Fwd: background info on sPICE

Subject: background info on sPICE
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eSpice: A win-win for whom? — Chan Kim Beng
September 08, 2011SEPT 8 - The Residents Association of Bandar Bayan
Baru (RABB) views with deep concern the signing of the concession to
build the e-Spice by the Penang state government yesterday. The people
of Bayan Baru township want the state and the MPPP to look into and
resolve the existing traffic flow and issue.

Day in day out, we face traffic jams in and out of the Bayan Lepas FIZ
area and our township is affected as well. Many vehicles go through
our township and the FIZ area during peak periods and when there are
big events held at PISA. Our association is also proposing a
Metropolitan Park for public recreation and activities. Many of the
open land space is being rapidly developed to make way for projects
like Bayan City (which includes Jaya Jusco), Quarter Mile, The One
Residence and soon the Sungai Nibong Kecil village.

The infrastructure development needs to be sustainable. Gas emissions
from thousands of vehicles to international conventions at e-Spice
would adversely impact our environment and quality of life. Land area
here is scarce, where would all the cars be parked? Worst, there has
not even been a proper feasibility study, a traffic impact study nor
an EIA study done nor proper dialogues with the local residents up
till now. So, why is MPPP and the state so adamant to push this
project through?

This concession deal has been inked between MPPP and Eco Meridian Sdn
Bhd (EMSB), a wholly owned subsidiary of SP Setia to undertake this
project since August 19, 2011. That was some three weeks ago and the
press only received wind of this news a couple of days ago. The
discreetness in announcing this deal surely raises plenty of eyebrows.

This comes hot on the heels after revelations at a closed-door
dialogue earlier this year on the project that SP Setia, which is
financing the bulk of the construction cost, will be allowed to build
an extra 1,500 houses in the various projects it is undertaking on the
island of Penang. True enough, this criteria was inked in this deal,
"over and above the maximum permissible density". The state
government's decision to give such a major concession to the developer
has set alarm bells ringing with questions raised if the move will set
a dangerous precedent which may come back and haunt Penangites later.
Is this in line with the state's motto of "Competency, Accountability,
Transparency"?

Our association also calls upon the state to reveal at least five
guaranteed world-class projects and their respective revenue potential
coming to e-Spice that it is capable of drawing in. That way,
Penangites would be able to gauge themselves the economic viability
and ROI of e-Spice. Then again, why not upgrade and refurbish the
existing PISA infrastructure and sporting facilities into a
world-class facility to cater to world-class events?

The anticipated cost of this project to the developer will be RM300
million (which includes upgrade and refurbishment of PISA). Despite
the cost, SP Setia Group will potentially earn even more from this
deal. Income generated through the hotel and the e-Spice rental can
easily be in the millions of ringgit.

SP Setia is allowed an extra 1,500 residential units. Now we know SP
Setia homes are well known to be quality homes. Therefore, let's do
simple accounting here (not taking into account the potential
population density, traffic jams, environmental impact these "extra"
homes are bound to create):

• 10 per cent are low-cost housing flats at 150 units x RM70,000 per
unit = RM10.5 million

• 40 per cent are medium housing condos at 600 units x RM400,000 per
unit = RM240 million

• 40 per cent are three-storey landed houses at 600 units x RM1.4
million = RM840 million

• 10 per cent are high-end three-storey penthouses at 150 units x RM2
million = RM300 million

The potential total revenue is a total of RM1.39 billion! Minus
building material, labour and the RM313.7 million, et, there is still
quite a fair share.

Clause 7 of the concession says that a site within PISA for a hotel to
be built is to be sold to the developer for RM13.7 million (based on
an agreed price of RM100 per square feet) and leased for 99 years.
Potentially this hotel is also another huge money churner for the
developer. Not to mention the rental collected from the F&B outlets
within e-Spice.

The people of Bandar Bayan Baru and those staying close and around to
PISA deserve better — they want the existing traffic woes to be
resolved, not for more traffic to be brought in. They want a better
quality of life and a sustainable township and a proper Metropolitan
Park, not a "rooftop park" within the busy traffic swirling around the
e-Spice Complex. Have bicycle lanes, build friendlier pedestrian
sidewalks, etc. We also invite the officials from the state and MPPP
to come and view themselves the traffic congestion and parking issues
whenever big fairs such Pikom PC Fair, Matta Fair, international
concerts, etc are held. Put yourselves in our shoes. A proper dialogue
with the local township community here should have been held if the
state and MPPP were serious about listening to the local people.
Apparently, the state and MPPP have jumped the gun in making decisions
on e-Spice.

Is this a win-win situation for the community in this township or a
win-win for a few?

* Chan Kim Beng is the honorary secretary of the Residents Association
of Bandar Bayan Baru (RABB).