The glut of high-end housing already in the market
• The ongoing high-end housing and reclamation projects in the north-east and east coast of Penang Island – these first two points alone will affect the price of reclaimed land for sale
• The currency restrictions by the government in China on its nationals trying to take money outside the country – so where are the 400,000 people on the three islands going to come from?
• The timing differences – it will take several years to reclaim and sell the land; so how is the state going to find the money in the meantime to finance RM17bn worth of transport infrastructure with just a couple of billion ringgit of “bridging loans”

But they wouldn’t listen. They were adamant about this “PTMP” – which really is a developers’ real estate plan for the three islands in the south. Driven by greed and $$$ signs, they could not see the biting reality.

What happened to all those assurances that the project would not involve a single sen of public funds?

Remember, when the Council of Eminent Persons was reviewing all the mega projects, the chief minister argued that the PTMP was somehow different as the three-island PTMP project would not involve public funds.

“When Daim Zainuddin and the Council of Eminent Persons began reviewing mega infrastructure projects (eg the East Coast Rail Link and KL-Singapore High-Speed Rail) to determine their benefits to the rakyat, it was in the context of using large sums of public funds to finance such mega projects, and whether there would be a positive return to our nation and rakyat.”

This, he said, was different from the major components in Penang’s PTMP – the Bayan Lepas LRT and the PIL expressway – as both these projects would be fully funded by the revenue generated from the sale of land reclamation in the PSR project.

Now the tune has changed.

First, the state began hoping the federal government would give them RM1bn in a soft loan for this extravagant shortsighted plan. Mercifully, that doesn’t appear to be forthcoming as Putrajaya itself is strapped for funds. For the LRT, the project proponents came up with an inflated ridership figure of 42 million trips per year in an island with a population of just 700,000. Thank goodness the federal government could see through the bluster, with the transport minister himself wisely saying the LRT was not be the best option for Penang. But the Penang government remained adamant and flew in to Putrajaya to meet the minister.

Now the Penang government, having been hit by market realities – which people had been warning them about – is hoping the federal government will be able to spare RM1-2bn a year over a five-to-seven-year period to finance the construction of the RM8bn LRT. (Have they given up on the RM9bn Pan Island Link?)

Look, if the federal government has no money to spare for a RM1bn soft loan, how on earth will it be able to cough up enough money to finance the construction of the expensive LRT with inflated ridership projections?

To me, it is clear that the funding model for the PTMP under the SRS proposal has failed. This funding model, which supposedly would not involve public funds – even though it would gobble up the Commons (a recreational and important fisheries area) – was crucial in the selection of the SRS proposal. That is no longer the case.

In the meantime, there is a lot of uncertainty over the Penang airport – new airport plans are cropping up all over the place – while public disquiet against the massive land reclamation is swelling. If a major airport is built on the mainland either in Kulim or in mainland Penang, what will it do to the already inflated LRT ridership projections for the Komtar-Penang Airport LRT route?

So the only thing to do is to scrap the SRS proposal and go back to the drawing board. It is time to come up with a better, cheaper, faster alternative that is less car-focused and genuinely promotes sustainable mobility.

We have wasted almost a decade on all this nonsense; so stop obsessing with pipe dreams, scrap the grandiose plans and get on with increasing the public transport modal share through a more sustainable mobility plan.