Penang Chief Minister Chow Kon Yeow confirmed at the state assembly that the state government has officially terminated its concession agreement with Rayston Consortium (Butterworth) Sdn Bhd (RCSB) for the Bagan Ajam–Bagan Luar coastline reclamation project. The decision was made after the company failed to demonstrate the feasibility of the proposed reclamation works. The state will reopen the project for new proposals from other interested parties.

According to Chow, the Penang government first signed a concession agreement with RCSB on 16 June 1999 for the construction and management of the Butterworth Outer Ring Road (BORR). Under a supplementary agreement dated 23 May 2022, RCSB was granted the right to develop 582 hectares of reclaimed land.

Major Challenges Acknowledged by Developer

Chow stated that following a series of technical and coordination meetings, RCSB acknowledged facing significant challenges that prevented the project from progressing as planned. These included:

A substantial increase in reclamation costs

The need to shift the reclamation footprint northwards due to the expansion of Penang Port

Restrictions arising from the airspace and height limits related to the nearby Royal Malaysian Air Force (TUDM) base

These factors collectively undermined the project’s viability under the original plan.

Concession Ended in  May 2025, No Construction Had Begun

“Since the developer was unable to prove that it had the capability and feasibility to complete the project, the state government has decided not to extend the concession. The agreement has formally terminated on 31 May 2025,” Chow said.

Chow emphasised that the decision reflects the state’s commitment to ensuring development that is pragmatic, sustainable, and beneficial to the public. He added that the complexity of the project exceeded the developer’s initial assessments, and pushing ahead could have disrupted coastal development along Butterworth’s shoreline.

Looking ahead, Chow said the state remains open to receiving new proposals or planning applications from companies interested in undertaking the Bagan Ajam–Bagan Luar reclamation project.

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