It is precisely because of the Covid-19 crisis that PSI must proceed

George Town, 1 June 2021

I refer to Nurul Izzah Anwar’s statement dated 31 May 2021 which calls for the cancellation of the Penang South Islands (PSI) project.

JV model to mitigate risks

First of all, a serious allegation is made about the project being “fraught with risks, debt, uncertainties”. It is understandable to raise such concerns on a project of this scale, but I am pleased to inform that in reality such claims are furthest from the truth. In fact, one of the key factors which led the State to adopt the joint-venture model with SRS Consortium, was to address these very concerns.

For the State to embark on building the PSI on our own, it would certainly be a financial burden. Not only would billions of ringgit of capital be required for the reclamation works, it would be years before we see a single sen of return as the land can only be sold after it is completed.

With the joint-venture model however, we would be able to commence the project with all associated risks and debt including both project financing and corporate guarantee being borne by the principal partner of SRS Consortium, Gamuda Berhad. In the event of default, we have also agreed that all reclaimed land will not be subject to caveat by the lenders. This effectively mitigates the potential risks.

PSR will benefit fishermen

Secondly, Nurul Izzah raises the important issue of fishermen livelihood, claiming that the reclamation project would affect the fishing community and “increase poverty”. This is far from the case, as she also correctly notes that “the Penang State Government is offering ex-gratia packages and programmes that are intended to provide long-term benefits to the 1,615 affected fishermen.”

In actual fact, it would not be a stretch to say that the ex-gratia packages being offered to the fishermen affected by the project is quite possibly the best large scale package ever paid out in Malaysia. On top of cash payments fishermen are also to receive new boats and engines, bringing their total package to about RM60,000 each depending on their category. These are capital investments that they would otherwise not be able to afford on their own.

As an added effort, a fisheries sustainability programme will also be implemented through the use of artificial reefs and fish aggregating devices, the release of fish and prawn fry and funding for marine-related research.

That said, Nurul Izzah also correctly pointed out the need for “re-skilling efforts” as a more comprehensive solution to the fishing community’s problems. On this point we are in complete agreement.

Besides the ex-gratia packages, there will also be a re-skilling programme for full-time fishermen, providing them with gainful employment during the course of the project that is projected to last for years. With this extra employment, they will have more stable income and financial security through EPF contributions which they currently don’t enjoy.

In order to better convince her, the State Government would be happy to arrange for Nurul Izzah to meet and speak directly to some of the actual fishermen involved, so she can get a clearer picture of the situation rather than relying on misguided advice.

Eco-friendly and sustainable development

Thirdly, Nurul Izzah highlights the need to address environmental concerns. Again, this is something we can agree on. The PSI has been designed with strict adherence to ESG (environmental, social, governance) criteria.

We are very much conscious of the fact that leading multinational corporations and investors today increasingly place much value into sustainability. With the PSI, we will be able to plan from scratch to ensure that we can produce a sustainable, low-carbon city that meets the highest international standards, and by doing so attract much-needed investments into the State.

The Environmental Impact Assessment (EIA) report has been duly studied and mitigation measures have been planned under the ecology offset programmes. Further to that, we have also incorporated studies by the UN Intergovernmental Panel on Climate Change (IPCC), Low Carbon Cities Framework, and the independent report by the Royal HaskoningDHV into the planning of the PSI.

And while it is easy to simply dismiss reclamation as environmentally hazardous, the truth is that reclamation is recognised by the UN IPCC as a “mature and effective technology” that “can provide predictable levels of safety,” thus serving as an adaptation method to mitigate the impact of climate change. Singapore is a good example of reclamation being done to address potential climate change effects.[1]

Rest assured, the three islands are designed to have plenty of public green spaces, with 20% of the land reserved for parks, mangroves, water canals, and wetlands to achieve temperature cooling. In addition to that, the PSI also aims to reduce carbon emissions by 40%, achieve 100% renewable energy usage and reduce freshwater demand by 70%.

PSI as an economic catalyst

Lastly, the PSI and the Penang Transport Master Plan (PTMP) have been identified by the Penang Socio-Economic Recovery Consultative Council (PSERCC) as key recovery drivers to ensure our economy survives as much as our citizens during and after the current Covid-19 crisis.

It is precisely because of the current protracted pandemic and the ensuing economic disaster that the PSI is needed now more than ever as a catalytic development project for Penang.

Based on Penang’s previous industrialisation trajectory, an independent study prepared by PricewaterhouseCoopers has indicated that the completed PSI would attract RM70bil of FDI and create more than 300,000 jobs over a 30-year timeframe.

More critically, PSI will be the catalyst for more high-value employment so that we can not only plug the brain drain and stop the outward migration of talented Penangites but also attract the best and brightest from all over the country and indeed the world to Penang.

Like the Bayan Lepas Free Industrial Zone before it, the PSI is a project for the future of Penang. Unlike Nurul Izzah, I grew up in Penang, I now work in Penang and I plan to one day retire in Penang. As such, I for one certainly want Penang to be able to provide great opportunities not only for me and my contemporaries, but more importantly for our children and their children to come. Without the PSI, I fear that future Penangites will do what many of their predecessors did before them, which is to leave for greener pastures elsewhere.

Zairil Khir Johari
Penang State EXCO for Infrastructure and Transport


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