FOCUS I want to give a few reasons why all of you should care about the Economic Transformation Programme’s River of Life (RoL) project, even if you are not living in Kuala Lumpur or Selangor.Firstly, a lot of the taxpayers’ money is going to be spent on this project.
In a recent article posted in Business Circle, which is managed by Pemandu, the director of the Greater KL/Klang Valley National Key Economic Area, Krishnavenee Krishnan, quoted a figure of RM4.4 billion for the RoL project.
Of this, RM3.4 billion would be spent on river cleaning.
The bulk of the river cleaning budget will be from the Drainage and Irrigation Department (JPS), under the budget allocation for the Ministry of Natural Resources and Environment (NRE), which is in charge of JPS.
Kuala Lumpur City Hall (DBKL), the Ministry of Green Technology, Energy and Water and the Ministry of Urban Wellbeing, Housing and Local Government (KPKT) are also likely to contribute towards this project.
For example, landscaping will be done by KPKT and/or DBKL, but their respective allocations are likely to be much smaller than the allocation needed for cleaning up the river.
The RM858 million pie
A total of 34 RoL-related contracts were identified via NRE’s tender website and various other online sources.
But the successful tenderers were only named for six contracts worth approximately RM858 million.
The flagship project worth RM130 million to build a gallery and surrounding facilities at the intersection of the Klang and Gombak rivers was awarded to none other than Ekovest, which is part of the project delivery partner (PDP) in the joint venture for the RoL project.
Aecom, a United States-based global consultancy, was selected in August 2011 to head the design master plan of the RoL project.
Aecom has an international reputation, with a good track record of delivering solutions in various infrastructures and planning related projects around the world.
But its services do not come cheap. Aecom’s fees have never been disclosed publicly. Nor have the details of the master plan been disclosed, not even on the official RoL website.
Hijacking risk
Secondly, the temptation to ‘hijack’ part of the RoL for private gain is immense.
When the RoL project was first announced in 2011, DBKL announced a freeze on land sales on both sides of the Gombak and Klang rivers.
The then mayor of DBKL, Ahmad Fuad, had this to say about the link between river beautification and its impact on increased land values:
“As for the incentives, after we beautify the whole area and state land has boosted in value, the PDP will get two percent of the land transaction’s total value if it can find a buyer, much like real estate agents. But it depends on the government when and if it wants to sell.”
This incentive is in addition to the basic fees for the PDP to coordinate the river beautification works. The fees will be a certain percentage of the project cost, Ahmad Fuad said.
This may be another reason why the PDP players, namely Ekovest and Malaysian Resources Corporation Bhd (MRCB), wanted to get into the game despite the low margins of one percent or RM22 million associated with the project.
Getting hands on precious waterfront land
But would the PDP partners also be able to buy the land that has been or will be rehabilitated via the RoL project?
According to Ahmad Fuad, the answer is (or was) a big NO. But, he said, the PDP will not be allowed to bid for government land near the Klang River as long as the joint-venture company still remains the government’s partner in the upgrading of the river.
“This is because it will have a competitive edge over others, given that it has access to information in its role as PDP. So it is not fair to the others.
“If it wants to bid for the land, it has to withdraw from being in the PDP. If it bids, then of course it won’t get the two percent incentive if the land is sold. The choice is theirs. You cannot get both,” said Ahmad Fuad.
And yet, Ekovest has launched a multi-billion ringgit project called Gateway @ the KL Bund with a gross development value (GDV) of close to RM3 billion.
Interestingly, all three sites under this project are close to or next to the RoL project, which is a big selling point in the marketing strategy of Ekovest.
At the same time, Ekovest has received a RM117 million facilitation fund from Bank Pembangunan Malaysia (BPM) for this project, which is supposed to consist of 300 units of PR1MA housing, in addition to the private high-end residential and commercial property. (Of course, the PR1MA housing is conveniently left out of the marketing brochures for the Gateway project.)
There is also speculation that Ekovest will team up with the China property giant, Greenland, to jointly develop property in Kuala Lumpur, perhaps on the land that is associated with the RoL project.
(One way in which Ekovest can escape the PDP restriction on land acquisition along the RoL is to acquire land for its Damansara Ulu Klang Expressway extension projects.
(It is uncertain if the three sites ( photo ) were acquired via this strategy or if Ekovest originally owned this land before the start of the RoL project, or was allowed to purchase this land after the start of the RoL project).
Ekovest is obviously a big player in the RoL project now, not just as a PDP partner but also as a developer as well as a highway concession holder.
Potential conflicts of interest
This raises potential concerns about possible conflicts of interests and perhaps additional un-priced benefits that may arise as a result of Ekovest playing these three roles.
Of course, Ekovest is not the only property player in this RoL project. The RoL website lists 25 development projects which are being planned or are being constructed or have been constructed as projects that will have an impact on the RoL project.
Of course, there is nothing wrong with roping in developers as one of the key stakeholders of the RoL project, given that there are many areas of cooperation which can result in win-win situations.
The more legitimate concerns are:
(i) The potential for private sector interests to capture brownfield sites along the RoL in a way that is not transparent (for example, direct negotiation for the land, rather than acquisition via open tender) and;
(ii) The potential that private sector interests would trump public access and enjoyment of the RoL (imagine a case whereby a developer wants to restrict access to part of the RoL to only its residents).
More digging needs to be done in terms of mapping out the land banks adjacent to the RoL project and the internal processes used to develop, and perhaps sell off this land.
Not all of this land needs to be sold off. It would be ideal if much of this land could be turned into public spaces, since the RoL project is supposed to be aimed at increasing public enjoyment of our rivers.
Communities displaced
Many communities along the RoL project have been and will be displaced.
People in some small kampung along the RoL have been moved as a result of this project, two of these villages being Kampung Puah and Kampung Puah Seberang.
While this may be an acceptable solution if proper alternative housing is given to them, the fear is that many of them will be displaced without proper compensation or alternatives.
The number of kampung that will have to be relocated is likely to grow as the RoL project expands.
It is also anticipated that some low-cost housing areas, for example in Brickfields will have to make way for RoL-related development.
Again, the key concerns here are the manner in which these projects are allocated and also, the compensation and alternative housing that will be provided to those who are made to move.
Tomorrow: A bicycle recce along the river bank
Yesterday:
