GEORGE TOWN: The Penang government has decided to go back on a land reclamation deal with Boustead Holdings Bhd, which was part of a compensation mechanism for the latter, after it scaled down its Royale Bintang Hotel project in the heritage core zone.

Penang Chief Minister Lim Guan Eng said the state government will discuss the issue with Boustead to avoid a legal recourse.

"After much public consultation, the Penang state government has taken cognisance of the views of the residents of Putra Marine, Gold Coast and Bay Garden and decided not to pursue the land reclamation at Bayan Bay to Boustead.

"This decision by the Penang state government is also pursuant to the legal notice of defamation sent by Boustead to Pantai Jerejak state assemblyman Sim Tze Tsin over his public remarks in defending the interests of his constituents, which the state government views with displeasure and as a form of pressure exerted on the state government.

"As the state government only submits to the people of Penang, to pursue the land reclamation deal with Boustead under the shadow of the legal notice of defamation sent by Boustead to YB Sim is wholly inappropriate.

"Boustead will still be required to comply with the World Heritage's building height control of 18m within the heritage core zone in George Town. The form of compensation to be paid and whether it should be paid is still subject to further negotiations with Boustead," Lim said at a press conference on Monday.

Boustead had agreed to submit a revised building plan for approval from the Penang Island Municipal Council (MPPP) which will not exceed the required height in consideration of the state government/MPPP agreeing to Boustead to reclaim up to 100 acres (40ha) or as sufficiently needed to provide for a minimum of 50 acres of net saleable development land area along the coastal area off Queensbay on a freehold basis to be formalised via a reclamation agreement.

This was supposed to be in lieu of monetary compensation sought by Boustead for having to scale down its 12-storey hotel to five storeys (18m), following the inscription of George Town as a Unesco World Heritage site in July 2008.

A signing ceremony was initially planned on June 27 this year for Boustead to enter into an agreement with the state government and MPPP.

"In that agreement, strictly without prejudice, I must emphasise, Boustead had agreed to revise the building plans of the hotel project by reducing from 12 storeys to five in exchange for compensation in the form of the reclamation project.

"However, I postponed the signing ceremony over the objections of Boustead, as I wanted to listen to Pantai Jerejak assemblyman YB Sim and the views of the residents in the surrounding affected areas," Lim added.

The project approved by the previous state government originally comprised the development of a 12-storey four-star hotel with 293 rooms and the restoration of a three-storey Heritage Building at No 1 & 2 Weld Quay, Penang on a 1.195-acre site.

Planning approval was obtained from MPPP on April 9, 2007 and building plans were approved on Feb 15, 2008.

"I must say this project was approved by the previous state government despite the fact that it had already submitted to Unesco that the limit of five storeys within the heritage enclave would be imposed.

"They were breaking their own promise, which they made to the international organisation and when the World Heritage site status was granted, this became an issue.

"This state government felt that since the commitment had been made, it had to be honoured," Lim added.

Before the land reclamation deal was initiated, Boustead had sought RM60 million in compensation claim from MPPP.

The Royale Bintang Hotel is among four projects affected by the Unesco ruling in the core zone of the World Heritage Site in George Town.

There are no problems with the other three projects, namely Asian Global Business Sdn Bhd's (AGB) Rice Miller Weld Quay Development in the core zone which has been rescaled to 18m in height, Eastern & Oriental Bhd's annexe building of the E&O Hotel in the buffer zone which has also been reduced in height and Low Yat group's project along Jalan Sultan Ahmad Shah.

SOURCE: The Edge Property