by : Nkhoo
There are two areas we have to examine, business ROI (return on investment) and legal implication.
Business ROI for sPICE Exhibition Hall is viable?
Hong Kong tycoon Superman Li Ka Shing invested more than USD 1 billion in Singapore Suntec convention center without getting a single penny free money from the Singapore government.
How on earth he can make money from the Suntec?
For exhibition hall operator, the sources of income are more than exhibition hall rental fees.
- Be an expo organizer
- Be a hotel provider (SP Setia has do so)
- Be a sport event organizer
- Rent out office space
- Rent out retail space
With the right business strategy and clean and efficient government, Suntec Convention Center occupation rate is almost 100% all year round.
With all income sources explored, a smart investor will still able to achieve ROI payback for sPICE in seven to ten years, a normal period for such MICE project.
RM750 million in profit is derived from 1500 extra units from higher density on land utilization. But the local Penangites have to bear and suffer for more air and water pollution, congested traffic, crowded schools, stretched out public healthcare facilities, lower qualify of life, etc. in the tiny island.
The developer is projected to rake in RM750 million profit (not income) from extra 1500 units in the island is a daylight robbery business deal.
For a good governance in any world, RM50 million free money and side concessions SHOULD NOT BE GIVEN to any profit making build-operate-transfer (BOT) project under the free economy spirit.
SP Setia either takes the business risks or flies kite, I believe Superman Li or Robert Kuok will more happy to invest RM250 million in Penang MICE sector if the tender call for sPICE was advertised in Singapore, Hong Kong and elsewhere.
MPPP website daily visitor is less than 1000, merely displaying the tender call in MPPP website is not an open tender at all, Penang Chief Minister, Lim Guan Eng supposed to fly to more places to get better deal for sPICE.
Legal implication?
- Who are another two bidders? Are they really exist or an illusion under CAT?
- What the terms from other two bidders (if they exist) compared to SP Setia?
- MPPP is not under the Chief Minister office’s jurisdiction, LGE active involvement and single-handed push through the deal may be constituted as an abuse of power.
- The RM50 million, land premium waive and sPICE contract were not approved by MPPP’s full board council meeting.
- Housing density adjustment waiver was not conducted in a just and professional way. No consultation with all stalkholders before such waiver was given to developer.
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