THE Penang South Reclamation (PSR) project will divert development focus in the north and northeast of the Penang to the south of the island, Chief Minister Chow Kon Yeow (PH – Padang Kota) said.
Chow said the standard of living for the local community, including fishermen and the next generation, could also be improved with the proposed PSR project.
“Fishermen and their families will have the opportunity to improve their standard of living and income. The PSR project will also provide more job opportunities.
“The PSR project is viewed as the state’s ‘economic transformation project’ for the next 50 years. It is aimed at developing an international services and manufacturing hub for Penang.
“The Penang government will be able to provide quality affordable homes that are connected to a transportation network; such as the Light Rail Transit (LRT), tram, and highway, when the 4,500-acre project is completed,” Chow said in reply to Ong Khan Lee (PH – Kebun Bunga) during the State Legislative Assembly in Dewan Sri Pinang today.
Later, Ong posed a supplementary question to Chow, questioning the need for the state to proceed with mega projects when there were still unresolved poverty issues.
“There are many people who can’t afford to buy affordable homes,” Ong said.
Chow replied: “Are you trying to say that if there is still urban poverty in a country, the responsible or irresponsible government should not implement any project to address poverty issues? Or are you trying to say that by not doing anything, there will be no poverty issues in the country?”
He said the initial plan, when the PSR project was conceptualised, was for the PSR project to finance projects under the Penang Transport Master Plan (PTMP), such as the Pan Island Link 1 (PIL1) and the Bayan Lepas LRT.
“The state had applied for a RM10 billion Federal funding for the LRT project (phase one). However, the Federal Government was unable to provide the allocation at the moment.
“The Federal Government encouraged the Penang government to set up a special purpose vehicle (SPV) for the issuance of bonds to be guaranteed by the Federal Government.
“This is important because the state may not be able to obtain the issuance of bonds on its own, and even if able to, the rate will be high.
“However, with the sovereign guarantee by the Federal Government, the issuance of bonds is possible.
“We are discussing with a consortium of banks to look into the possibility of financing the project,” Chow said.
Chow said the state was still hopeful that the Federal Government would consider its application in the 12th Malaysia Plan to provide the fund.
“We hope that the Federal Government can provide some funds, perhaps not the entire RM10 billion allocation, to reduce the amount of bonds needed to finance the project,” he said.
It was reported that the Penang government had asked for the RM10 billion Federal funding to consider scaling down the PSR project.
Chow said that without the Federal funding, the state would have to fall back on its initial plan.
Lee Khai Loon (PH – Machang Bubuk) asked if the state could consider scaling down the PSR project with the issuance of bonds.
Chow said the issuance of bonds is still a form of loan from the bank; unlike a grant or allocation from the Federal Government.
Later in a press conference, Chow said the SPV that would be set up is for the LRT project.
“The SPV for the issuance of bonds is for the LRT, since the LRT project was referred to in our appeal.
“The state received the letter, dated Oct 1, from the Federal Government on Oct 15. The next course of action will be to communicate with the Prime Minister, Finance Minister and Finance Ministry for further discussion,” he said.
Chow added that with the Federal Government’s guarantee, the state’s SPV could obtain a ‘Grade AAA rating’ in its application to the banks.
“A Grade AAA would mean that the SPV is entitled to obtain a loan with the lowest rate.
“We do not need the entire RM10 billion to start the (LRT) project. About RM1 billion or RM2 billion is sufficient to begin the project.
“We can reduce the issuance of bonds when the PSR land can generate revenue,” he said.
Chow said there were many Federal projects that were funded through the issuance of bonds.
“It is a very active funding mechanism. This is nothing new,” he said.
Chow also said that the project delivery partner (SRS Consortium) would have to come up with RM1.3 billion in bridging finance.
“They (SRS Consortium) can get the bridging finance. We (state government) are still responsible for the ‘after that’,” Chow said.
Story by Christopher Tan
Pix by Adleena Rahayu Ahmad Radzi and Darwina Mohd Daud
Video by Law Suun Ting