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What went wrong in sPICE under Penang PR government?

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Corruption, Arrogance, Talking.

There are two areas we have to examine, business ROI (return on investment) and legal implication.

Business ROI for sPICE Exhibition Hall is viable?

Hong Kong tycoon Superman Li Ka Shing invested more than USD 1 billion in Singapore Suntec convention center without getting a single penny free money from the Singapore government.

How on earth he can make money from the Suntec?

For exhibition hall operator, the sources of income are more than exhibition hall rental fees.

- Be an expo organizer
- Be a hotel provider (SP Setia has do so)
- Be a sport event organizer
- Rent out office space
- Rent out retail space

With the right business strategy and clean and efficient government, Suntec Convention Center occupation rate is almost 100% all year round.

With all income sources explored, a smart investor will still able to achieve ROI payback for sPICE in seven to ten years, a normal period for such MICE project.

RM750 million in profit is derived from 1500 extra units from higher density on land utilization. But the local Penangites have to bear and suffer for more air and water pollution, congested traffic, crowded schools, stretched out public healthcare facilities, lower qualify of life, etc. in the tiny island.

The developer is projected to rake in RM750 million profit (not income) from extra 1500 units in the island is a daylight robbery business deal.

For a good governance in any world, RM50 million free money and side concessions SHOULD NOT BE GIVEN to any profit making build-operate-transfer (BOT) project under the free economy spirit.

SP Setia either takes the business risks or flies kite, I believe Superman Li or Robert Kuok will more happy to invest RM250 million in Penang MICE sector if the tender call for sPICE was advertised in Singapore, Hong Kong and elsewhere.

MPPP website daily visitor is less than 1000, merely displaying the tender call in MPPP website is not an open tender at all, Penang Chief Minister, Lim Guan Eng supposed to fly to more places to get better deal for sPICE.

Legal implication?

- Who are another two bidders? Are they really exist or an illusion under CAT?

- What the terms from other two bidders (if they exist) compared to SP Setia?

- MPPP is not under the Chief Minister office’s jurisdiction, LGE active involvement and single-handed push through the deal may be constituted as an abuse of power.

- The RM50 million, land premium waive and sPICE contract were not approved by MPPP’s full board council meeting.

- Housing density adjustment waiver was not conducted in a just and professional way. No consultation with all stalkholders before such waiver was given to developer.

Category: Corruption & Cronyism, PR White Elephant | Tags: | 21/09/2011
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100 acres land reclamation concession for Boustead by Penang PR state government

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The deal was called off, this project is removed from the PR white elephant list!

The Edge Financial Daily had reported yesterday that Boustead would be allowed to reclaim an area along the coast, south of the Penang Bridge “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 south of Bayan Mutiara which the state government recently tendered out to be developed.

The 100 acres land reclamation concession by PR state government is to compensate Boustead for downsizing its 12-floor hotel to 5-floor after the former BN Penang government approved the project without considering the building height limit set by Unesco and MPPP.

Why I condemn LGE again, didn’t I know the hotel plan was approved by Koh’s BN government? Did I have a personal grudge with him?

Read my analysis first before you jumping up an down like a DAP wild monkey.

LGE should fight the case in the court first and argued that MPPP canceled Bostead Royale Bintang hotel is to safeguard Georgetown world heritage status and national interests.

Signing off hotel plan by previous BN government could be a technical error for overlooked the world heritage guidelines.

If state government loses the case, then compensate Boustead at an amount determined by the court. LGE is selling off reclaimed land rights without a fight.

This is his typical excuse for another PR project. I will still salute LGE even he loses the case, but not without a fight in the court.

Downsizing to 5 floors compensation will not cost the state government another 100 acres of prime land.

RM 75 million is a reasonable amount if we let the court to decide the compensation. Court may decide a smaller amount if our national interest is considered in the judgment.

Why I am whining again?

The same size of Bayan Mutiata reclaimed land in Pantai Jerjak was sold to Ivory Land for RM 1 billion by PDC.

