Integrated transport system aims to boost economic activity in Malaysia

As the north’s industrial powerhouse, a logistics hub and a popular tourist destination, Penang is also one of Malaysia’s fastest-growing states, with a population projected to reach 2.5m by 2030. It is divided into two halves, Penang Island, where the capital George Town is located, and Seberang Perai on the mainland. However, the increasing number of residents and visitors each year is putting a strain on the transportation system, not just in George Town but throughout the state. Residents, officials and tourists alike have been searching for new and better transport options.

A Separated State

Because Penang is divided by a channel, travellers face many transport challenges, with road and airport congestion constituting a major issue for daily life and an economic drain on the state’s productivity. A 2013 report prepared by the Penang Institute found that if the government took no action to reduce automobile traffic, the number of commuting trips would overwhelm road capacity. The report also forecasted an increase of weekday morning peak travel from 250,000 in 2013 to 335,000 by 2030. Meanwhile, use of public transport would only comprise 4% of all journeys.

Additionally, 6.5m passengers arrived at Penang International Airport in 2015, which was the number the 2013 report forecasted to arrive in 2020. “The traffic has increased tremendously and this problem requires an immediate solution from the government,” Penang Chinese Chamber of Commerce president Choot Ewe Seng said during a March 2016 press conference. “Penang’s infrastructure urgently needs to be enhanced and upgraded or our economy will be adversely affected,” he warned.

Master Plan

Against this backdrop, the Democratic Action Party-led Penang government set out to implement one of the biggest infrastructure projects outside of the Klang Valley – the Penang Transport Master Plan (PTMP). Based on the principle of “moving people not cars”, the PTMP is intended to create an integrated transport system that will reduce congestion and increase economic activity.

If the entire plan is realised, George Town’s city centre will eventually be connected by monorail lines to suburbs Air Itam and Tanjung Tokong, while trams will occupy the city’s streets. A light rail transit (LRT) line will shuttle passengers from Komtar in central George Town to Penang International Airport. Another line, operating via a 6.5-km undersea tunnel, will run from Gurney Drive on the island to Bagan Ajam on the mainland. A rail line and a bus rapid transit system will connect districts in Seberang Prai on the peninsula.

Preliminary work has also begun on a cable car project, the Penang Sky Cab, which will function as a link between Jelutong on Penang Island with Butterworth on the mainland. Malaysian Resources Corporation is building the 4.8-km system, which is set to begin construction in 2018 and cost between RM500m ($123.8m) and RM700m ($173.3m).

In December 2015 the Penang State Executive Council appointed the SRS Consortium as the project delivery partner for the plans’ rail and expressway work. The SRS Consortium is composed of Gamuda (60%), Penang-based Loh Phoy Yen Holdings (20%) and Ideal Property Development (20%). In addition to getting the projects built, the consortium is responsible for acquiring federal government approvals and permits for the project, as well as bearing the costs incurred in doing so, and any overruns.

Creative Funding

The PTMP project is estimated to cost RM27bn ($6.7bn) in total, with much of the funding coming from the auctioning of land reclamations. The Penang government lacks the authority to borrow money or raise bonds to fund the master plan, making reclaiming and selling land the only option for funding the massive project, according to the chief minister of Penang, Lim Guan Eng. “When we have something of this scale – RM27bn ($6.7bn) – we have no choice,” Lim told local press in December 2015.

Part of the funding plan includes a proposal – called the Penang South Reclamation (PSR) plan – to create new reclaimed islands on the south side of Penang Island. Under the plan, two artificial islands of 930 ha and 445 ha will be located near Permatang Damar Laut. A third 323-ha area nearby has also been identified for use if there is further demand for land activities. The reclaimed land will be used for future expansion of the island’s industrial and logistics centre – the Bayan Lepas Free Industrial Zone – as well as for housing and offices for the state’s administration.

Feasibility studies for the project are currently being carried out, but the current plan also calls for at least one of the islands, close to the Penang International Airport, to become a new smart, green city – called the SRS Smart City. It will comprise 24,000 units of affordable homes, a 5-km beach, a 25-km coastal park, a 30-km waterfront and 283 ha of green areas, all connected by a rail transit system.

The concept will also enable the more than 470 small and medium-sized enterprises and 117 multinational companies in the nearby free trade zone to expand. The SRS Consortium has reported that a third of the companies in the free trade zone want to expand but have no room to do so.

Environmental Concerns

The state has not yet approved any land reclamations, Lim told local media in December 2015. After environmental impact assessment, heritage impact assessment and fisheries impact assessment studies are finalised, the proposed reclamation project will be presented to the public for feedback, a process expected to begin by June 2016. In public briefings held in January 2016, members of the state’s fishing community raised concerns that the coastal reclamation project would cause pollution that would destroy marine life.

In response to the community concerns, measures were proposed to help those who might be affected by the project. These could extend to building new wharves, jetties and a service centre for boat repairs. Officials said local fishermen and residents from affected villages would also be prioritised for suitable job openings when the construction projects begin. To provide them with the requisite skills, the SRS Consortium is reportedly looking to partner with a vocational college to provide the appropriate training.

Navigating The Timelines

The SRS Consortium will call for open tenders for the project packages after it has obtained the necessary approvals. It estimated that the first phase of the project – the Pan Island Link 1 and the LRT line between George Town and the airport – will be rolled out by 2017. The next steps include conducting detailed environmental impact assessments (DEIAs) on both projects and receiving approval from the federal authority in charge of rail transport – the Land Public Transport Commission (Suruhanjaya Pengangkutan Awam Darat, SPAD). The railway scheme for the Bayan Lepas LRT was submitted on April 1, 2016 to SPAD, with conditional approval expected by June. It is estimated that the scheme could be approved by the third quarter of 2016, with construction beginning in 2026.

In the meantime, the DEIAs for the Pan Island Link 1 and the PSR are scheduled for completion in mid-2016, after which they will be opened for public comments. Approval for the DEIAs is expected in September 2016, and if all goes according to plan, all approvals will be obtained by early 2017. At that point, the SRS Consortium will be able to finalise designs for all the projects and start piling by the end of 2017.

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The Report: Malaysia 2016

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