MPPP Will Be Paying A Net Sum Of RM 11.5 Million Cash In Exchange For A Penang People’s Park(PPP) That Will Give Penangites A sub-terranean New Convention Centre(sPICE) Worth RM300 Million, A New 7 Acre Public Park, Upagraded and Refurbished PISA And Aquatic Centre.
Majlis Perbandaran has approved by open tender the construction of a Malaysia’s first sub-terranean convention center costing RM300 million known as sub-terranean Penang International Convention & Exhibition(sPICE) Centre. There were 3 companies that submitted a formal Request for Proposal under an open tender system beginning in 2009, and the best offer and design was awarded to a subsidiary company of listed company and renowned property developer, S.P Setia Bhd.
An open tender system is one of the key planks of Penang PR state government’s CAT governance of Competency, Accountability and Transparency. Three key requirements were considered – best value for money pricing, best product quality and whether it can be maintained to match world-class standards. sPICE fulfilled all three requirements and more. sPICE also provided a green structure and a new park with an area of 7 acres on top of its roof.
The beauty of the open tender system is that SP Setia is not only offering to build sPICE but also an entire new concept which they call Penang People’s Park(PPP). PPP comprise 5 key important portions:-
1. RM300 million sPICE;
2. A new 7 acre public park
3. Refurbished, repaired and upgraded Penang International Sports Arena(PISA);
4. Refurbished, repaired and upgraded Aquatic Centre;
5. A new hotel and retail outlets and additional car park.
In other words, the PPP offers not just the RM300 million sPICE, but also refurbished, repaired and upgraded PISA and Aquatic Centre, as well as a new 7 acre public park for public use.
In financial terms, MPPP is supposed to pay RM50 million for a RM300 million sPICE – a good exchange under any circumstances. However the financial terms are even better for MPPP. MPPP will earn RM25 million in savings from refurbishing, repairing and upgrading PISA and Aquatic Centre that MPPP need not spend. Further SP Setia’s will also buy the portion of the land at current valuation to build a 4-star hotel to complement sPICE and pay MPPP RM13.5 million for the land.
Instead of MPPP paying RM 50 million, MPPP will be actually paying RM 11.5 million because MPPP will earn RM38.5 million from selling land at RM13.5 million based on current valuation for the hotel and savings of RM25 million needed to spend to upgrade, refurbish and repair PISA and Aquatic Centre. This is why MPPP President Patahyiah binti Ismail was so excited about not just the design and building of the PPP but also the financial terms – which she described as a good deal for MPPP and the people of Penang.
Questions were raised as to how SP Setia would be able to generate back their costs for their RM300 million investment with a mere RM 11.5 million payment from MPPP. This is where the question of confidence in Penang’s future prospects comes in.
Ever since PR Penang state government outlined our vision of transforming Penang into an international and intelligent city, Penang has seen much business activity. The old paradigms do not work. The platform for the future is one of unbridled confidence that the state government is committed towards economic growth through good governance, integrity in leadership, public-private partnership, infrastructure works, balanced development for all and performance-based approach such as open tenders. In other words, the business of government is to get out of business.
SP Setia believes that by managing sPICE for 30 years, they will be able to recoup their investments from rentals and related activities. This is a vote of confidence for Penang that Penang will be a preferred choice of investors, tourists, young and talented residents who desire a sustainable habitat.