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Penang’s artificial island plan pivots to greener industry, but critics unconvinced

Penang’s artificial island plan pivots to greener industry, but critics unconvinced

Published by Straits Times • 19/09/2022

GEORGETOWN, Penang – Plans to develop an industrial park with a sustainability focus as part of Penang’s artificial islands venture has not placated critics, who say the reclamation project’s socio-ecological damage will be extensive and should be called off.


The northern Malaysian state plans to create a “Silicon Island” anchored by a 300ha industrial park that meets increasingly stringent environmental, social and governance (ESG) criteria from investors, said state executive councillor for infrastructure and transport Zairil Khir Johari.


Plans include halving carbon emissions by using 100 per cent of electricity from renewable sources, reducing freshwater and landfill use, and maintaining a 70:30 split between public and private transport.


Penang is trying to avoid the misfortune that beset Forest City, an 1,800ha integrated residential development and private town on four man-made islands in Johor that is now oft described as a “ghost town”.


Aside from ironic praise for its pristine golf courses, it has struggled to justify its projected US$100 billion (S$140 billion) valuation.


Just 15,000 out of 700,000 residential units were sold before the Covid-19 pandemic hit, with but a few hundred people living on the island at the edge of the maritime border with Singapore.


The Penang South Islands (PSI) project shares the same lofty ambition of futuristic green cities in its corner of Malaysia. Forest City has also claimed features such as vertical greening and “smart” energy and water management.


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But Forest City’s disastrous outcome eight years since reclamation began played a part in Penang’s decision to prioritise business investment instead of a “real estate play” for its own artificial islands, envisioned to be more than three times the size of Singapore’s Sentosa.


“We don’t want to fall into a Forest City thing. The only economy there is the two golf courses,” said SRS Consortium’s project director Szeto Wai Loong at a media briefing last Tuesday.

Ongoing construction work at Forest City, a mixed-use development with homes, offices and shops on
four artificial islands, in Johor in 2018.

The SRS Consortium and state-owned Penang Infrastructure Corporation (PIC) have entered a 70:30 joint venture to develop PSI. SRS comprises engineering and construction giant Gamuda, Penang-based developers Ideal Property Group and Boon Siew Group.


Sustaining investment interest will be crucial for Penang, which accounts for about 5 per cent of global semiconductor sales, to continue being dubbed the Silicon Valley of the East.


“Without jobs, who are you going to sell houses to?” said Mr Zairil at last Tuesday’s briefing, adding that the influx of labour will then create demand for property on PSI. “Anyone can create an island for real estate. Many have tried, not many have succeeded.”


Only after Silicon Island is built will two more islands offer residential and commercial units that can add to government coffers. The original plan was for the industrial island to be developed in parallel with a second island made up largely of residential units.


Detractors believe the entire project should be scrapped due to damage to the ecology, impact on the livelihood of fishermen and questions over the necessity to finance public transport capacity that far exceeds the needs of Penangites.


Mr Zairil justified the need for landfilling, saying “there is no more land available”, citing Penang’s record RM83.5 billion (S$25.9 billion) of investment approved last year.


Activists, however, point to new townships and industrial parks being opened in Penang’s mainland on Peninsular Malaysia.


“It is a travesty to talk about ESG when they destroy the ecosystem by reclamation,” said former city councillor Lim Mah Hui, an economist who is also a steering committee member of the civil society movement Penang Forum.


“Batu Kawan has all the necessary conditions to achieve that, especially with the link to the Free Trade Zone and airport via the underutilised second bridge,” Dr Lim told The Straits Times, referring to the 1,700ha second phase of the Batu Kawan area on the mainland of Penang that could ostensibly be developed as an ESG industrial park without the need for reclamation work.

Penang executive councillor for infrastructure and transport Zairil Khir Johari (centre) believes the
reclamation is crucial to sustaining investment.

PSI has yet to gain approval for its environmental impact assessment (EIA) after a group of fishermen successfully challenged the validity of the report last year due to a technicality.


The state government has refiled a new EIA which it hopes will be approved, to allow reclamation works to start by November. The EIA also details the development of the first island, “Island A”, which SRS estimates will cost RM10 billion over the next decade.


But the change of plans raises other problems. Besides road bridges, a Light Rail Transit (LRT) is supposed to connect PSI to the airport and farther up to Georgetown, the capital of Penang.


The LRT is part of an ambitious RM43 billion Penang Transport Master Plan that involves highways, an undersea tunnel and rail links. The state government had previously planned to use proceeds from land sales in the PSI project to fund the master plan.


However, having committed to prioritising investors rather than real estate sales, the state government will not be able to pay for the LRT upfront.


It is set to issue a request for proposals that requires bidders to also come up with financing models to get the RM9.5 billion rail up and running.


Getting the LRT operational could be crucial to Silicon Island’s success, as most employees will be expected to commute to their workplaces while awaiting more homes on PSI’s second and third islands.


PIC chief executive Farizan Darus said: “If we fail Island A, there is no point going forward with this.”

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