Assuming 100 acres (new data is awaiting to be released by Penang state government) land reclamation concession for Boustead is a fire sale under the name of compensation for its hotel downsizing plan.

In other word, Penang PR state government and Penangites may losing RM940 million due to this land reclamation concession!

More shocking revelation is Boustead only asked for RM50-60 million compensation, but LGE is so generous to handover this land reclamation concession to them with a potential market value of RM 1 billion and more.

I hope BN opposition files a lawsuit against PR state government if this deal is sealed regardless the huge losses for the rakyat.

This is my estimation based on the best assumptions on how much is reasonable compensation for Boustead in case state government loses the case in court.

Assumptions:

- 1 floor got 27 rooms, and 7 floors have total of  189 rooms.

- Penang hotel average occupation rate is 80%.

- Profit margin per hotel room is 30%.

- Average room rate is RM500

With a quick computation,

- 1 room earning per year = 1 X  RM500 X 30% X 292 = RM 43,800

- 189 room total earning per year = 8.28 million

Total earning for 15-year = 124 million.

After minus 40% corporate income tax, the net profit is 74.4 million.

Category: PR White Elephant | Tags: | 14/09/2011
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PR White Elephant Project # 2: sPICE Exhibition Center, Penang.

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The side concessions unrelated to sPICE defy the normal business practice, and this sPICE contract is scandalous as Plus Highway and IPP agreements.

Latest news break is the contract was never approved by the MPPP full council meeting. I am not a legal expert, no sure this contract is still valid or not.

My high expectation on PR is being a better and cleaner government than BN is totally shattered to pieces after sPICE contract was sealed without following CAT.

I hope Tony Phua as DAP Economist should come forward to explain this sPICE matter to public members. I believe he will shake his head in disbelief behind his party boss.

I repost several legitimate questions from Anil Netto,

- Have all MPPP councillors been given a copy of the agreement? Chinese press reports suggest rumblings of discontent among MPPP councillors.

- Was there a MPPP full council meeting to approve the agreement and the RM50m cost (to be absorbed by the MPPP) before the agreement was signed by the MPPP and SP Setia? When was the MPPP budget for this approved?

- Is the traffic impact assessment for ‘academic purposes’ only? Why no social impact assessment?

- Is it true that only 2000 parking bays are to be provided even thought the capacity of the convention centre will be 6000?

- Am I seeing correct regarding the 1500 additional homes allowed to SP Setia in return for building Spice? Not only 87 units/acre but now 120 units/acre in some places? Are these densities higher than what is allowed under the Penang Island Local Plan, which has not yet been revealed even though it was approved in 2008?

- How much do all the waivers add up to plus the land to be provided by the local government for affordable housing? These should be added into the state/MPPP’s cost.

This project initiated by PR Penang state government is a good project but it comes with dubious and smelly execution.

I concluded the contract is a lopsided contract totally tilted to developer, Eco Meridian Sdn Bhd (EMSB), a wholly owned subsidiary of SP Setia after a scrutiny on its contract.

The project estimated cost is RM300 million, with RM50 million free money from MPPP.

The concessions given by MPPP to EMSB is too lucrative to be believed. For an example, 1500 extra housing units are granted to SP Setia can rake in RM700 million profits for the company. Its ROI details can be found from here.

The shocking fact is MPPP got no profit-sharing from RM50 million investment. This is another BN-like contract under PR government.

Besides, there is no EIA study on its impact on traffic flow and environment before the contract was sealed.

This is so-called transparency, but without accountability and competency, a mockery of LGE’s CAT “Competency, Accountability, Transparency” slogan.

Repost my posting in Anil’s blog.

MPPP or LGE (LGE overstepped MPPP) said three companies have bid for the project.

Did LGE show you the other bidders’ offers when you met up with MPPP and LGE some time ago?

IF LGE is talking transparency, he should also list down two other biddings (the companies name can be omitted) for people to see SP Setia is truly the best bidder or not.

