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Friday September 16, 2011

Foreign giants keen on RM8bil Penang infrastructure jobs

GEORGE TOWN: Several foreign giants apart from China's Beijing Urban Construction Group (BUCG), namely Citic Group of China, South Korea's SK Group, as well as couple of Japanese conglomerates and one Singapore company have expressed interest to bid for some RM8bil worth of infrastructure jobs in Penang.

Penang Chief Minister Lim Guan Eng said the funding of these crucial road works would be done via a land swap.

“We will finance these projects by land swap as they are expensive. The land will be nearby reclaimed land, which means they will own a certain acreage. These companies appear to be interested (in these projects) even though they involve a land swap. We might as well use something to improve traffic,” Lim said in an interview after opening the one-day investPenang seminar organised by ECM Libra Financial Group Bhd recently.

The interested parties, according to Lim, had been told to submit their request for proposals (RFP) which would also include their recommendation on land usage by year-end.

In April, Prime Minister Datuk Seri Najib Abdul Razak and Chinese Premier Wen Jiabao witnessed the signing of a memorandum of understanding between the Penang government and BUCG for a proposed traffic-alleviation project. Even so, Lim said the RFP was open to other interested parties apart from BUCG.

The projects include the 6.5km tunnel job (from Gurney Drive to Butterworth) which takes up the bulk of the RM8bil cost, the 4.2km Gurney Drive-Lebuhraya Tun Dr Lim Chong Eu bypass, and 4.6km Lebuhraya Tun Dr Lim Chong Eu-Bandar Baru Air Itam bypass. The proposed tunnel project will be the third link between Penang and Butterworth.

“We need to find a way to disperse traffic and with these projects, we will complete the loop. We've revived the idea of a third link and want to get it done,” he said.

The pricing for the third link, said Lim, would be higher as “people still use tunnel as it's shorter ... about one quarter length of the second bridge.” He expects work on the project to start earliest by 2013 although he would like it to start the end of next year if he had his way.

Apart from congestion, the escalating property prices in Penang, largely due to land scarcity, is another issue of concern. Towards this end, Lim said the Government had set up the Penang Housing Board (PHB) to build affordable housing in the state. The board is largely modelled after the Singapore Housing Development Board (HDB).

“We are doing more than talking. We have visited them (Singapore) and they have come to do on-site inspection. In a few months' time, it should take off the ground,” he said.

The pilot project, the first of its kind in the country, will be located on a 60.7ha site in Batu Kawan. According to Lim, it would comprise 10,000 units of about 750 sq ft each and steps would be taken to ensure that only first-time genuine housebuyers qualifed. “We will try to curb speculation ... the buyers will only be able to sell after a certain time frame. We have to work out all these details.

“Most people's concept of affordable housing is like ghetto or slum. But we want to build communities fully equipped with amenities like football fields and green spaces. We are currently working out the mechanism and the project will be funded by the state government. However, we will outsource the actual building of these houses.

“The units will be HDB quality and style and not necessarily HDB. Penangites want to live on the island but you must appreciate that we try to provide where we can but land (on the island) is limited and expensive,” he said, adding that once the third link was up, the island would become so much closer.

Meanwhile, CB Richard Ellis Malaysia managing director Allan Soo, in his presentation at the investPenang seminar on the Penang real estate, said there should be no concern of a property bubble in the making despite the seemingly high property prices. He pointed out that foreigners made up only a small portion of property buyers on the island and that the prices, relative to the hot spots in the Klang Valley as well as in Singapore and Hong Kong, were far lower.

Given the challenging economic times, he expects property prices to correct but not to a great extent. “For those interested in buying property in Penang and are waiting for prices to fall, they are better off buying at current levels and ride the uptrend as I don't think the prices will correct significantly... in fact, I expect prices to remain resilient,” he said.

The seminar was held to pitch the appeal of Penang to a large group of fund managers from Singapore, India, Hong Kong and the Philippines with sizeable portfolio funds as well as major property developers in Malaysia, namely SP Setia Bhd, YTL Corp Bhd and IJM Corp Bhd.

Another growing attraction in Penang in recent years is medical tourism which has chalked up an average growth of 20% a year since 2005. According to Penang Health Association chairman Datuk Dr Chan Kok Ewe, the industry grew by some 25% in terms of revenue to RM136mil in the first half of this year from last year's corresponding period.

“Medical tourism in Penang started in earnest in 2005. Today, it accounts for two thirds of the medical tourism market in the country and has proven itself to be extremely resilient even in a recession as its services are more of a need than a want,” he said, adding that there were much opportunities to be tapped in dental hospital, rehabilitation centres, retirement villages and medical supplies.

“Malaysia is one of the top five destinations for people looking for affordable medical treatment with a large chunk of it coming from Penang,” said Chan.

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