Boustead project called off

The Penang state government has cancelled a plan to allow Boustead Holdings Bhd (BHB) to reclaim up to 0.16 hectares of land off the Penang Bridge.

Boustead was initially given the rights as part of compensation package for agreeing to scale down a hotel development project in the state's heritage zone.

A statement from Chief Minister Lim Guan Eng's office, obtained by Business Times yesterday, noted the decision was made following public consultation and a legal notice sent by Boustead to a state assemblyman who was defending his constituents in the affected area.

"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.

"To pursue the land reclamation deal with Boustead under the shadow of the legal notice of defamation sent by Boustead to (Pantai Jerejak) assemblyman Sim Tze Sin is wholly inappropriate," Lim said in the statement.

"Boustead will still be required to comply with the World Heritage building height control of 18 metres within the heritage core zone of George Town.

"The form of compensation to be paid and whether it should be paid," Lim added, "is still subject to further negotiations with Boustead".

Boustead was in the midst of constructing a one-block 300-room Royale Bintang Hotel in George Town's heritage zone in 2009, when works were halted following reports the development could place George Town's heritage status in jeopardy.

Boustead is one of four developers who have been singled out for undertaking projects exceeding the height restriction in the heritage city's buffer and core zone.

The others are Asian Global Business (AGB) Sdn Bhd, Eastern & Oriental Sdn Bhd and the Low Yat Group.

All the firms had approval from the Penang Island Municipal Council for projects exceeding the 18m limit, well before George Town was placed on the World Heritage List in July 2008.

Last year, Boustead said it was seeking compensation from the Penang state government for agreeing to reduce the height of its proposed hotel. It is learnt that the company had sought RM20.8 million as compensation.

A Boustead spokesman, meanwhile, said the company was waiting for the state government to make a decision on the compensation.

"They have to pay us either in the form of land reclamation or cash reimbursement. They have to make a decision as to how to pay us, so we can recover the money we have spent," the Boustead official said.

The spokesman did not divulge the amount spent by Boustead on its hotel project, except to say that they had completed between 10 and 15 per cent of work so far. - By Marina Emmanuel and Sharen Kaur (Business Times)