Display a signed contract for public to read is not transparency, is a political stunt.

In the end, the whole sPICE bidding and tender process is no different with the BN black box tender system because people still in the dark on how a contractor was selected and why RM50 million public money injected for a private BOT project.

More shocking revelations by BN opposition (In Mandarin) about sPICE after the agreement was opened for public reading.

- 3.1 acres land sold to developer at merely RM100 per sq ft which is much below market price of RM300 per sq ft. Potential losses are estimated at RM 27 million.

- The developer is allowed to build 450 units max 650 sq-ft medium cost house with minimum selling price of RM 72500. The land is supplied by state government. Estimated extra profit for the developer is RM10 million

This clause is designed to protect developer, not the rakyat.

- 1500 extra housing density given to developer to rake in extra RM450 million on land utilization alone. The abnormal concession can rake in RM700 million profit at the present value.

Public fund for sPICE : RM 50 million

Losses from the side concessions unrelated to sPICE :  RM737 million

Number of PR White Elephant Project monitored : 2

Total accumulated cost/losses: RM 792 million.

Category: PR White Elephant | Tags: | 08/09/2011
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PR White Elephant Project #1: Penang Hill Kancil Car Park

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Although I am not a civil engineer, I can tell from my mechanical engineering background that all supporting pillars are too small and thin. The risk of building collapse under the full loading and after one or two pillars knock down by the bus is high.

When I visited Penang Hill last June, I could sense the car park building is in very odd shape. The height of ground floor can accommodate at least two buses stack together, and a MPPP car attendant told me the architect must be “siow” (crazy) person to come out such design.

The design and construction of the car park building fail to meet many building codes as told by the news sources and no CF is issued until today although the project supposed to be completed by Q3, 2010.

This shoddy quality project is not worth RM 5 million.

My question is how on earth the plan was approved by MPPP? Was there no architect or civil engineer in MPPP to review the plan before final approval is granted.

Actually the fault is PDC who has never submitted plan to MPPP in the first place.

The building is an illegal structure from day one, and MPPP also never issued work stop order. This is typical case of rule by law and “I support you, you support me” culture as practiced by BN for the past 54 years, yet PR has learned the bad habit in less than three years.

Penang Development Corporation under the PR government MUST be held responsible for this blunder. PDC people may think LGE is PDC chairman, they can bypass MPPP and take the law in their hands.

Penang CM Lim Guan Eng should enlighten rakyat especially to Penangites what was happened? What actions are going to take against those officials in-charge of this project.

PDC GM should be chopped off with immediate effect if CAT principle is fully preached by LGE.

LGE and his father, LKS always asking BN politicians to resign for negligence and malpractice, now is LGE own turn to show us what is true accountability.

LGE as Penang CM and PDC Chairman should cut RM10 from his monthly salary and fire PDC General Manager.

MACC should come in also to investigate any irregularities in the whole process.

Penang PR government is incapable to manage RM5 million small project, how PR can be trusted by our rakyat to run the country?

Project cost for Kancil car park : RM 5 million

Number of PR White Elephant Project monitored : 1

Total accumulated cost/losses: RM 5 million.

1Malaysia = Duit rakyat dibazirkan, saku PDC diutamakan.

‘Kancil car park’ a white elephant? A puzzle why its plan was approved

By CHRISTINA CHIN
http://thestar.com.my/metro/story.asp?file=/2011/9/3/north/9416983&sec=North

THE new multi-storey car park at the base of Penang Hill will end up as a white elephant if no immediate steps are taken to rectify the design.

The Penang Development Corporation (PDC), in charge of managing the project which was funded by the Federal Government, has fallen short of the state government’s competency, accountability and transparency (CAT) philosophy by failing to satisfactorily explain why the much-needed car park has failed to obtain the Certificate of Fitness (CF) from the Penang Municipal Council.

Continue reading >> PR White Elephant Project #1: Penang Hill “Kancil” Car Park

Category: PR White Elephant | Tags: | 03/09/2011
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