PETALING JAYA: The Penang government and infrastructure group Gamuda Bhd have agreed on the project development model for the development of Island A, the first of three man-made islands to be reclaimed to finance the implementation of the Penang Transport Master Plan (PTMP).
The state government and Gamuda, through their respective wholly owned subsidiaries, have incorporated Silicon Island Development Sdn Bhd, a jointly-owned company which will act as the project developer for the mega project, Gamuda said in its filing with Bursa Malaysia today.
“Both PSG (Penang state government) and SRS Consortium Sdn Bhd (Gamuda’s 60%-owned unit) have agreed that the project development of Island A shall be implemented through a project development model via an entity to be incorporated between the nominees of PSG and project delivery partner, respectively,” it said.
Gamuda previously announced on March 25, 2021 the project development of Island A would be through the deployment of private sector capital without any recourse to the state government.
As such, Gamuda said, Silicon Island was incorporated on March 1, 2023, and its equity ratio comprised 70% held by Gamuda’s wholly owned subsidiary SRS PD Sdn Bhd and 30% by PIC PD Sdn Bhd.
PIC PD is a wholly owned subsidiary of Penang Infrastructure Corporation Sdn Bhd, a special purpose vehicle set up by the state government to spearhead the implementation of the PTMP.
The two directors of Silicon Island are Farizan Darus, former Penang secretary and now Penang Infrastructure Corporation CEO, and SRS Consortium executive director Szeto Wai Loong.
In consideration of Silicon Island agreeing to provide all the finances, management and skill necessary to carry out and complete the development on Island A, Gamuda said, the state government has granted to the project developer the sole, exclusive and full right to commence, manage, carry out and complete the project.
The filing added that Silicon Island was also entrusted with securing planning approvals and other approvals for the common infrastructure (including smart city features), investor marketing, and “land disposal of the reclaimed lands”.
The last clause seems to imply that Silicon Island has sole and exclusive rights to develop and sell the reclaimed land in Island A.
Transforming Penang’s sleepy southern coast
Island A is part of the massive Penang South Islands (PSI) project, the Penang government’s strategic development plan to transform the sleepy southern coast into a smart city, and a world-class trade and tourist destination.
Its three islands will measure 4,500 acres in total – Island A at 2,300 acres, Island B at 1,400 acres and Island C at 800 acres.
According to reports, the Penang government in 2013 approved a RM27 billion PTMP to address the state’s chronic transport and traffic problems. Two years later, SRS Consortium proposed an amended PTMP which saw the proposed costs rising to RM46 billion.
The proposal included the reclamation of the three islands – now the Penang South Islands – to finance the PTMP.
Project delivery partner
SRS Consortium was appointed to be the project delivery partner (PDP) to manage this project, charging a fee equivalent to 6% of the total project cost.
According to the SRS Consortium request for proposal, reclamation of islands A and B, taking about eight years, will net an income of RM16.1 billion for the state (RM7.2 billion from Island A and RM8.9 billion from island B).
All funding, except the initial capital, is supposed to come from the reclamation of the three islands. SRS Consortium was to source the initial RM1.3 billion bridge loan to kick start the reclamation.
Chief minister Chow Kon Yeow said in January the PSI project is expected to start in the third quarter of this year, once the necessary approvals are obtained.