Cover Story: Azmin has his work cut out

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THERE is no honeymoon period for new Selangor Menteri Besar Mohamed Azmin Ali because he needs to embark on a mission to save the Pakatan Rakyat government that is on the brink of losing the support of the people following the recent fiasco over the head of the state.

Azmin, who was a vocal critic of his predecessor Tan Sri Abdul Khalid Ibrahim’s state policies, has to immediately deal with some thorny issues — toll highways, water consolidation and affordable housing — left by the latter.

The new MB needs to beef up efforts to implement the coalition’s election promises, including no new toll highways, more affordable housing and a better public transport system in the state, before his tenure ends in 2018.

To do this, Azmin will need to strike a balance between the interest of the people and the business sector, as well as manage the clashing political forces in the state.

As the chief executive of one of the richest states in the country, he would have to deal with the Barisan Nasional-led federal government on completing the water consolidation exercise and giving the required approvals to the Langat II water treatment plant and six toll highways that will cut across Selangor’s borders. The highways have already got the green light from the federal government.

Toll highways

Protests by Selangor folks against six toll highways approved by the federal government have put the state government in a hot seat as its previous administration had agreed to them in principle.

The highways are the Kinrara–Damansara Expressway (Kidex), the East Klang Valley Expressway (EKVE), the Sungai Besi-Ulu Klang Expresssway, the Damansara-Shah Alam Highway, the Serdang Kinrara Putrajaya Expressway (SKIP) and the West Coast Highway (LPB) (see table).

These proposed highways, which would cost billions in construction cost, are expected to ease traffic congestion and serve as a link to existing highways in the state.

Affected residents protested against the proposed projects mainly because of the nebulous manner in which they were awarded. Residents were often not consulted and kept in the dark.

Mak Khuin Weng, a committee member of the Say No to Kidex group, wants the new MB to be open and convince residents on how these highways can benefit the people in the long run and whether they are economically viable.

He says although these projects were approved by the ministry of works, the state can impose conditions before giving its nod. This fact was also revealed by Khalid in a meeting between the state government and Kidex Sdn Bhd.

“The state government can impose conditions, for instance, [it can tell the federal government that] we want comparative studies before we agree to the project,” Mak tells The Edge.

“Comparative studies are necessary to gauge whether it is more viable and cost-effective to build other transport systems, such as MRT (mass rapid transit) or LRT (light rail transit), or improve the existing public transport system to tackle present traffic woes.”

Kidex, which will cut across Petaling Jaya and Bandar Kinrara, made the headlines when residents whose homes had to make way for it protested and demanded more information on the project.

Pakatan’s state assembly members, meanwhile, have stated that the RM2.24 billion elevated toll road is not justified because the projected reduction in traffic in Petaling Jaya is a mere 5.8% upon the project’s completion in 2018 and 3.05% in 2028.

The shareholders of the project’s concessionaire Kidex are Emrail Sdn Bhd with 70% equity interest and Zabima Engineering and Construction Sdn Bhd with 30%. The shares of both companies are held by individuals linked to Umno, including Umno lawyer Datuk Mohd Hafarizam Harun and former chief justice Tun Zaki Azmi.

It is worth noting that the Petaling Jaya City Council had rejected the plan for the highway three times because of a lack of details from the concessionaire.

The EKVE earned the ire of residents and environmental groups as it will cut through important water catchment areas, namely the Ampang and Ulu Gombak forest reserves that form part of the Selangor state park.

The park is the largest stretch of contiguous forest left in the state and is classified a Rank 1 Environmentally Sensitive Area in the National Physical Plan 2 (NPP-2). This means no development, agriculture or logging is permitted in the park and water catchment areas, with concessions made only for ecotourism, research and education.

The state government is looking to reroute the alignment to the fringes of the park.

Water woes

The contentious water asset deal between Khalid’s administration and the federal government was derided for its lack of transparency and is set to become a hot issue for Azmin.

How the new MB handles this deal will have wide implications for the state, whose people have suffered from the poor maintenance of water infrastructure and pipelines. A drought earlier this year resulted in intermittent water cuts, affecting up to 700,000 households in Selangor.

The water shortage also angered the property developers. Earlier this month, the Real Estate and Housing Developers’ Association (Rehda) revealed that over 800 developments in the state had stalled due to problems faced by the developers in getting approval from water supply company Syarikat Bekalan Air Selangor Sdn Bhd (Syabas).

Rehda chairman Datuk F D Iskandar said the problem was so bad that many developers expect Syabas to reject their first application for their developments.

Syabas’ excuse, he pointed out, was that there was not enough water in the state. And the problem has existed for years now.

The water deal entails the consolidation of assets held by several water concessionaires in Selangor. Puncak Niaga Sdn Bhd (PNSB), Syabas and Konsortium Abass Sdn Bhd have agreed to be taken over as part of a RM9.65 billion deal offered by Kumpulan Darul Ehsan Bhd.

The sole holdout, Syarikat Pengeluaran Air Sungai Selangor Sdn Bhd (SPLASH), is seeking a better exit price, which could mean that Azmin would have to continue delicate negotiations with the company.

As part of the deal, the federal government has agreed to pay out RM1.68 billion via Pengurusan Aset Air Bhd (PAAB). In return, Selangor will hand over the water assets to PAAB for 45 years.

Another deal — to construct the RM3.6 billion Langat 2 water treatment plant — was also signed earlier this year with the bulk of infrastructure contracts already awarded to several firms.

As a backbencher, Azmin repeatedly called for more openness on the deals, particularly their terms, which are still classified under the Official Secrets Act.

Azmin has said he will scrutinise the deals, acknowledging their significance to solving the state’s water woes.

Some quarters believe Azmin should first reveal the details of the agreements that Khalid signed with the federal government on the water asset consolidation. So far, none of the Pakatan representatives has an inkling of what the water agreement is about.

“Azmin has, from day one, talked about transparency,” DAP Bukit Gasing assembly member Rajiv Rishyakaran tells The Edge. “The first thing to do is to expose the water deal. We need to know what was signed.”

But whether Azmin has the power to change stipulations in the water agreements if they were found to favour the federal government’s interests instead of the state’s, and by extension, the people’s, remains to be seen.

Affordable homes

Escalating property prices is another hurdle for Azmin to overcome. Selangor folks may pin their hopes on him implementing measures and policies that would strike a balance between the interests of the developers, local government regulations and the people’s demand for affordable homes.

The Pakatan-led state government implemented a policy on affordable housing after it took over the state in 2008. Under Khalid’s leadership, it had allocated RM100 million from its coffers for the construction of 35,000 homes over four years. Its subsidiary, the Selangor State Development Corporation (PKNS), also constructed 10,000 homes in Kota Puteri and Antara Gapi.

However, during Khalid’s tenure, PKNS also focused on high-end development projects, leading some BN assembly members to question its commitment to its social obligations.

Khalid’s justification was that such projects would boost PKNS’ earnings and allow it to compete with other developers.

As land is a state matter, Azmin will have to juggle between PKNS’ interests and the need for affordable housing by determining how much of the land, some of which has appreciated a lot in value, will be allocated to affordable housing.

He will also need to review local government policies that stipulate that developers build affordable housing.

Under the purview of state executive councillor for Housing, Building Management and Urban Settlement, Iskandar Samad, the specifications and pricing of low-cost units have changed as well.

The Selangorku housing policy calls for houses in a range of RM150,000 to RM250,000 and 800 to 1,000 sq ft to be built for the middle-income group, to be offered via open tender.

The state government has also maintained the housing ratio at 20% low-cost, 20% low-medium-cost and 10% medium-cost.

However, developers find it difficult to build affordable and low-cost homes because land prices and construction and business costs have shot up.

Over the past three years, the state government has increased land premiums and the development charges for land zoning conversions and plot ratio changes, Rehda Selangor chairman Datuk Khor Chap Jen says, adding that the imposition of additional guidelines, including plot ratio conversion, by local councils has inflated business costs. “Some of our members have complained that the local councils insist that they build the low-cost houses first before embarking on the medium-cost development. But developers have to build the other houses first to cover the cost of subsidised low-cost housing.”

This article first appeared in The Edge Malaysia Weekly, on September 29-October 5, 2014.