Malaysiakini Letter

The background to Penang's RM6.3bil project

Chant Awareness  |  Published:  |  Modified:

The RM6.3 billion mega project covers a 6.5km undersea tunnel from Gurney Drive to Bagam Ajam in Butterworth; 4.2km expressway bypass from Pesiaran Gurney to Persiaran Tun Dr Lim Chong Eu; a 4.6km expressway and by-pass from Tun Dr Lim Chong Eu to Bandar Baru Air Itam and a four-lane 12km road linking Tanjung Bungah with Teluk Bahang.

The tunnel idea came about two years ago. A memorandum of understanding was signed between Penang and China for the project and three other highways in April 2011. The tunnel would be the fourth cross-channel link, after the ferries and the first and second Penang bridges.

Remark: According to a study, only 7 percent or 15,750 of the 225,000 vehicles using the roads during a peak period in Penang are shuttling between mainland and island. The “million dollar” question is do we need an underwater tunnel?  

Last month, Chief Minister Lim Guan Eng had announced that a Malaysian-Chinese joint venture, Consortium Zenith BUCG Sdn Bhd, had won the tender to build the mega structures costing RM6.3 billion.

Consortium Zenith BUCG Sdn. Bhd. is given a 44ha of reclaimed land in Tanjung Pinang and a 30-year concessionary right to collect toll for the undersea tunnel as payment for the four planned infrastructure projects totaling RM6.3bil.

Remark: There was no clarification or indication of the present and future gross development value of the reclaimed land in Tanjung Pinang. Toll rate is expected to start at RM9.40; similar to the second bridge toll rate. How did the state government arrive at the quantum of the payment e.g. 110 acres of prime land and 30-year concessionary right to collect toll? Where are the financial projections?

When did the state gov't decide to approve the project? 


The formal agreement for the Transport Master Plan (TMP) was signed in mid 2011. In the same week, the chief minister announced the signing of MOUs for four major road projects with Chinese companies. Concurrent negotiations for the tunnel and highway projects started in 2011 and held while the TMP study was under way.

TMP calls for a balanced approach to solving transport problems. It suggested short and medium term measures and recommended major road construction as longer-term solutions commencing after the short/medium-term measures. The TMP puts public transport at a much higher priority than the tunnel.

In fact, the TMP consultants did not originally propose the tunnel idea. They diplomatically (given that the tunnel was probably the state government’s idea) suggested that the tunnel would only be something to consider for 2030 and beyond.


  • Why were awards for the projects given out even before the TMP is finalised and made public?
  • Doesn’t this pre-empt the significance of the report’s recommendations?
  • Why didn’t the state conduct proper Detailed Environmental Impact Study Traffic Impact Assessment, Economic Feasibility Study and Risk Analysis before approving, tendering and awarding the project?
  • Why did the state government conduct public dialogues only after the award of the project?
What are the issues, implications and challenges?

  • The perceived public acceptance of the project may be misguided by emotion and not based on accurate facts and information. How is the public expected to provide meaningful feedback when they are hazy about the precise alignment of the routes?
  • The state government should make publicly available all the tender documents and acceptances and the decisions of the tender award, consistent with its CAT policy and the Freedom of Information Act.
  • It is worrying that the state government is trying to suppress and subjugate public consultation on this project when Guan Eng said his “PR coalition is willing to lose votes” over the project. The state government to focus on technical facts and evidence before making a policy decision to ensure that the project does not have an adverse impact on the state.
  • Is the state government aware of the impact of the tunnel on maritime logistics development of the Penang Port? Almost 90 percent of all international trades are via seaports. The tunnel is going to limit the expansion of our maritime logistics. Cargo ships have increased in size from 3,000 TEUs twenty years ago to 18,000 TEUs today. The depth of our Northern Chanel seabed (the area where the tunnel is going to be located) is between 10-11 meter and it is the only gateway to Penang Port. In the future, smaller ships may be phased out and shipment cost is going to go up if goods from our Free Trade Zones (FTZ) have to be transported to other ports to be exported. Factories may relocate and Penang may lose manufacturing jobs. Cost of trading may escalate and cause a spillover impact on retail prices. How can the state government mitigate the implications on Penang Port and FTZ?
  • The underwater tunnel is going to sacrifice the seafront promenade of Gurney Drive. Gurney Drive is one of the most iconic leisure and tourism destinations in Penang. Massive land reclamation at the seafront is going to destroy the landscape of Straits Quay, Gurney Drive and surrounding areas. Did the state government inform us about its implications?
  • Did the state government call for an open tender for the mega project? How can it be an open tender if MOUs with the Chinese government were signed before the RFP? In an open tender, the state government should make public the reasons for rejecting and accepting a tender bid.
  • Who are behind the local companies e.g. Zenith Construction Sdn. Bhd., Sri Tinggi Sdn. Bhd. and Juteras Sdn. Bhd that were named in the winning bid? What are their track record, financial position and role in the project? What kind of performance bonds and guarantees and Service Level Agreement will the local companies give? Does the state government have any contingency if construction costs shoot up over the next 5-20 years? If the project is aborted due to some reasons, what is the quantum of compensation that has to be paid by either party?
  • What are the plans for the 110 acres of land; how is the use of this land going to contribute to or solve some of our existing problems. Is it going to add to traffic congestion? Is it going to address shortages in public space and how is it going to influence the property market and the price of housing. How much affordable housing will be built on this land?
  • The emphasis on building more infrastructures without improving the public transport system is not going to help solve traffic problems. Is the public being given an alternative based on sustainable transport? Does creating dependency on private transport help the poor?
What can we do?

In line with the Freedom of Information Act and the CAT pledge, we should ask the state government to make publicly available all the tender documents and acceptances and the decisions of the tender award.

We should write to both the federal government and the state government to focus on the improvement of public transport system in Penang. The people of Penang should be presented with viable options to choose.

We should insist that the state government conducts an independent detailed environmental impact assessment, a feasibility study, traffic impact assessment and justify its spending of RM6.3 billion to reduce congestion in the long-term.

We should ask the state government to adopt solutions that are compatible to its slogan of “Cleaner, greener Penang”.

We want the Pakatan coalition to stop using the 13th general election as a referendum for this project. Any attempt to politicise the project is going to distract our focus on facts and evidence-based analysis on the feasibility of the underwater tunnel.

This brochure aims to provide the necessary background information on the project, especially the underwater tunnel, which is lacking and inadequate.  We hope that these probing questions will start a series of levelheaded and calm dialogues on the project.

‘Love Penang, Stay Engaged!’

Share this story


Welcome back,

Your subscription expires on

Your subscription will expire soon, kindly renew before

Your subscription is expired
  Click here to renew

You are not subscribed to any subscription package
  Click here to subscribe now

Any questions?
  Email: [email protected]
  Call: +603-777-00000