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LETTER | Penang South Reclamation - who does it serve?

LETTER | Since 2015, the fishermen of Penang have been protesting against the Penang South Reclamation (PSR), a project of the Penang state government that will endanger the fisheries commons where the local people have fished for generations. No amount of rebranding PSR as “Penang South Islands” or “BiodiverCity” will make this project green.

Two years ago, Penang Forum launched a petition with the support of 45 non-government organisations. We explained why the state’s project to reclaim three islands totalling 4,500 acres is unnecessary, unjustifiable and likely to fail. All appeals to conscience, logic and good governance have been stonewalled by those in power.

The petition to cancel PSR and has so far gained 115,000 supporters while a second petition to save the turtles of Penang and Perak has attracted 225,000 supporters. Since then, more weaknesses, flaws and pitfalls of the PSR plan have come to light, with potentially grave consequences for Malaysian taxpayers and Penang rate-payers. The following ten questions demand answers:

Is building PSR Island A the best strategy for Penang’s industrial expansion? Located near the Penang airport and in the flight path, Island A may not be suited for certain high-tech industries. It might be more strategic to develop the Batu Kawan–Kulim industrial corridor to create synergies with the Kulim High-Tech Park and the proposed Kulim International Airport. With lower industrial land costs and ample room for expansion, it would be easier to attract companies offering manufacturing jobs. Factories could be built with attached dorms, thus reducing traffic jams from workers’ commute. It is puzzling why the Penang government is focusing yet more development on Penang island despite promising that “the future of Penang is in Seberang Perai”.

Who is the PSR residential development for? The Department of Statistics forecasts 1,983,200 Penang inhabitants by 2030. However, the state’s Penang Structure Plan and Penang Transport Master Plan are based on an over-inflated 2030 population projection of 2.45 million, perhaps to justify the territorial expansion. As a reality check, Penang recently emerged as the state with the lowest fertility rate in the country, at 1.3 children per woman. If not locals, will the additional 446,300 PSR population be mostly foreigners, like Johor’s Forest City?

What about the looming water shortage in Penang? Sungai Muda supplies about 80 percent of Penang’s water, but the Ulu Muda headwaters are threatened by Kedah’s logging concessions. Anyhow, Kedah intends to channel the bulk of Sungai Muda’s waters to irrigate its rice bowl areas. As Penang is unwilling to pay Kedah for ecosystem services, how can it guarantee future water security for its present 1.77 million people, let alone provide for PSR’s additional 446,300 population?

Has the Penang public been fooled by bait-and-switch tactics? In response to the Request For Proposal (RFP) for the Penang Transport Master Plan (PTMP) in 2015, the winning developer consortium recommended the reclamation of three islands totalling 4,500 acres to finance the transport plan. The PTMP then morphed into a RM46 billion megaproject and highway plan. Finally, the transport plan was decoupled and jettisoned from the reclamation plan in the PSR Environmental Impact Assessment (EIA) of 2019. 

One might conclude that the public transport plan was conveniently used to bait frustrated Penang drivers to buy into the reclamation scheme, but costly land expansion through reclamation was the main intention from the beginning. What was promised - better public transport. What is delivered - artificial islands and more highways. Bait and switch.

Who is dictating the rules of the game? When the Covid-19 pandemic changed economic realities, priorities and risk levels, the Penang state should have cancelled or at least postponed the PSR project. When it was unable to raise the RM2 billion loan required as initial capital, the state should have realised it was no longer in a position to undertake the project. 

The one with poor leverage power will always be the loser. Not knowing when to quit, the state is now pressured to privatise the reclamation of thousands of acres of land (under water) to one developer consortium, without going through transparent procurement practice such as open tender. 

The state retains a 30 percent ownership of the project development company in a complex ownership structure representing the coadunation of corporate state interest and private interest. It would come as no surprise if government officers were expected to remain silent whenever public interest is sidelined.

How did the project delivery partner become the majority owner of the project? Originally, the developer consortium was supposed to act as the project delivery partner (PDP), an “agent” or “servant” of the Penang state. Now it seems the tables have been turned. In the latest PSR agreement, the private developer consortium gets 70 percent control of the project development company appointed by the state. 

