Why start 3 islands project amid recession, says CAP

The Penang state government is considering a bond issue to finance the Penang South Reclamation project.

GEORGE TOWN: The Consumers Association of Penang today criticised the state government for signing a deal on its proposed three-island reclamation project, saying it is “highly irresponsible” in the midst of the economic crisis caused by the Covid-19 pandemic.

It said the mega project would burden the state government with more commitments, such as a bond issue which has been mooted to partly finance the project launch.

CAP president Mohideen Kader also said a challenge mounted against the project’s environmental impact assessment had yet to be heard by the Appeals Board.

Saying that many economists were predicting a recession, or even a depression, Mohidden asked why the state government was in a hurry to sign the agreement.

Last Wednesday, the state government signed a master agreement with project delivery partner SRS Consortium to officially go ahead with the project, dubbed Penang South Reclamation (PSR), along with two highways and a light rail transit project on the island.

A total of 1,821 hectares will be reclaimed off the southern coast of the island and sold to the highest bidder to finance the infrastructure projects.

Chief Minister Chow Kon Yeow had said the government would now await the consortium’s plan to finance the project. He said he had been advised by financiers that Penang need not obtain federal government approval to issue the bonds.

Is the state government being run by businessmen, says Mohideen

Mohideen said that the issuance of bonds without federal approval would be unconstitutional.

“It is strange that the Penang government sought advice from financiers, and not the attorney-general or the state legal adviser, on whether federal approval is needed to issue bonds,” he said in a statement.

“This raises a serious question on the functioning of the state government. Is it being run by businessmen or by elected members advised by constitutionally appointed officials?”

“The federal government should not approve the issue of any bonds by the state or guarantee loans to finance this mega project,” he said.

Mohideen said the issue remained on how the state would fund the RM46 billion Penang Transport Master Plan (PTMP), which includes the three islands. He said it was clear the state did not have an idea of how it would raise the money.

“The PTMP was drawn up by a consortium of developers and contractors and not by an independent traffic consultant. “The focus of the consortium’s proposal appears to be increasing the land bank and not alleviating traffic congestion,” he said.

Mohideen said the state government should also reveal if there was an exit clause in the agreement signed on July 1.

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