THE Penang government has decided to terminate the land reclamation agreement with Rayston Consortium (Butterworth) Sdn Bhd (RCSB) for the Bagan Ajam–Teluk Air Tawar project, following challenges that rendered the project financially and technically unfeasible.
Chief Minister Chow Kon Yeow, during his winding-up speech at the State Legislative Assembly today, explained that the original concession agreement for the Butterworth Outer Ring Road (BORR) was signed on June 16, 1999, with an amendment on May 23, 2022, granting RCSB the right to reclaim 582 hectares of land.
“After extensive discussions and evaluations, RCSB has informed the Penang government that the project faces several critical challenges.
“These include high land acquisition costs, the northward shift of reclamation areas due to the expansion of Penang Port, and planning restrictions on building height near the Royal Malaysian Air Force base,” Chow (PH – Padang Kota) said.
Despite an extension granted until May 31, 2025, for approvals, RCSB continues to face difficulties in executing the project.
Chow stressed that the decision to terminate the agreement was made after careful consideration of financial viability and technical feasibility.
“The cost of reclaiming 582 hectares exceeds the developer’s projected budget, making the project unsustainable.
“Additionally, planning restrictions and technical challenges arising from port expansion and military safety requirements further complicate execution.
Terminating this agreement is the most prudent approach to ensure Penang’s development remains realistic, sustainable, and beneficial to the people,” he added.
Chow also addressed Lee Khai Loon (PH – Machang Bubok), acknowledging his suggestion for a post-mortem report and strengthening early-stage project monitoring.
“As the project has not commenced on the ground, a post-mortem review is not applicable.
“However, the state government continuously conducts internal reviews and monitoring to improve project evaluation and ensure similar issues do not recur,” he further commented.
Looking ahead, Chow affirmed that the state government remains open to planning applications from interested parties for land reclamation projects at Bagan Ajam – Telok Air Tawar.
“The state is committed to ensuring that any future development aligns with strategic planning, financial prudence, and public benefit,” he concluded.
Story by Kevin Vimal