This is in return for putting up the capital to reclaim the first 1,200 acres (half of Island A), at an estimated cost of RM6bil to RM7bil, including road and bridge development. “On a back of the envelope calculation, the reclamation cost works out at about RM95 per sq ft” – this could be much higher than average reclamation costs in Melaka. If this is a public project, how come the developer consortium has the main say in the price and reclamation schedule?

Is our chief minister building Penang’s future on shifting sands? With financial reserves of just over RM1 billion and an annual budget of about RM1 billion (and a development budget a third of that), is the Penang state government being over-ambitious in embarking on a RM46 billion project? 

As the state is ultimately responsible for making the project viable, it may find itself burdened with new traffic, social and environmental issues in addition to old unsolved problems, eating into its budget. Will the state then sell off more state assets (as it has done in the past) or take up loans just to stay in the game, or even trade-off state assets from the future islands even before they are completed?

Can “too-big-to-fail” reclamation projects actually go wrong? Look around. The Kansai Airport in Osaka, Japan is sinking faster than expected. The financial future of Dubai’s Palmeira Islands and Forest City Johor have been disrupted. The reclamation of Teluk Jakarta and Teluk Benoa Bali continue to be delayed due to popular resistance by those fighting for survival. 

The Melaka Gateway and Saemangeum (Korea) reclamation have missed their deadlines by years. Despite huge capital inputs and refinancing efforts, the ongoing reclamation project of Sri Tanjung Pinang 2 north of Penang island is far from sales-ready.

Is the Penang government trying to distract our attention from other failed projects? Penang still has two unfinished megaprojects. The first is the Gurney Wharf land swap for a tunnel and three highways, where nothing has been built after seven years (except two high-end condos). 

The second is the Bukit Kukus Paired Road project, originally costing RM275 million which has now run overbudget, costing RM545.6 million and two years behind schedule after a landslide in 2018 which claimed nine lives. So much for transparency, accountability and competency.

Is “pollute first, clean up later” an acceptable development strategy? The pollution from previous reclamation projects has yet to be addressed. The fishermen are left with declining fish catch. Severe erosion has been reported in public recreational beaches at Penang's Batu Feringghi and Melaka's Pantai Puteri, possibly due to currents altered by the private reclamations. 

Who has to repair the eroded beaches, dredge the silted harbours and estuaries, mitigate flooding problems and clean up the mess? The Drainage and Irrigation Department, the harbour authorities, the municipal authorities and the state – in short, taxpayers and ratepayers. This is how profits are privatised, and losses are socialised.

During the fasting month, Penang politicians keep announcing the start of the Penang South Reclamation. Similarly, the Environmental Impact Assessment for PSR was also displayed during Ramadhan in 2017 and 2019. Might this be construed as a deliberate attempt to break the spirits of the affected fishermen? Ex-gratia payments have been held out to the stakeholders, but those who have accepted appear to be mostly part-time or retired fishermen. 

The full-time fishermen of Sungai Batu and Teluk Kumbar have largely rebuffed the state’s offers. Instead, they question the project’s legitimacy. They have mounted an appeal against the EIA approval, under the Environment Quality Act 1974. The appeal is scheduled for June.

Facing high-risk climate scenarios, many countries are planning for a green future of balanced development for the sake of socio-economic stability. However, a neoliberal state captured by private interests is incapable of virtuous planning for the people’s well-being and prosperity. It can be predicted that the Penang government’s monolithic development agenda will increasingly come into conflict with the needs and priorities of ordinary people.

Today, the fishermen’s livelihoods and fishing grounds are being sacrificed. Tomorrow, Penangites will probably have to pay higher assessments and quit rents, forego their fresh wild-caught seafood and worry about their water supply. With increased exposure to climate events and rising sea levels, there is no guarantee that the PSR islands will not sink in the foreseeable future. 

And if they do, the current political leaders would have retired, the developers would have made off with the profits, and the Penang people will be left staving off man-made disasters.


The views expressed here are those of the author/contributor and do not necessarily represent the views of Malaysiakini.

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