Of Queensbay and foreshore
21/10/08 NST Salleh Buang
A news item regarding the National Land Code (NLC), specifically section 76,
recently caught my attention.
Under the law, a State Authority is the absolute owner of all "state land"
within the territory of the state.
In section 5 of the NLC "state land" is defined as "all land in the State"
other than alienated land, reserved land, mining land and reserved forests.
The term includes the bed of any river and the foreshore and bed of the sea
situated within the territory of the state.
Section 42 empowers the state to dispose off state land in one of two ways:
By alienation and otherwise than by alienation.
If disposal is by the first method, state land becomes privately owned
alienated land.
If the disposal is by the second means, such as where the State Authority
merely grants a temporary occupation licence, permit to remove rock material
(for example sand) or permit the use of its air space, the land still
remains as state land – its status does not change.
Disposal by the first method (by alienation) is described in detail in Part
Five of the NLC, which includes section 76, a clause that empowers the State
Authority to alienate state land either for a term of not exceeding 99 years
(leasehold) or in perpetuity (freehold). In the old days, a private citizen
(either by luck or with the right connections) could get freehold land from
the State Authority.
Not any more. Nowadays, a private citizen can get freehold land from the
State Authority only in rare cases where the "State Authority is satisfied
that there are special circumstances which render it appropriate to do so".
Under section 76, freehold land can be alienated only to the federal
government or to a public authority or when the State Authority is satisfied
that the land is to be used for public purpose.
It has a proviso stating that the State Authority shall not alienate "any
part of the foreshore or sea-bed" for a period exceeding 99 years. In other
words, even if any State Authority is generous (or unwise) enough to
alienate its foreshore, it can grant at best a term of no more than 99
years.
In the past, a foreshore was made by nature. Nowadays, through modern
technology, a "new foreshore" can always be "created" by a State Authority
from the sea, via coastal reclamation.
Sentosa Cove, at the southern tip of Sentosa Island in Singapore (which has
a Foreshore Act), is an excellent example of such coastal reclamation, where
public access to the waterfront has been maintained and not lost to the
private developer carrying out the reclamation work and ensuing development
project.
According to the news report that triggered me to think of the NLC, it was
stated that the land where Queensbay Mall in Penang is presently sited is
reclaimed land. Several concerned people in the island asked how and why did
this reclaimed piece of waterfront property attain freehold status?
Curious to find the answer, I did some research and have come up with the
following explanation. The Queensbay land was indeed, at the beginning,
leasehold in tenure. However, in October 2005, the former Barisan Nasional-led
state government allowed this prime 73-acre property to be converted to
freehold. How much conversion premium was paid is not known.
This project (then known as Bayan Bay, of which the precursor of Queensbay
Mall, Bayan World Megamall was one of the earlier components) was undertaken
by Bayan Bay Development Sdn Bhd a 70:30 joint-venture with the now defunct
Anson Perdana Bhd holding the majority share and Penang Development Corp the
balance.
In 1998, as a result of the Asian financial crisis, the Bayan Bay project
stalled with the first phase 85 per cent completed and the second 25 per
cent.
The then state chief minister Tan Sri Dr Koh Tsu Koon was quoted as saying,
"We are concerned over the fact that out of 409 retail lots in the mall at
the time, 270 units had already been sold and a substantial number of buyers
(are now) in a lurch."
He added, "It is obvious to us that we need to find a rescue plan for this
project."
Following that major setback, several attempts were made to revive the
project, but all were unsuccessful.
Several interested parties then approached the state government expressing
interest to revive the abandoned project.
One "rescue condition" the Penang government insisted of any white knight is
that it must first "complete the megamall", regarded as the project’s
largest component.
In 2003, a white knight came in the form of Kuala Lumpur-based CP Group. In
2005, the leasehold land was converted to freehold.
Some quarters justify the conversion to freehold as a "compensation in kind"
for the buyers (who have suffered heavy financial loss with nothing to show
for their investment) as well as the developer (of which the state is also a
partner) who was unable to pay liquidated damages to the buyers.
Development work has since continued unabated. Due for completion by 2013,
this massive waterfront development is said to have a gross development
value of RM1.5 billion.
The heart of the Queensbay development, Queensbay Mall, opened for business
on Dec 1, 2006.
Described by Penangites as the "biggest retail development" on the island,
the mall has a gross built-up area of 2.6 million square feet.
To sum up, this man-made foreshore was not alienated by the Penang State
Authority as freehold. When first alienated to Penang Development Corp, it
was for a term of years, in compliance with section 76 of the NLC.
However, due to unforeseen economic factors, coupled with the reasons put
forward by the state government, this leasehold property was later given
freehold status.
Could this be regarded as an indirect and roundabout way of alienating the
foreshore as freehold in contravention of section 76?
I don’t think so but I would let Penangites be the final judges of the
affair.
